Keep expectations low from Page Industries
ICICI Securities, adding that athleisure remains a pain point for Page, contributing more than 30% to revenues Recall that in Q3, Page’s revenue grew marginally by 2.4% year-on-year, after remaining flat to negative in the previous four quarters. Volume growth of about 5% was driven by the innerwear segment, while athleisure wear continued to be a laggard. Now, if the core issue of excessive inventory persists in the athleisure segment, it could delay a meaningful earnings recovery.
In this backdrop, from Q4 management commentary, investors will watch out for the overall industry demand scenario, how the company’s software implementation is panning out and whether inventory-led issues have bottomed out. Page’s recent earnings performance suggests it is feeling more pressure of the overall weakness in consumption demand for innerwear products than those having exposure to the mass segment. Note that there is no like-to-like comparison between Page, Dollar Industries Ltd and Lux Industries Ltd as the other two companies offer innerwear products at relatively lower price points.
As the chart alongside shows, revenues of other value-focused listed peers such as Dollar and Lux have grown faster than Page in the recent four quarters. This is attributed to entry-price products witnessing better demand than Page’s products. This could be a fallout of consumers opting to down-trade amid muted demand.
As such, Page is not looking to tweak prices any time soon. In other words, the levers of favourable product mix and price hikes, which fuelled Page’s realization growth in the past, are likely fading in FY25, leaving room for further earnings downgrades. The stock’s dismal performance signals the nervousness of investors.
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