The Souled Store’s Impressive Growth in FY24

The Souled Store, a direct-to-consumer pop culture brand, experienced a significant growth of 54.5% year-on-year for the fiscal year ending March 2024. Backed by Xponentia Capital, the company also turned profitable during this timeframe. Financial records submitted to the Registrar of Companies (RoC) indicate that The Souled Store’s operational revenue increased to Rs 360 crore in FY24, up from Rs 233 crore in FY23.

Overview of The Souled Store

Established in 2014, The Souled Store creates, manufactures, and markets apparel inspired by various pop culture elements, including superheroes, movies, and television series. Its diverse product range comprises footwear, books, mobile cases, notebooks, mugs, and much more.

Retail Operations and Revenue Generation

The company operates 18 stores throughout India, with 98.6% of its revenue derived from product sales both online and in-store, showing a 55% rise to Rs 355 crore in FY23. The remaining revenue stems from membership fees.

The Souled Store additionally accrued Rs 5 crore from interest on deposits and gains from current investments, summing up its total revenue to Rs 365 crore in FY24, compared to Rs 236 crore in FY23.

Expenditure and Profitability

For this D2C brand, the procurement cost constituted 42.2% of total expenditures. This cost rose by 68.5% to Rs 150 crore in FY24. Employee benefits and rental expenses also surged by 34.5% and 77.8% respectively in the preceding fiscal year.

Based in Mumbai, the firm invested Rs 68 crore on advertising in FY24. Legal, freight, job work charges, and other overheads collectively raised overall expenditures by 40.3% to Rs 355 crore in FY24 from Rs 253 crore in FY23.

The combination of over 50% year-on-year growth with controlled expenses enabled the firm to achieve a net profit of Rs 18 crore in FY24, as opposed to a loss of Rs 16.5 crore in FY23. The return on capital employed (ROCE) and EBITDA margins improved to a positive 6.38% and 5.21% respectively. From a unit perspective, the firm expended Rs 0.99 to generate one rupee of operating revenue. At the end of FY24, total current assets were reported at Rs 225 crore, which included cash and bank balances of Rs 44 crore.

Investment and Competition Landscape

The Souled Store has successfully raised nearly $30 million in total funding, which includes a $16 million investment led by Xponentia Capital in 2023 along with a $10 million round spearheaded by Elevation in 2021. As per various startup intelligence platforms, Elevation stands as the largest external investor, with Xponentia Capital following closely behind.

This pop culture brand faces competition from emerging fashion labels like Rare Rabbit, which reported Rs 636 crore in revenue with a Rs 76 crore profit in FY24; Bewakoof, which achieved revenue of Rs 162 crore; and WROGN, backed by Virat Kohli, which faced a revenue decline of 29% to Rs 244 crore in FY24.

Challenges and Opportunities Ahead

The success of brands such as Rare Rabbit and The Souled Store highlights the segment’s strong appeal, with even major retailers like Zudio enjoying substantial valuations in public marketplaces via Trent. A critical challenge for The Souled Store will be to maintain its identity as a D2C brand while avoiding excessive diversification across channels. Keeping advertising costs under 20% of the revenue is considered acceptable in this scenario.

Expanding into multiple channels can complicate operations without delivering substantial returns. It may also dilute the brand’s exclusivity, which is crucial for its target demographic. The youthful consumer audience tends to perceive itself as somewhat non-conformist, and broadening availability has seldom resonated with them positively. Furthermore, consumers with a passion for comic books have historically had limited options in India, especially with numerous older comic characters recently becoming available due to copyright expirations or lower licensing fees. Therefore, opportunities exist for brands like The Souled Store to engage with the last generation of baby boomers through reimagined characters such as Tintin, Asterix, and Phantom.