Decathlon India posts Rs 4,008 Cr revenue and Rs 197 Cr PAT in FY24

French sports retailer Decathlon has made a turnaround in FY24, reporting a profit of Rs 197 crore, a sharp recovery from a Rs 18 crore loss in FY23. However, its revenue growth remained flat, registering a 2.2% year-on-year increase for the fiscal year ending March 2024.

While we will analyze Decathlon’s expense pattern that contributed to its bumper profit in the second half of the story, for now, let’s focus on its revenue streams during the last fiscal year.

Decathlon India’s revenue from operations grew to Rs 4,008 crore in FY24 from Rs 3,920 crore in FY23, its annual standalone financial statements sourced from the Registrar of Companies (RoC) show.

Decathlon India operates on a direct-to-consumer model, managing the design, manufacturing, and sale of its sports gear through large retail stores and an e-commerce platform. Its in-house brands cater to various sports, including cycling, hiking, football, swimming, and running, offering interactive in-store experiences to engage customers. The company currently operates 90 stores across India.

The sale of sports products was the sole source of revenue for Decathlon India. It also added Rs 58 crore from interest on investments and other non-operating income which tallied its overall to Rs 4,066 crore in FY24.

For the sports retail firm, the cost of procurement was naturally the latest cost center forming 64.4% of the overall expenditure. This cost was reduced by 4.3% to Rs 2,448 crore in FY24, compared to Rs 2,559 crore in FY23. Decathlon India spent Rs 327 crore on employee benefits.

Its controlled spending on power, rent, repairs, fuel, advertising, information technology, freight, franchisee fees, and legal/professional expenses led to an overall cost reduction of 4.5% to Rs 3,797 crore in FY24 from Rs 3,975 crore in FY23.

Despite modest revenue growth, Decathlon India’s cost-control measures enabled it to post a net profit of Rs 197 crore in FY24, a sharp recovery from a Rs 18.6 crore loss in FY23. On a unit level, the company spent Re 0.95 to earn a rupee, with improved ROCE at 17.79% and EBITDA at 14.49%. 

By the end of the last fiscal year (FY24), its total current assets stood at Rs 1,247 crore, including Rs 325 crore in cash and bank balances.

Last year, Decathlon India CEO Sankar Chatterjee mentioned that the company plans to double its revenue to Rs 8,000 crore within the next 3 to 5 years.

Decathlon’s success has been well documented, and most of the praise has been well earned. The firm didn't just prove a market existed for a fitness focused supermarket of sorts, it also wrote the rules of the game in many ways in the category. Now, in its 16th year in India, the firm has been pushing to learn the roles when it comes to e-commerce and more. It has even done the unthinkable and used third party channels to reach new customers. Even as it remains a formidable player in the category, protecting market share is an increasingly tough game for the master of sports and fitness. That is because it is close to, or has run up against a problem now common across categories. 

A consumer market that is simply not deep enough to keep growth going, with the law of diminishing returns kicking in much earlier than expected. The firm has been careful in terms of the segments it enters so far, sticking to sports and fitness hardware and  products. It might be time soon to spring yet another surprise for the French multinational. In doing so, it might just learn a lesson or two from the Indian market, after over a decade of introducing the market to an all new way of selling and building a solid cohort of loyal users.