The Souled Store approaches Rs 150 Cr revenue in FY22

Lifestyle brand The Souled Store recently claimed a revenue run rate of Rs 450 crore during their Series C funding round. While this number will be known when the company files FY23 and FY24 financials, the Xponentia Capital-backed firm has managed to approach the Rs 150 crore revenue mark in FY22.

The Souled Store’s operating scale grew 82.3% to Rs 145.1 crore in FY22 from Rs 79.59 crore in FY21, according to its annual financial statements with the Registrar of Companies (RoC).

The company claims to have partnered with over 150 franchisees and its product portfolio includes t-shirts, mobile covers, badges, boxers, notebooks, mugs, and umbrellas among others. The sale of these products constitutes 98.2% of the total operating revenue which spiked 83.4% to Rs 142.46 crore in FY22.

The Souled Store also offers a membership subscription which includes free delivery, early access and discounts. Income from this vertical increased 38.9% to Rs 2.64 crore in FY22.

On the expense side, the cost of procurement of materials formed 30.3% of the total expenditure which grew 98.5% to Rs 52.29 crore in FY22 from Rs 26.34 crore in FY21.

With the launch of various promotional campaigns with Hardik Pandya and Sara Ali Khan, The Souled Store’s advertisement and marketing cost soared 2.8X to Rs 47.49 crore in FY22.

Its employee benefits cost also surged 2.04X to Rs 19.01 crore while the firm added another Rs 9.05 crore and Rs 17.98 crore on transportation and job work charges which pushed its overall expenditure by 2.18X to Rs 172.56 crore.

Unlike FY21, the company slipped into the red and posted a loss of Rs 26.72 crore in FY22. The Souled Store posted a profit of Rs 51 lakhs in FY21.

Its ROCE and EBITDA margin worsened to -43.93% and -15.91% during FY22. On a unit level, the company spent Rs 1.19 to earn a single rupee.

While the firm slipping into losses is no surprise, one would have expected a better set of results from The Souled Store. Operating in categories that offer gross margins of 60 percent and above, the firm’s splurge on celebrity advertising has clearly had an impact on costs, and FY23 will give us a better sense if that has all been worth it.  The key for the category is going to be distribution, and how Souled Store can pull off something special there to make it all worth it. Because when it comes to differentiation in these product categories, it is truly a treadmill for firms, with new designs and looks coming in virtually every week.