A worker performs a quality control test on a mattress. (Photographer: David Paul Morris/Bloomberg)

Q4 Results: Lower Discretionary Spending Hits Sheela Foam’s Earnings

Sheela Foam Ltd., the makers of Sleepwell brand of mattresses, reported weaker-than-expected numbers for the quarter ended March amid lower discretionary spending by consumers.

“From the time demonetisation happened, things have changed dramatically...and the economy is struggling to catch up post that,” the company’s Managing Director Rahul Gautam told BloombergQuint.

Gautam, however, expects discretionary spending as well as liquidity in the Indian economy to improve after announcement of results to the Lok Sabha election.

Dented Growth

The technical foam market is going through a bad patch, Gautam said, adding that the segment’s performance would take at least two quarters to return to normalcy. “Eventually, consumption is decided by the users.”

The company is focusing on improving touch points for the business. Sheela Foam has 4,000 exclusive stores, Gautam said, adding that the company is working with them to increase footfalls and increase conversion within the stalls.

Q4 Earnings Highlights (YoY):

  • Revenue rose 1.3 percent to Rs 535 crore.
  • Net profit increased 17.7 percent to Rs 37.9 crore.
  • Ebitda improved 5.7 percent to Rs 55.5 crore.
  • Ebitda margin expands 40 basis points to 10.4 percent.

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