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In this report, we present a primary survey of 19 footwear brands – Puma, Campus, Metro, Mochi, Bata, Adidas, Nike, Reebok, Fila, Crocs, among others – covering 21,000 SKUs to assess the degree of discounting in the ongoing EOSS. Highlights: (1) Bata has opted for early discounting (from 15th Jun’23 – similar to branded apparel retailers: read our previous reports on EOSS Link), while Campus and Metro started EOSS participation from 1st Jul’23 and 7th Jul’23, respectively. Read on for our analysis on brand-wise discounts and average selling price (ASP) offered at overall SKU level. We believe higher discounts are reflective of relative stress in the underlying inventory, and hence may be a leading indicator of the business performance in the near term. We maintain Metro as our top pick in the footwear sector.

Highlights

* On EOSS (end of season sale), overall discount offered by Bata has been lowest amongst the top 5 brands at ~15%, followed by 17% by Mochi, ~19% by Metro, 22% by Campus, 27% by Adidas, and 41% by PUMA (refer table 1).

* Interestingly, BATA has started EOSS participation much early (from 15th Jun’23) similar to branded apparel retailers. We believe companies that are facing higher inventory stress have preponed EOSS by two weeks (we already highlighted this is our previous report on women ethnic wear). BATA is likely to report slowest revenue growth in the sector at ~3% YoY (our estimate) in 1QFY24.

* Metro and Mochi continues to follow strict discounting principles while overall ASP stood at ~1.9x of BATA.

* In our sample data, we observe Metro’s SKUs to be over-indexed to women-wear (50-60% of total), while that for Bata stood at ~40%. In women wear, Metro’s ASP (Rs2,800) stood at ~60% higher than Bata’s (at Rs1,750).

* Red Tape offered highest discount at ~70-80% largely in sports-wear segment with average ASP of Rs1,448. This may likely impact Campus which operates at ASP of Rs1,018 (average retail price at Rs1312 without discount).

* In sportwear, Puma and Fila (acquired by Metro) also offered aggressive discounts (40-50%) across men, women and kid segments. However, we believe higher discount in Fila is due to liquidation of excess inventory acquired by Metro post the acquisition of Cravatex Brands.

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