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Bata welcomes GST rate cut on footwear, says move will benefit customers

Updated : July 24, 2018 03:43 PM IST

Footwear major Bata on Tuesday welcomed the Goods and Services Tax (GST) rate cut on footwear, says move will benefit customers.

The Bata stock is in focus after it touched record highs yesterday post the GST Council's move to cut the tax on footwear between Rs 500-1000 to five percent from 18 percent.

Ram Kumar Gupta, director finance and chief financial officer, said, "About 50 percent of Bata's volumes comes from products between Rs 500-1,000 and 75 percent of revenues come from products below Rs 1,000."

Gupta said 60 percent of the footwear industry is unorganised and about 40 percent is organised according to several reports.

Talking on first quarter same store sales growth, Gupta said it was in mid-single digits, but expects high single-digit growth in FY19.

According to Gupta, the average selling price in Q1 was in high-single digit rate and would be in double-digits in FY19 end.

Premium product portfolio contributed around 30 percent to total revenues and would go up to 34-35 percent by FY19-end, Gupta said.

However, Bata is working towards improving its margins through cost saving initiatives and plan to renegotiate rentals and optimal utilising of retail space. The more the sales, the rent as percent of sales will go down, he added.

Bata is also planning to open 100 own retail store and 15 franchise stores as they opened around 20 retail stores and 10 franchise stores in Q1.

Talking on concept stores, Gupta said, "Opportunity for individual brand stores like 'Power' stores is good. They already have five 'Power' stores and 'BubbleGummer' stores for children."
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