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market in India
Outline
2007
Organised penetration
in Clothing
12%
2008
16%
2009 E
22%
The volume of market share of kids apparels in the total apparel market in
2008 at 24.9%, as against a 15% share in 2005.
Industry players predict that the market is set to grow by 12% annually
Estimated market size in 2009 end equals to Rs 35,000 cr
10
Volume
Super Premium
32%
14%
Premium
28%
12%
Medium
19%
9%
Economy
13%
7%
Low
6%
3%
Total
14%
4%
School Uniforms
22%
9%
Total
17%
5%
Exclusive Brand Outlets (EBO): sell merchandise which belong to only one company.
apparel is directly sold to the final consumer , company may own the shop or may have it on
rent , the realisations for the company are highest through this mode of distribution ,the
company can get first-hand feedback of the consumers preferences, these stores also help
establish the brand-image of the company. Typical size of EBO: 800-1000 sq ft
Shop-in-Shops (SIS): stores are located in large format stores (LFS) like Shoppers Stop,
LifeStyle, Big Bazaar ,the manufacturer sells the apparel to the LFS, which in turn, sells it to
the consumer through its retail outlets, the manufacturers realisations are lower than that
through EBO.
Multi Brand Outlets (MBO): These stores house apparels from multiple brands. The
apparel manufacturer sells the apparel to the MBO, who in turn, sells these apparels to final
consumer. Since margins of MBO are higher, the manufacturers realisations are lower.
Distributors: The apparel manufacturer sells the apparel to the distributor, who in turn, sells
it to either MBO or SIS, who in turn, finally sells it to the consumer. Since two agencies are
involved in this mode, the manufacturers realisations are much lower than that earned via
other modes.
The Lilliput brand was set by the successful garment manufacturing and export
enterprise called Anand International. In 2003,it entered into kids apparel
business.
Products Segment: Complete wardrobe for 0-12 year old which includes casual
wear, footwear, party wear, inner wear, night wear, swim wear and accessories.
The brand caters to middle and premium segment.
Distribution System: The brand sells through 225 exclusive stores (70% company
owned and 30% franchise) and 250 points-of-sale in multi-brand outlets in 150
cities across the country. The brand is available in major chains like Shoppes Stop,
Westside, Lifestyle, Ebony, Pantaloons etc.
Revenue: Lilliput clocked a turnover of Rs 310 crore last year with export
accounting for a third of it. Market Leader with greater than 10% market share.
In November 06, Inivison PE picked up 24 per cent equity in Lilliput Kidswear
for about Rs 45 crore ($10 m).That values the company at about $42 million.
Future Plan: Lilliput said that it plans to launch an IPO by 2010 end. The brand
plans to tap the potential of South India and Tier II cities.It is targeting growth of
40% in the next 2 years.
Catmoss brand was established in 2004 by Mr.Ashwin Chawla. the brand has
gained popularity in a very short span of time. .
Products Segment: The retail business caters to the middle and premium
segments. Catmoss is also venturing beyond the ethnic and party kidswear
apparel segment and would soon be introducing kids accessories like shoes, belt,
etc for both boys and girls in the age group of two to 14 years The brand plans to
introduce formal wear for young boys as well as an economy range in casual
wear.
Distribution System: The brand has 150 EBO all over India (78 company
operated and 72 franchised outlets). The brand is also sold through various large
format stores like Lifestyle,Globus etc
Revenue: It has a turnover of Rs 100 crore in FY 09. It has the distinction of
being the fastest growing kids wear brand in the country and has registered a
whopping 78% growth
Financial goal include reaching a turnover of Rs 150 crore by the end of 2009-10
along with the launch of 75 new stores. Invest Rs 400 crore for rolling out 500
stores by 2011.
Brand
Lilliput
Product
Price Range
Range of apparel,
accessories and footwear for
children; GJ Jeans, baby
products
Rs. 400-2500+
Casual wear, footwear,
party wear, inner wear,
night wear, swim wear and
accessories.
Rs. 245-945
Catmoss
kids: upper-wear:
Rs. 299-699,
Sportswear and casual wear bottom-wear: Rs. EBOs: 36; MBOs:
for young parents and kids. 499-899.
25
Rs 300 -1,000
16
Retail Presence
Turnover (in
Rs cr)
225
8%
310
10%
EBOs:125 ;LFS
100
3%
In 2007: 55 cr
2%
Comparable Valuations
P/E
10.7x
12.3x
18.2x
14.2x
7.1x
25.6x
EV/Revenue
1.6x
1.3x
1.8x
1.2x
0.4x
3.0x
EV/EBIT
7.7x
6.5x
17.0x
10.0x
6.0x
18.3x
EV/EBITDA
6.6x
5.1x
13.8x
8.7x
5.1x
15.6x
Mean
Median
14.7x
13.2x
1.6x
1.5x
10.9x
8.9x
9.1x
7.6x
EBIT
EBITDA Square feet
Margin Margin
area
21.1%
24.7%
183,965
19.8%
25.2% 1,292,179
10.6%
13.1%
NA
11.9%
13.7%
NA
7.2%
8.5%
666,575
16.2%
19.0%
NA
14.5%
14.1%
17.4%
16.4%
Inventory
turnover
(COGS/Avg
inventory)
2.3
0.3
1.3
1.7
5.2
2.1
2.1
1.9
Sales per
square feet
in Rs
7859
8100
NA
NA
8286
NA
8082
Comparable Valuations
Companies in Children Apparel Retail in US
P/E
Children's
Place Retail
Stores (PLCE)
Carter's, Inc.
(Public,
NYSE:CRI)
EV/Reven
EV/EBITD
ue
EV/EBIT
A
EBIT
Margin
EBITDA
Margin
Inventory
turnover Sales per
Comparable (COGS/Avg square
store sales inventory) feet (in $)
15.1x
0.7x
10.4x
6.4x
7%
11%
2%
4.7
15.0x
1.1x
9.2x
7.9x
12%
14%
0%
4.7
22.9x
1.4x
9.2x
7.5x
15%
19%
-4%
4.5
Business
Specialty retailer of
childrens apparel and
350 accessories
Owns two children brands
and market apparel for
388 children
Specialty retailer operating
stores selling apparel and
accessories for children
564 under different brands
17.7x
15.1x
1.1x
1.1x
9.6x
9.2x
7.3x
7.5x
12%
12%
15%
14%
4.6
4.7
434
388
Gymboree
Corporation
Mean
Median
-1%
0%
Recent M&A in Children apparel market in US : In June 09, Dress Barn which operates
womens apparel specialty stores acquired Tween Brands, speciality retailer in teen girls market.
The deal multiple was EV/EBITDA=5.5 x
Conclusion
The prospects of kidswear industry, a sub-sector of apparel and retailing,
essentially depends upon the growth of the economy and organized
retailing industry at macro level and personal expenditure and willingness
to spend on kidswear at micro level.
Indian kidswear industry is one of the most happening industries in India.
with the projected annual growth in organised kidswear retail of more than
20%.
Growth opportunities for kidswear retail is very high in Tier II, Tier III
cities and in school uniform segment.
Entry of foreign kidswear manufacturers and the entry of major Indian
apparel houses indicate the importance of kidswear industry and their
intention to cash in on the opportunity.
However, the dominance of unorganised players, uneconomic scale of
operation by small unorganised players, low brand penetration could derail
the growth of the industry
19
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