The Souled Store nears Rs 500 Cr revenue in FY25; profits decline 38%

After recording over 50% year on year growth in FY24, direct to consumer pop culture brand The Souled Store maintained its growth pace in FY25 and posted a 37% rise in operating revenue. However, profitability slipped marginally during the year as costs increased.

The Souled Store’s revenue from operations grew to Rs 492 crore in FY25 from Rs 360 crore in FY24, according to its annual financial statements sourced from the Registrar of Companies RoC.

Founded in 2014, The Souled Store designs, manufactures, and sells pop culture inspired apparel, drawing from themes across superheroes, movies, and television shows. Over the years, the company has expanded its product portfolio to include footwear, books, mobile covers, notebooks, mugs, and other lifestyle merchandise, sold through both online and offline channels.

Income from the sale of products across physical stores and online platforms accounted for 98.5% of the company’s operating revenue and rose 36.8% to Rs 485 crore in FY25. The remaining operating income was derived from membership fees.

On the cost side, procurement remained the largest expense for the brand and accounted for a significant portion of total expenditure. With the company scaling its operations, procurement costs increased 40.8% year on year to Rs 210 crore in FY25. Employee benefit expenses and marketing spends stood at Rs 54 crore and Rs 57 crore respectively during the year.

Marketplace commissions, rent, transportation, and other overheads further pushed total expenditure up by 36% to Rs 487 crore in FY25 compared to Rs 358 crore in FY24.

Despite posting healthy top line growth, rising costs particularly higher employee benefits and marketing spends impacted profitability. As a result, profit declined by 37.6% to Rs 11 crore in FY25 from Rs 17.67 crore in FY24.

From a margin perspective, The Souled Store reported positive ROCE and EBITDA margins of 7% and 9.7% respectively. On a unit economics basis, the company spent Rs 0.99 to earn every rupee of operating revenue during FY25.

The Souled Store has raised nearly $30 million in funding to date. This includes a $16 million round led by Xponentia Capital in 2023 and a $10 million round led by Elevation Capital in 2021. According to startup data intelligence platform TheKredible, Elevation Capital remains the company’s largest external stakeholder followed by Xponentia Capital.

Within the wider competitive set, The Souled Store faces competition from brands like Rare Rabbit, which posted Rs 636 crore in revenue with a Rs 76 crore profit in FY24 and has not yet filed for FY25. Bewakoof reported revenue of Rs 173 crore in FY25, while Virat Kohli-backed Wrogn recorded a 9% year on year decline in revenue to Rs 223 crore in FY25.

While an interesting space offering margins where offerings click with the target base, the Souled Store and peers do face a unique problem. The drop in friction in the manufacturing and distribution chain, an outcome of the efficiencies that have crept in over the past few years, means competition can come from pretty much anywhere now. From Instagram influencers to pop up stores that can deliver products at the same or even lower cost. That places a special premium on getting the ideas right, sourcing right, and building the buzz to sustain sales enough to pay for the duds. In short, much like the movie business, if we have to stretch the analogy. Like movie sequels, lineups that can deliver over an extended period will decide the winners and growth for the category, besides the hope that overall growth will be good enough to keep customers in the  mood for such indulgent and impulse buys. Innovations like collectibles will matter at some stage, as will the ability to strike and protect interesting licensing deals.