Why Campus Activewear Share Price is Falling

Editor's note: With no signs of a turnaround, Campus Activewear is turning out to be yet another stock like Polyplex Corporation that just keeps going down.

In 2024 so far, Campus Activewear shares have fallen almost 20%!

The selling pressure comes on the back of consecutive quarterly sales drop, ultimately impacting the company's margins big time.

In the most recent quarter, the company saw an increase in other expenses due to inflation and higher marketing spends.

Back in November 2023, the company's share price was experiencing a similar decline and we wrote a detailed article explaining why the near-term outlook will be weak.

Continue reading to find out what lies ahead for this footwear stock.

Why Campus Activewear Share Price is Falling

Shares of Campus Activewear have been experiencing a downward trajectory of late, plunging over 15% in the past two sessions.

Shares of the footwear retailer fell to a record low today after the company posted its September quarter earnings report.

However, this is not the first time the stock has fallen.

Since the beginning of 2023, Campus shares have been on a persistent downward trajectory, eroding over 37% of their value.

This decline is not limited to Campus Activewear alone; the entire footwear industry has been displaying a subdued performance throughout 2023.

Irrespective of falling raw material prices, many footwear stocks have witnessed declines of up to 40% this year.

Let's find out what has led to this sudden fall in the stock.

Weak Q2 Results

The steep fall in the company's stock price can be attributed to a sharp 98% decline in its net profit to Rs 3 million in September 2023. This was due to weak operational performance.

The footwear company had posted a net profit of Rs 145 million in a year ago quarter.

The company's revenue from operations came in at Rs 2.6 billion (bn) as compared to Rs 3.3 bn in the year ago period, owing to tepid consumer sentiments coupled with challenging macro environment.

The company's management said that performance was subdued amid reduced sales volumes during the quarter due to a difficult macro-economic environment and some channel inventory correction.

The company is now planning to focus more on making further inroads into the key Western and Southern states in India.

Muted Near-Term Outlook

Given the aggressive footprint expansion and marketing spend, the company's performance was expected to remain muted in the first half of 2024.

That's exactly what has happened.

Also, weak economic conditions are expected to affect revenue growth across the entire footwear industry.

Additionally, the challenges posed by the company's aggressive store expansion and significant advertising investments are expected to increase these difficulties further.

However, amid these challenges, there is a potential silver lining in moderating raw material prices. If the cost of raw materials decreases, it will have a positive impact on the company's profit margins.

This may provide an opportunity for the company to either enhance its profitability or pass on cost savings to customers by potentially reviving demand.

Looking ahead, the outlook for the company suggests a recovery in the second half of 2024. It is anticipated that the combination of improved margins and the potential revival of demand will contribute to the company's growth rebounding in the latter part of the year.

What Next?

Campus Activewear Update in 2024 - While the company has posted consecutive drop in sales numbers for some time now, there are some signs of a turnaround...

In the December 2023 quarter, the company posted a positive growth QoQ while gross margins also went up to 38.3%, largely on account of some benefit from decline in material cost.

During the quarter, the company also recuded its debt by Rs 1.1 bn.

Overall, it saw a strong recovery in Q3 despite disruptions in B2B and O2O channels.

Going forward, increased demand and restocking in primary distribution markets is expected to drive the footwear company's growth in the medium term.

How Shares of Campus Activewear have Performed Recently

Campus Activewear share price is down 13.5% in the past two days, while over the past one month, the stock is trading down by 12%.

So far in 2023, shares of the company have declined by 37%.

Today, the stock fell below its IPO issue price of Rs 292 and touched a new 52-week low of Rs 237.

Campus Activewear touched its 52-week high of Rs 527 on 10 November 2022.

The company made its stock market debut last year in May and its IPO had seen over 50 times subscription.

Post listing, the company quickly doubled investors' money and touched a high Rs 640 before making a record low in intraday trade today.

Shares have rebounded from the lows and recovered a bit and currently trading 3% lower.

It is currently trading at a PE (Price to Earnings) multiple of 75x, while Price to book value multiple stands at 14x.

About Campus Activewear

Headquartered in Delhi, Campus Activewear manufactures and distributes a variety of footwear.

Campus Activewear claims to be India's largest sports and athleisure footwear brand by value and volume in financial year 2021.

The company sells its products through both online and offline channels. As of December, the company had 425 trade distributors fulfilling orders of over 19,200 geographically mapped retailers across India.

Apart from its e-commerce website, the company has extended its online presence through Flipkart, Myntra, Udaan, and Fynd.

For more details, see the Campus Activewear company fact sheet and quarterly results. .

You can also compare Campus Activewear with its peers:

Campus Activewear vs Mirza International

Campus Activewear vs Relaxo Footwears

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...