Campus Activewear Ltd

NSE:CAMPUS

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Campus Activewear Limited's Q1 FY '25 Earnings Conference Call. [Operator Instructions] Before we proceed on this call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business that could cause future results performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements.

The Campus Activewear management team is represented by Mr. Nikhil Aggarwal, Whole-Time Director and CEO; and Mr. Sanjay Chhabra, CFO. I now hand the conference over to Mr. Nikhil Aggarwal, Whole-Time Director and CEO, for his opening remarks. Thank you, and over to you, sir.

[Nikhil Aggarwal, executive]

Thank you, Yusuf. Good evening, ladies and gentlemen. I thank you all for joining our quarter 1 FY '25 earnings call today. Despite a challenging market environment, Campus Activewear has demonstrated resilience and strategic progress, reporting a volume growth of 3% year-on-year in quarter 1 FY '25, amounting to 5.8 million pairs of footwear.

Our agile approach, coupled with keen sense of fashion and segmentation, has allowed us to introduce products that resonate with the evolving preferences of our consumers. We were able to maintain our gross margins at 53.3% during the quarter slightly declined due to extreme summer season, resulting fewer in-store footfalls coupled with lower betting days.

There has been a noticeable shift in the revenue mix towards open footwear, reflecting the consumer's choice in response to the elevated temperatures. Despite these challenges, we have maintained our focus on innovation, continuously offering new and differentiated products tailored to the dynamic Indian consumer by launching 78 new designs in quarter 1.

Additionally, we continue to invest in performance marketing to drive sales in marketplace. Despite the increase in minimum wages mandated by the government, which has impacted our margins, which [Technical Difficulty] to pass on these higher costs to our consumers during these certain consumer [Technical Difficulty] we strengthened distribution capabilities by adding a new LFS account in the first quarter.

Furthermore, we have expanded our EBO presence by adding 30 new stores. That is 7 COCOS and 6 FOFOS across the nation, taking the total count to 275 stores. Our extensive distribution network is a cornerstone of our business, ensuring that our diverse product offerings are accessible to consumers throughout India.

Further, we have tendered our pan-India distribution network by adding a couple of super stockist and 8 new distributors, further intensifying the penetration in the interiors of the country. With the quest to offer consumer delight, Campus Activewear product range has further enhanced to 650 plus new retail outlets, raising the total count to 23,100 plus retailers across the country. With a strong brand reputation, diverse product portfolio, value for money proposition contribution, Campus Activewear is well positioned to capitalize on this anticipated demand growth in the coming quarters.

We anticipate a resurgence in demand post monsoon with additional momentum expected for tested season. We remain committed in our mission to deliver excellence and would like to express my sincere gratitude to our dedicated team, our lower customers and our esteemed shareholders for their continued support.

Thank you now. And I will give it to our CFO, Mr. Sanjay Chhabra, to take you through more details in quarter 1 FY '25 results.

[Sanjay Chhabra, executive]

Thank you, Nikhil. Good evening to everyone, and thank you for joining us for the Q1 '25 Campus Activewear earnings call. Our operational level stood at INR 339.2 crores for the first quarter. The company sold approximately 5.8 million pairs of shoes in Q1, up 3.3% year-on-year, owing to our strategic distribution push and higher open footwear sales. The average selling price stood at INR 585 in Q1, driven by higher saliency of open footwear, which was close to 22% versus 18% last year.

Our gross margin is at 53.3% is flat versus last year despite the open footwear saliency led ASP drop. The revenue mix between men and women and kids stood at [ 77%] [Technical Difficulty] versus last year's same quarter, 80% to 20%, reflecting our strategic efforts to expand women and kids category.

Our EBITDA for quarter 1 was at INR 54 crores. The EBITDA margin stood at 15.8% in quarter 1, owing to higher employee costs driven by headcount addition and inflation partly offset by lower finance costs. Total cost, excluding COGS, was at INR 147.8 crores versus INR 146.6 crores last year, a marginal increase of 1%, reflecting our efforts to drive efficiency.

The PAT stood at INR 25.4 crores in quarter 1 and PAT margins are at 7.4%. With this summary, I would now conclude my remarks and open the floor to the moderator for the Q&A. Thank you.

[Operator]

[Operator Instructions] First question is from the line of Priyank Chheda from Vallum Capital.

[Priyank Chheda, analyst]

Nikhil, my first question is on channel-wise growth. If you can highlight how has been the growth in trade distribution, D2C online and B2C online. And within D2C online, if you can also split the growth of marketplace as well as B2C online. I reckon that we had some challenges in B2C online. Has that been -- the decline that we saw in B2C online has been arrested or not? That's my first question.

[Nikhil Aggarwal, executive]

So we have seen actually all the channels getting back on track in terms of the volume. So let me give you an example. Like for MPO for distribution, we have seen 2 consecutive quarters of 4.5% revenue growth. This is the second quarter consecutive one, along with distribution and store expansion, like I mentioned. In the online, again, we have seen our marketplace grow by almost 24% in this quarter 1 versus Y-o-Y. And of course, 2 has declined. This is in line with the strategy of reducing the B2B business, the dependency on the B2B business.

And the retail channels, the offline EBOs, have also grown by 8% in quarter 1. So this is very much in line with the strategies of having different strategy for each channel very clearly laid out, like distribution is our volume growth channel and EBO and brand.com and our own online channels are basically the ones to drive premiumization and so on. So Sanjay, if you would like to add?

[Sanjay Chhabra, executive]

Yes. Just to add on to what Nikhil just now mentioned. So by and large, the higher base effect of the B2B and O2O channel would be ending this quarter. So this quarter have been, since the basic impact was higher, we have seen a degrowth in the B2B, but which has been largely mitigated by the marketplace channel.

And net-net, as far as online is concerned, we are now in the trajectory of less than 5% degrowth. So the impact of higher B2B base is almost done with it.

[Priyank Chheda, analyst]

Sorry, I couldn't get the point of 5%. Is the -- what was the 5% number? And you mean that when the higher rates again this quarter, the quarter-on-quarter decline will not be seen from Q2 onwards. These are the 2 clarifications, sir.

[Sanjay Chhabra, executive]

So just let me view sort of split answer. So our marketplace has grown by around 25%, but the further marketplace business has degrown. So net-net, our D2C earning is showing a degrowth in terms of revenue by around 5%.

[Priyank Chheda, analyst]

Right, right, right. Okay. And when you say that this had ended in the previous quarter, do you mean that the quarter-on-quarter decline will get arrested in the current quarter, which is Q1?

[Sanjay Chhabra, executive]

Yes, because last year in the same, one of the big B2B platform was still operational and did a large amount of sales. And from Q2 onwards, they started sort of de-growing big time. So this is corrected from Q2 onwards. So we will see a sort of flattish or plus/minus 5% sort of impact versus 40-plus percent of de-growth in other than marketplace.

[Priyank Chheda, analyst]

Perfect. Now my second question is on the traditional channel, right? So we have been adding the retail touch points very aggressively. And it have to go back to, say, pre-IPO days or pre-COVID days, where we had sales per touch point to be at around 5.1 lakhs per year. It has fallen down to say almost around 3.5 lakhs per year, where the competition is leading a throughput of 2 lakhs higher than ours.

So do I think that there is a scope to increase this pan-India throughput and other that we have reached slightly in the town as far as state channel presence goes. So how should we think the growth coming out in the traditional channels in terms of touch points, plus throughput per touch points?

[Operator]

Sorry to interrupt, Mr Chheda, your voice is getting muffled. Can you please come a little closer to the device, use your handset?

[Priyank Chheda, analyst]

Is it clear now?

[Operator]

This is a little better.

[Priyank Chheda, analyst]

Okay. Could I repeat the whole question, sir, Nikhil?

[Nikhil Aggarwal, executive]

Yes. Please, go ahead.

[Priyank Chheda, analyst]

Okay. So my question is in terms of sales per touch point. We were at around INR 5.1 lakh per year per touch point. We have fallen down to 3.5 lakhs per touch point per year, while the competition is higher than ours. So how do you think that this throughput per touch point should payout going ahead as well as in terms of et touch point additions for the full year?

[Nikhil Aggarwal, executive]

Sure, Priyank. So see, our strategy is to continue to expand the touch points, and we have been doing that along with our distribution base. So the share per counter will also go up, it's just a seasonal effect. Like in quarter 1, we've sold higher volumes because of open footwear, but the overall ASPs have dropped. So this was basically because we didn't -- we also didn't expect so much heatwaves across the country, which led to a higher -- much higher than anticipated share of open category.

Therefore, that led to an ASP drop and a lower realization per counter, like you mentioned. So -- but this will normalize. This is just a seasonal effect. And going forward, we see the share per counter going up.

[Priyank Chheda, analyst]

Okay. And on ASP declines, outside this open to the season that we have seen. As a strategy, we did see that the temporary presence in slowdown, Campus will be focusing back to INR 1,000 SKUs. So here, I mean, how should ASP tie-off for the full year versus say FY '23, '24?

[Nikhil Aggarwal, executive]

Sorry, your voice is muffled. But if I get your question, you're asking the ASP change between FY '23 and FY '24, what -- like going forward, what do we expect in FY '25?

[Priyank Chheda, analyst]

Yes. I mean, we are focusing -- we started focusing back to some [ INR 1,000 SKU ]. So outside this whole issue of heatwave and open footwear getting shown higher, how should ASP pan out for the full year?

[Nikhil Aggarwal, executive]

No. So we -- like I said, we were not expecting this kind of demand for the open category, and it's very understandable given the kind of heat waves we had. So -- but this should not be impact I mentioned also in our last earnings call that we don't really see a big increase in our ASP in FY '25. If you recall, because we anticipated the demand scenario, but we do see demand getting back on track very soon like even July onwards, we've seen a decent recovery in demand. So therefore, we don't anticipate any further ASP drop, I would say, going forward. This was just a seasonal thing.

And this attracts our [ clinical ] portfolio, like I also mentioned last time. So our ratio to economical has actually also slightly gone up for below INR 1,000 to 30% lean versus 27% year-on-year and INR 1,000 to INR 1,500 portfolio semi-premium has gone up actually from 25% to 30% again year-on-year. But our 1,500-plus portfolio premium segment has dropped from 46% to 40% year-on-year. So this is what is in line with the strategy as well.

[Priyank Chheda, analyst]

Perfect. Now just last question on the overall category growth for the sports and in athleisure, given the casualization trend that we are witnessing, how would have been the primary sales being for FY '24, would it be double digit because we had some channel issues. So I just want to get the sense of how would have been the category growth for the full year FY '24? And any reason to believe that this category growth should not grow more than double digit, in fact, it should sustain double-digit in FY '25, given that we are a smaller category in whole of a lakh kind of a space. So what should be the overall category growth in FY '25? Where should be Campus? I assume that we will be looking out for some market share gains in this category tailwind.

And yes, if you can set overall thoughts on the category growth.

[Nikhil Aggarwal, executive]

So see, this is definitely the fastest-growing category still. There is no question about that. The whole sports and athleisure space is growing faster than any other footwear category currently, for the last, I think, 5 years, 6 consecutive years now.

We anticipate, I think, in lower double-digit for sure like kind of category growth this year, FY '25, to happen, just waiting for the markets to sort of demand scenario to come back, but that's about it. And there should be no challenge. And we should grow line or faster than the category.

So I don't see any challenge with respect to our market share increase for this year as well. We are just honestly hoping and waiting for the markets to normalize and the demand scenario to come back. But we are fully geared up for the coming quarters.

[Operator]

Next question is from the line of Videesha Sheth from AMBIT Capital.

[Videesha Sheth, analyst]

My first question is on the channel inventory. So where does it stand as of date, given the muted consumption environment? Is it still elevated? Or has it largely normalized?

[Sanjay Chhabra, executive]

This is Sanjay. So channel inventory, if you see the way the quarter shaped up, it was more towards the open footwear, which eventually means that we did more query on the open front, open footwear and slightly lesser as far as the shoes is concerned, so which, by and large, indicates that the internal inventory is sort of coming to the levels or is at par with the demand in the market.

Currently, we continue to hold around 60-odd days of inventory in the distribution channel, anywhere between [ to 80 ] days, and that continues to be the norm considering the lead time for production of the MTDC.

[Videesha Sheth, analyst]

Got it. So it's largely normalizing going forward. The primary growth and the secondary source is also largely be in line?

[Sanjay Chhabra, executive]

Yes.

[Videesha Sheth, analyst]

Okay. The second question was, if we were to remove the higher mix of the open footwear portfolio that we've seen this quarter, would the increase in portfolio mix of top INR 1,000 price point products still happen, the increase that we've seen from 27% to 30%?

[Nikhil Aggarwal, executive]

Okay. I would say that it's not that we are by and large driving a INR 1,000 price point category, we did try to fill certain gaps in our product portfolio in that particular price point, wherever we felt that there is a market demand and we are absent in that price point.

However, we would continue to consciously drive a mix of our products through different channels. So let's say, the distribution would be a lever for driving volume and our other channels, including the online, our brand.com and our own stores would be driving the mix, which means they would be offering the consumers a wider range of product. And hence, on an overall basis, we'll continue to be conscious about our ASP going forward.

[Videesha Sheth, analyst]

My third question was if you could elaborate on the consumption of growth factor you've seen across these states in the fourth quarter and the second quarter to date?

[Nikhil Aggarwal, executive]

Which key states are you talking about?

[Videesha Sheth, analyst]

Our key states in the North.

[Nikhil Aggarwal, executive]

Sure. So North specifically, we have seen slight decline in our salience from, let's say, 41% to 38%. This is year-on-year. This is primarily due to the heatwave. And we have seen our West and South portfolio grow by almost 4%. The East is also flattish at about -- has slightly grown from 17% to 18%, and [ salience ] has also grown from 6% to 7.8%. So it's basically not that it's taken a little bit of it in terms of the salience because of the extended heatwave. But we don't see any concern on that side.

[Videesha Sheth, analyst]

Got it. Sir, just to marry these 2 points, this point on the fact that our open for the saliency has increased. So the open footwear portfolio would have largely picked up in the region ex of North?

[Nikhil Aggarwal, executive]

That's right. It's actually pan-India like even South, a very big market for open category, South and East. Almost like a pan-India category. We can't really say if it is North and center...

[Videesha Sheth, analyst]

All right. Got it. And just the last question, what has led to the 21% increase in the employee cost that we've seen this quarter?

[Sanjay Chhabra, executive]

Okay. So this is primarily driven by our additional headcounts, primarily in the front-end function, the distribution business and also in the stores, that would be addition of new stores over the period. And also, of course, the year-on-year inflation through the increment. So these 2 factors are driving the higher employee cost.

[Operator]

Next question is from the line of Umang Mehta from Kotak Securities.

[Umang Mehta, analyst]

Most of my question is answered, just 2 of them, if you can. First 1 was on your -- you mentioned about performance marketing investments continuing. Was there any reason for a special call-out? Or is it in line with what you've been doing historically?

[Nikhil Aggarwal, executive]

That's perfectly in line with what we have been doing for the last 3-odd quarters. The only reason for the call out is that we have seen a growth in the marketplace and that requires a bit of investment in the performance marketing.

[Umang Mehta, analyst]

Understood. And the second one was on the stores, which you've opened. So I realized that the mix of COCOs are a bit on the higher end. Again, was that like on a one-off and you maintain that most of the new stores really on the franchisee going forward?

[Nikhil Aggarwal, executive]

No. So it's just a phasing thing, Umang. We're still on track with the ratio of almost 65, 70 FOFOs to 30, 35 COCOs. This is just a phasing thing that can vary from quarter-to-quarter.

[Operator]

Next question is from the line of Mousumi from Equentis.

[Unknown Analyst]

I wanted to ask what are your target markets and you are looking to expand your store count?

[Nikhil Aggarwal, executive]

Sorry, come again, please. I can't hear you. You're not clear. Can you come a little bit to the mic?

[Unknown Analyst]

Hello, can you hear me?

[Nikhil Aggarwal, executive]

Yes.

[Unknown Analyst]

So what are the target markets when you are looking to expand your store count?

[Nikhil Aggarwal, executive]

Did you ask what is the store count that we...

[Unknown Analyst]

No, no, no, no. I am asking what are your target markets, which are your focus markets when you are looking to expand or come up with new stores?

[Nikhil Aggarwal, executive]

Sure, sure. So for EBOs, right?

[Unknown Analyst]

Yes.

[Nikhil Aggarwal, executive]

Yes. So EBOs, we are already present in 27 states as we speak. And like, for example, we've just opening a new store in Mangalore. So there are markets basically in South that we are actively pursuing. That is 1 space that has the least number of stores. So it's basically South and a bit of East -- West. West also and South and West in line with the company's [indiscernible].

[Unknown Analyst]

Your gross margins for this year?

[Nikhil Aggarwal, executive]

Gross margins for this year?

[Unknown Analyst]

Guidance on EBITDA, EBITDA margin or gross margins for this year?

[Nikhil Aggarwal, executive]

We don't give any guidance. We shared some guidance in the last call, picking by...

[Operator]

Next question is from the line of Aliasgar Shakir from Motilal Oswal Mutual Fund.

[Aliasgar Shakir, analyst]

A question on the BIS. I just wanted to understand what's the current status there? I understand almost 15%, 20% of industry were revenues or rather products in that, particularly sportswear, were coming from imports. And am I correct that from the 1st of August that has been completely stopped. So if you could just share, I mean, whether that is true. And then how much inventory would be there in the system and how we should benefit with this policy?

[Nikhil Aggarwal, executive]

Sure. So BIS is fully in effect now as of 1st of August. And the government has mandated time until end of June 2025 for everyone to liquidate the non-BI inventory. And we are seeing some changes in the market already.

Like I know from the channels that the Chinese inventory and the [ stake ] are being imported from China have reduced significantly. The imports have also been largely curtailed. So there is definitely a positive impact that we see in the market on account of that, at least in terms of imports, it's just a matter of the inventory that holding today, the -- all the channels of Chinese imports or the other imports from other countries. And we believe that they should be -- I believe the liquidating all of that by the season and get done with it.

[Aliasgar Shakir, analyst]

And you said it's the time allowed us till June 2025 to liquidate all of that?

[Nikhil Aggarwal, executive]

That's right. Yes, for non-DIS.

[Aliasgar Shakir, analyst]

For non-DIS. And what about the domestic market? Even here, I think a lot of small unorganized players had sportswear, with non- probably BIS compliance. So what's the policy year end? I mean what is the impact of that we would also have in terms of us that we will have to bear for the BIS compliance?

[Nikhil Aggarwal, executive]

So for us, the cost impact on BIS is very small, very, very small because we were already making very high-quality shoes. So for us, really, the cost only in terms of materials with respect to BIS standards has not really changed. But we expect the other smaller players in the industry to have a significant cost impact on account of BIS because they'll have to really upgrade the indication of the material that we use in...

[Aliasgar Shakir, analyst]

Okay. Can you just throw some a little more color when you say the increase in cost for them or what kind of cost increase will happen because obviously, there was a lot of big price arbitrage between the products that we were selling [ deselling ] and what is the kind of compliant you will have to have?

[Sanjay Chhabra, executive]

Ali, this is Sanjay. So from a cost perspective, what -- as Nikhil mentioned, for us, it was a very little impact. For us, it was more of a cost for earnings or having some equipments to label the finished goods.

But by and large, our components were fully compliant even prior to the BIS coming into it. However, for smaller plus, we will have to get back to the drawing room and see that their source, whether they are compliant in terms of flexibility and composition, where the uppers are using the right kind of fabric as specified by the guidelines. If at all, they don't have an enhanced labs to test, then they'll have to get the tests conducted through the external labs, and that will have a cost impact.

So these are the 3 cost elements, which are the basic ones post the BIS implementation, which will trigger to all different players.

[Aliasgar Shakir, analyst]

Got it. This is very clear. And there is no clear timeline yet for the domestic industry, right? Or for the SME and ME,they are still not given a deadline, right, for BIS compliance? Or has it been done?

[Sanjay Chhabra, executive]

That, I think turnover of less than INR 50 crores are not falling into the BIS back date moment. But we expect that to change. I think the endeavor government has to mandate it for everybody.

[Aliasgar Shakir, analyst]

Got it. This is very useful. Just last question on the margin. So if you can first just remind what is the margin outlook you gave in the last quarter? And assume that if, as Sanjay also mentioned that this was the last quarter where we saw the impact because of B2B. If that gets normalized and we get into a run rate of double-digit growth, then what is the normalized margin our business can do? Can we go back to the stable state margin we were doing earlier of 17%, 18%?

[Nikhil Aggarwal, executive]

Sure, if you really want me to call it out. See we will be aspiring to get to those numbers for sure. There is no doubt. Even, in a very tough macro to be very honest, quarter 1 was highly muted in terms of demand. And in spite of that, we've been able to deliver 15.8% EBITDA margin, which, obviously, we're very proud of because it was unprecedented in terms of the demand this quarter.

So therefore, in a normalized scene, we certainly expect a higher margin offtake.

[Aliasgar Shakir, analyst]

Got it. And just last bookkeeping question. On the -- can you just call out what is the share of B2B in the overall D2C online business in this quarter?

[Nikhil Aggarwal, executive]

Sure. Sorry, the share of B2B?

[Aliasgar Shakir, analyst]

Correct. You mentioned that has come down significantly. So I was just thinking if you could share the mix?

[Nikhil Aggarwal, executive]

Yes. In the overall scheme of things, it is around 10-odd percent.

[Aliasgar Shakir, analyst]

Of the total revenue. And almost 50% of our revenue is D2C, right?

[Nikhil Aggarwal, executive]

I'm sorry, I don't understand your definition?

[Aliasgar Shakir, analyst]

Okay. I'm saying online, basically, the entire online business out of INR 340 crores is 50%?

[Nikhil Aggarwal, executive]

No, it's just around.

[Sanjay Chhabra, executive]

Around 35% to 37%.

[Aliasgar Shakir, analyst]

35%. Okay. And out of that, of the total revenue, 30%, 10% is the B2B?

[Sanjay Chhabra, executive]

Yes.

[Operator]

[Operator Instructions] Next question is from the line of Ankit Kedia from PhillipCapital.

[Ankit Kedia, analyst]

Sir, you spoke of open footwear doing exceedingly well in the quarter. While you didn't intend to have so much, I just wanted to know is the product expand very good that the consumers came to us for open footwear because competition could also be there.

Secondly, there was so much demand from an inventory perspective, how could you meet this demand because you would have not thought of such unprecedented demand in open footwear?

[Nikhil Aggarwal, executive]

So we do have a very agile supply chain like we've mentioned in the past as well. So we did prepare for higher offtake. We expected a higher uptake offtake than the previous year-on-year quarter 1 in terms of open category. It was more than what we anticipated, but we were kind of prepared with it as we have a very agile supply chain, and we could manage it within [ lean ] season to be supplied, right? So that is what gave us a higher volume offtake in the open category.

[Ankit Kedia, analyst]

What will be the ASP difference between a closed and open footwear for you? And typically, in open footwear, what exactly are we selling?

[Nikhil Aggarwal, executive]

So open is basically all around sandals and slippers. These are the broadly 2 major categories. We do a bit of clothes, but that's still much smaller compared to the other 2. The ASP differences is...

[Sanjay Chhabra, executive]

In the range of INR 150 to INR 200.

[Ankit Kedia, analyst]

The difference would be INR 150 to INR 200? . And do you, going forward, given the response which you have, it makes sense to push open footwear going forward as well? Or do you want to maintain it that around 20% plus/minus range?

[Nikhil Aggarwal, executive]

Sure. So open, definitely, strategically, it will be an important category going forward. This is a seasonal category, which is basically mostly in quarter 1. And given the demand and the brand positioning that we command, the top of mind recall, it definitely is a very low-hanging fruit that we are in cash upon. So we would -- we would be looking to drive this category properly and with a much more rigor even from next onwards.

Therefore, the -- but at the same time, we do not expect our closed footwear category share to sort of be cannibalized by the open category. And by doing that, we should be able to maintain our ASPs or at least not that can drop beyond the point.

[Ankit Kedia, analyst]

Sure. And my next question is on the rail channel. This quarter also has declined by around 6%, 7% overall, and that's 52% contribution. Do you think this can go back to the 60% of contribution in the next 3 years given the growth and investments you are doing in the offline channel? Or this will remain in that 50%, 55% ballpark range?

[Nikhil Aggarwal, executive]

So trade distribution revenue has dropped largely on account of ASP drop because of open category. It's not the volume. The volume has grown in the offline channel. So soon as the open -- the close is back, let's say, in quarter 2 onwards, we should be able to recover the revenue growth in the distribution channel. And going forward, I mean, the aspiration has always been to have a 50-50 mix between distribution and D2C.

So I see really no change in going forward because our retail is now retail like offline EBOs, LFS, [ CLBC ] [indiscnible], all of these put together have also been now been a significant contributor to the share of the top line channel has gone up from almost [ 11% ] to 13%. So we do expect this to now also contribute significantly going forward. So distribution will probably remain at 50%, 51% in this [indiscernible] going forward.

[Ankit Kedia, analyst]

Sure. And my last question is on the margins. With this open footwear coming in, do you see open footwear at a lower margin versus closed footwear? Or it's pretty much similar multiplier?

[Sanjay Chhabra, executive]

Okay. Just on the gross margin front, we were flat versus last year despite the increase in saliency of open footwear, which is a clear reflection of the fact that we are not trying to sort of downsell or rather maintain the product portfolio in a range, which is to our margin thresholds. I hope that answers your question.

[Ankit Kedia, analyst]

And if I could squeeze in 1 more, how is the discounting by competition? Because pretty much if we have had a tough quarter, competition would have a worst quarter, right? And given that -- and last few quarters have been challenging. How are they expediting inventory because they would not have working capital to have new products in the system. Are you seeing discounting being higher by competition, they are reducing the shifts from 3 to 2 to 1? What's happening out there?

[Nikhil Aggarwal, executive]

We are seeing higher discounting by the competition. I'm talking about the private smaller players in the market. They are actually discounting by a much higher level. So -- and this is largely due to the BIS impact as well. So we have been able to maintain our margins while also selling the non-BIS inventory and selling the open category. We've been able to maintain margins. So -- and going forward, we expect, as the demand picks up, the ASPs too also pick up.

[Ankit Kedia, analyst]

And your manufacturing, is it full swing today? Or you have also cut down shifts at the factory given this demand environment?

[Nikhil Aggarwal, executive]

No. We definitely calibrated the factory also in line with the demand also because there was a robust drive from our end in terms of selling the non-BIS goods as well as mandated by the government. So keeping both the views in mind the muted demand and the sellout of the non-BIS, we have calibrated our production accordingly in quarter 1.

[Operator]

[Operator Instructions] Next follow-up question is from the line of Priyank Chheda from Vallum Capital.

[Priyank Chheda, analyst]

Nikhil, what would be our contribution from the sneakers as a category? And how has been the progress over here? Any growth numbers, any revenue contribution numbers that you would like to talk on this?

[Nikhil Aggarwal, executive]

Sure, Priyank. So this is something we're very excited about. The sneakers portfolio has basically grown by almost 120% even though the base is obviously smaller compared to the sports portfolio, but the demand and the acceptance in the market is very promising. So going forward, it is definitely one of the key areas that we continue to [indiscernible]. It's a big growth lever, along with the women and kids category, where the women's share has also gone up, both in sneakers and in sports.

[Priyank Chheda, analyst]

Perfect. And then on the South as a regional mix, which where our efforts have been concentrating for quite some time now. So any overall change in the GTM strategy for South? I mean we understand that we have a largely online as a channel to penetrate out market. So what are the efforts that are left to penetrate further deeper and as well as in the breadth via trade channel in the southern markets?

[Nikhil Aggarwal, executive]

Sure. So South is -- has been a focus both on online and offline. So in distribution in the traditional channel also, we've opened a couple of new distributors in South and enrolled a few more stores along with enhancing and we've invested in the sales team and created a very, very good team on ground as well.

So also in terms of product portfolio, they do require a higher share of open versus closed category. That is also in line with the growth strategy in South. So we are doing all of these efforts in order to grow our South portfolio. So there's no reason that we should not see a growth from there very soon like within this year.

[Priyank Chheda, analyst]

Okay. And on the new LFS account that we have opened. So would that mean that the growth in that account would gradually pick up? Or is it that Day 1 we grew it in that channel? And would that be -- would that add another 200-odd touch points from 1,300 to, say, 1,500?

[Sanjay Chhabra, executive]

Okay. This is Sanjay. The growth in the LSS is a gradual progression. I mean we do get an entry into certain number of test stores and then eventually, it amplifies based on the success of our product or the particular category. So it will be a period of, I would say, 3 to 4 quarters, wherein we would be present in all the stores of that particular chain. It will be a gradual progression.

[Priyank Chheda, analyst]

And Sanjay, just last clarification on that B2B online, which you said would be around, say, 10% of the total revenues, which would mean that it would be INR 30 crores, INR 35 crores of total revenue and annualize, that would be around INR 120 crores, INR 140 crores. And so for a full year, it would remain flat, right? I mean we ended B2B around INR 130 crores, INR 140 crores last year.

[Nikhil Aggarwal, executive]

Yes, that's right, INR 150-odd crores. .

[Operator]

Next question is from the line of Niraj Mansingka from White Pine Investment Management Private Limited.

[Niraj Mansingka, analyst]

A few things. One, what is our presence in -- can you tell something about what is your estimate of the market share in the sports category in LFS and the retail side?

[Nikhil Aggarwal, executive]

So LFS is a fast-growing channel for us. Honestly, we won't have the numbers for market share for campus. We don't track that yet as it's still a very small contributor to the overall revenue. So there's ample growth for revenue, like it's a completely wide space for us at the moment.

So the focus is more on adding every quarter and maybe regularly, I think big and strong LFS partners on board, and that's what we're driving the moment. So I think the market share number would be relevant probably a couple of quarters from now.

[Niraj Mansingka, analyst]

Okay. Any thoughts on how your market share has moved in the open footwear over the last 2 years, 1 or 2 years?

[Nikhil Aggarwal, executive]

Open. Again, no, we wouldn't have a very significant market share on the open side, to be honest. Even that's, like I mentioned earlier, it's a low-hanging fruit. It's a white space. The only thing we'll have to be conscious of is our ASPs and the margins we contributed from the open category. But given how strong the brand acceptances in the market, we have received a very, very good response in quarter 1 from the open category.

So it is encouraging to definitely increase the -- it's the share of this category going forward.

[Niraj Mansingka, analyst]

And open footwear, you're talking about the generally the EVA based products the growth price points in [indiscernible]?

[Nikhil Aggarwal, executive]

Growth price points, we do have a single EVA, we also have EVA with rubber and DPR also, which is a linear product on the sandal and slipper side. So it's a range. We start at almost INR 499, and we go up as high as INR 999. INR 999 in the open category is a very premium offering, which very few brands in the country are basically providing.

[Niraj Mansingka, analyst]

And my last question, any thoughts on you are opening a lot of retail stores. And conclusion was many of that remain in your platform. So any thoughts on that?

[Nikhil Aggarwal, executive]

Come again in the second half. We're opening a lot of retail stores.

[Niraj Mansingka, analyst]

Okay. So I thought you were talking about moving to athleisure like future where -- in the future?

[Nikhil Aggarwal, executive]

So we are already doing a couple of other categories, like we have backpacks. We have socks, which is actually doing quite well. So very decent contributor to the revenue of the [indiscernible]. We also have some other accessories like caps and stuff. But apparel is a big category, which we would need a little bit more time to venture into. It's not on the cards at the moment.

[Niraj Mansingka, analyst]

But is it -- is that ask for some threshold of some EBOs would like to look at that, is the rate we are seeking or?

[Nikhil Aggarwal, executive]

Right, yes. It would make more sense after we have a couple of hundred stores.

[Operator]

[Operator Instructions] As there are no further questions from the participants, on behalf of Campus Activewear Limited, we conclude this conference. Thank you all for joining us. In case of any further queries, please reach out to Campus Activewear Investor Relations team at [e-mail]. You may now disconnect your lines.