FY19 marks a landmark year for all of us as your trusted company Arvind FashionsLimited (AFL) was listed on NSE & BSE in early March 2019 after the demerger from theparent - Arvind Limited during the year. My heartfelt gratitude to our employees andbusiness partners who made this possible! Having built an unparalleled portfolio ofcredible and loved lifestyle brands over the years we are very excited about the mediumto long term prospects of your company.
The Indian fashion industry remains one of the biggest and the most promising consumersegments with a market size of $50 billion. As a nation we are at the cusp of crossing aper capita income of $2000 and as seen in other emerging economies such as China andBrazil this is likely to be an inflection point for the already promising and expansivefashion market.
As the market is set to grow rapidly there are some significant trends driving themarket growth such as a shift towards casualization a move from unbranded to brandedclothing in categories like womenswear or kidswear which have primarily remained unbrandedso far and e-commerce emerging as a significant growth vehicle for fashion brands.
Your company spotted these trends early on and pioneered the casualization revolutionwith a portfolio of top-of-mind casual denim brands. Our portfolio includes U.S. PoloAssn. - the market leader among casual brands with a turnover of more than र 1000crore. Tommy Hilfiger - the leading premium casual wear brand Flying Machine - amongstthe top three denim brands in the country Calvin Klein - the leading premium denim brandand GAP - the American standard for casual clothing.
AFL with its powerful portfolio of brands strong capability platforms distributionexpansion opportunities in smaller cities and strong omnichannel capabilities is wellpositioned to sustain the growth momentum in the coming years and emerge as a lifestylepowerhouse.
This unmatched portfolio has delivered a growth upwards of 25% CAGR for the past manyyears and has helped establish your company as a leader in the fashion industry. We have aclear strategy to leverage this powerful portfolio and continue our journey of rapidgrowth in the coming years.
Having identified a big opportunity in kidswear & innerwear your company has builta strong position in both these categories through category extension of our power brands.Our kidswear portfolio which comprises of U.S Polo Assn. Kids Tommy Hilfiger Kids alongwith Gap Kids & The Children's Place is unmatched in the industry and has enabled yourcompany to emerge as a market leader in premium kidswear.
Spotting the opportunity for branded innerwear your company entered the innerwearmarket through Hanes in 2014. Over time your company has built a strong portfolio ofinnerwear brands like Hanes U.S. Polo Assn. Tommy Hilfiger and Calvin Klein. We areextremely glad to report that in FY19 U.S. Polo Assn innerwear business crossed thethree figure mark in revenue in it's third year of operations with distribution reaching8000+ innerwear specialty stores. We are very excited with immense growth opportunityinnerwear presents in future.
Online channels have redefined the reach of fashion brands and your company recognizedthis opportunity quite early. Through a combination of investment in technology andbuilding strategic alliances with third party e-commerce players your company has built astrong position in online sales. In FY19 online sales grew close to 50% with a low teencontribution to total revenue.
Your company is equally excited with opportunities that Sephora presents in PrestigeBeauty. Since taking over Sephora India distribution we have grown by ~10x in 3 yearsthrough store expansion and e-commerce and clearly established Sephora as a leader inPrestige Beauty. Sephora presents huge opportunity for growth in coming years.
For the financial year ending March 2019 Arvind Fashions posted 10% y-o-y increase inrevenue (underlying growth of 15%) accompanied with 80 BPS increase in EBITDA to reach6.2% and 170 BPS improvement in Return On Capital Employed (ROCB to reach 6.7%. Our powerbrands (U.S. Polo Assn. Arrow Flying Machine and Tommy Hilfiger) grew at 9% (underlying16%) with a healthy improvement in profitability.
AFL with its powerful portfolio of brands strong capability platforms distributionexpansion opportunities in smaller cities and strong omni-channel capabilities is wellpositioned to sustain the growth momentum in the coming years and emerge as a lifestylepowerhouse.
I am filled with optimism and incredibly excited about what lies ahead for us. I amhappy that we have put Arvind Fashions on the growth track and in the hands of a drivenmanagement team which will take the business to greater heights.
With warm regards