The Souled Store, a direct-to-consumer pop culture brand, experienced impressive growth, increasing 54.5% year on year in the fiscal year ending March 2024. Xponentia Capital-backed company also achieved profitability during this time.
The Souled Store's revenue from operations increased to Rs 360 crore in FY24 from Rs 233 crore in FY23, according to its annual financial statements filed with the Registrar of Companies (ROC). The Souled Store, founded in 2014, designs, manufactures, and sells pop culture-inspired apparel with themes from superheroes, movies, and television shows. Its product line includes shoes, books, mobile covers, notebooks, mugs, and more.
According to the company's website, it operates 18 stores throughout India. Revenue from product sales in stores and online accounted for 98.6% of total revenue, up 55% to Rs355 crore in FY23. Membership fees account for the remaining operating income. The Souled Store also added Rs 5 crore in interest on deposits and gains on current investments, bringing its total revenue to Rs 365 crore in FY24, up from Rs 236 crore in FY23.
For the D2C brand, procurement costs accounted for 42.2% of total expenditure. To scale, this cost increased by 68.5% to Rs150 crore in FY24. Its employee benefits and rent increased by 34.5% and 77.8%, respectively, in the previous fiscal year. The Mumbai-based company spent Rs 68 crore on advertising in FY24. Legal, freight, job work charges, and other overheads increased total expenditure by 40.3% to Rs 355 crore in FY24 from Rs 253 crore in FY23.
Over 50% YoY growth, combined with controlled expenditure, resulted in a net profit of Rs 18 crore in FY24, up from a loss of Rs 16.5 crore the previous year. Its ROCE and EBITDA margins increased to positive 6.38% and 5.21%, respectively. On a unit basis, it spent Rs 0.99 to generate one rupee of operating revenue. At the end of FY24, the company's total current assets were Rs 225 crore, which included Rs 44 crore in cash and bank balances.
The Souled Store has raised nearly $30 million in total, including a $16 million round led by Xponentia Capital in 2023 and a $10 million round led by Elevation in 2021. According to TheKredible, a startup data intelligence platform, Elevation is the largest external stakeholder, followed by Xponentia Capital.
The Souled Store competes with emerging fashion brands such as Rare Rabbit, which reported Rs 636 crore in revenue and a Rs 76 crore profit in FY24; Bewakoof, which operates on a scale of Rs 162 crore; and Virat Kohli-backed WROGN, whose revenue fell 29% to Rs 244 crore in FY24.
The success of brands such as Rare Rabbit and Souled Store demonstrates why the segment receives so much attention, with even large retailers like Zudio receiving relatively high valuations in public markets via Trent. Of course, The Souled Store will face the challenge of maintaining its identity as a direct-to-consumer brand rather than expanding into other channels. Advertising costs of less than 20% of topline are acceptable in that context.
Spreading out across channels not only adds complexity to operations without providing worthwhile returns, but it can also remove the element of 'exclusivity' from the brand, which is detrimental. The target audience is young and considers itself to be somewhat non-conformist, and expanding to become more 'available' has rarely worked for them. Furthermore, until now, comic book fans in India had very few options, with a world of older comic characters either losing copyright protection or becoming available for low licensing fees. That means brands like The Souled Store may be able to target the fag end of the boomer demographic with renditions of characters such as Tintin, Asterix, and even Phantom, among others.
