Kalyan Jewellers’ new strategy pays off as sales rise sharply in Q2

The Kalyan Jeweller’s new strategy of expanding and focusing on non-south markets seems to be paying off for the company, going by the strong growth reported during the second quarter. Besides looking at new regions, the jewellery group has sharpened its focus on e-commerce to target millennials.

“Kalyan has displayed its strategy of opening stores in non-South markets could improve studded ratio, serving millennials with online format, and meeting their aspirational demand by introducing new designs,” noted the broker.

Although the second quarter of the financial year was expected to show weak performance due to seasonal reasons, Kalyan Jewellers was able to buck the trend and report robust growth in revenue through its expansion strategy.

Despite a 15% year-on-year increase in gold price, Kalyan Jewellers reported higher footfalls and sales momentum during the quarter. This led to an increase of 13% in the same stores sales growth, as the company’s update. Even the domestic business has grown by 32% on the year, aided by the higher prices.

The management attributed this to strong operating momentum led by the resilience of the jewellery category.

On an overall basis, the company’s consolidated revenue has seen an year on year increase of 27%, which has raised the hopes of the company for the second half of the financial year.

“..we believe, the company [is set] to deliver high double-digit same store sales growth in Q2”, said the report by Centrum.

The Middle East region showed a moderate 4% increase in revenue, contributing to 14% of the total sales during the Eid holidays. However, the online jewellery format, Candere, likely saw a 15% decline in revenue from the region.

The non-south markets have shown higher growth in revenue, especially due to new store openings and introduction of Franchise Owned Company Operated (FOCO) stores.

The management expects to add further 26 showrooms in the next 40 days to take the total number of showrooms to 65 in FY24.

The jewellery chain added 13 new stores in the non-South markets, taking the store count to 172 in India.

Including the stores in the Middle East, the total store count for the jewellery group stands at 209.

Although gold price hikes or a decline in demand could pose serious threats, Kalyan Jewellers expects sales momentum to continue through the coming months, backed by upcoming festivals and wedding season.