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ICICI Direct Report
TCNS Clothing Co. Ltd.'s revenue recovery has been sluggish with sales reaching 100% of pre-Covid levels versus other lifestyle retailers posting 120-140% recovery rate in Q1 FY23. It mainly caters to office, festive ethnic wear for women that was slow to pick up post economy re-opening versus other segments (western wear).
We envisage a material improvement in operating metrics, going ahead, on the back of a gradual recovery in same-store sales growth (double digit growth) during festive season. Also, after muted store addition pace in the past two years, TCNS has embarked on an aggressive store addition with plan to open 100 plus stores in FY23 (54 stores added in FY20).
Over the past two years, key agenda of TCNS was conserving balance sheet strength with a conservative approach on the working capital front (down 5% versus pre-Covid levels). This may have led to revenue loss but with robust cash on the books (Rs 150 crore), the company is now well geared up to accelerate its growth trajectory.
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