Koutons Retail -Yet another disappointing quarter…ICICI Securities

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Koutons Retail -Yet another disappointing quarter…


Koutons Retail (Koutons) reported yet another set of disappointing
numbers in Q3FY11. Sales continued to decline, falling 33.1% and 59.6%
QoQ and YoY, respectively. It reported an operating loss of | 31.3 crore
(against an operating profit of | 49.2 crore in Q3FY10) on the back of
heavy inventory pile-up. Further, a higher interest outgo (on account of
higher debt) made matters worse. Koutons reported a net loss (before
extraordinary item) of | 63.1 crore during the quarter. Over the last few
quarters, the company has been grappling with issues of inventory pileup
leading to higher working capital requirements. This further
impacted cash flow generation and has led to defaults in interest
payments to banks. The pledged portion of the promoters’ stake (~50%
of the promoter holding) was also liquidated during the quarter.
Consequently, the promoter holding has come down from 59.5% in
September 2010 to 32.0% in December 2010. The promoters have also
considered selling 15% of their stake to reduce the debt burden.

Koutons Retail India: Cash crunch enforces stake sale… ICICI Securities

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Cash crunch enforces stake sale… 
The promoters of Koutons Retail (Koutons) are considering selling upto
15% of their stake (~5% of the total equity) inorder to raise cash to pay
off debt. The proposed stake sale is likely to happen through a fresh
issue of shares reducing the promoters’ stake from 32% to 27%. A few
private equity funds and a Mumbai based apparel company are
reportedly vying for  the stake. The company has been reeling under
debt pressure and is not able to service the debt owing to slow-down in
sales. The management stated that they are in talks with the lenders to
reconstruct debt carrying an average cost of 14%.

KOUTONS RETAIL- Disappointment yet again;: Edelweiss

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􀂃 Q2FY11 disappointing: Revenues plunge 53%; PAT declines 91% Y-o-Y
Koutons Retail’s (KRIL) Q2FY11 revenues plunged ~53% Y-o-Y, to INR 1.6 bn,
vis-à-vis 3.4 bn in Q2FY10. EBITDA margins declined 112bps, following higher
other operating expenses of 565bps, which was partially offset by lower COGS of
~453bps. Lower sales and EBITDA margins resulted in core PAT decline of
91.3%, to INR 20 mn.