Wakefit starts FY27 with profitability despite cost pressures

Wakefit, the omni-channel home and sleep solutions brand, began FY27 with higher revenue and improved profitability, supported by strong growth in its own sales channels, rapid retail expansion and better gross margins, even as volatile raw material costs remained a challenge.

Revenue from operations for the June quarter rose 16.6% year-on-year to Rs 404.9 crore. Profit after tax increased 19.2% to Rs 23.4 crore, although reported earnings were reduced by a Rs 7.3 crore deferred tax charge linked to the partial unwinding of deferred tax assets recognised in the previous quarter.

Reported EBITDA, a measure of operating profitability before interest, tax, depreciation and amortisation, rose 25.2% to Rs 56.4 crore, with the margin improving to 13.9% from 13%. Operating EBITDA, which excludes lease accounting adjustments, ESOP costs and one-off or non-operating items, grew 49.7% to Rs 36.8 crore.

Gross profit climbed to Rs 231.1 crore with the margin expanding to 57.1% from 55.8%, aided by price increases introduced after supply disruptions pushed up Polyol and TDI prices, two key chemicals used in mattress manufacturing.

Mattresses remained Wakefit’s largest business, contributing 65.9% of sales, followed by furniture at 27.8% and furnishings at 6.3%.

Own channels accounted for 72.3% of revenue and grew 20.5% year-on-year, while external channels grew 7.6%. Repeat customers contributed 36.7% of revenue during the quarter and the mattress business grew 27.3% year-on-year, reflecting continued strength in the company’s core category.

The company added 27 company-owned stores during the quarter, taking the total to 165, while its multi-brand outlet network expanded to 2,250 stores across 701 cities. Wakefit said it remains on track to add nearly 80 company-owned stores during FY27, with planned capital expenditure of about Rs 100 crore to Rs 120 crore, around 80% of which is earmarked for retail expansion.

The company said price increases introduced during the quarter were aimed at cushioning the impact of higher input and supply-chain costs, even as it expects the full effect of raw material inflation to be felt during the first half of FY27.

“The quarter was marked by significant volatility in raw material prices following the Middle East situation. We responded through calibrated pricing actions to mitigate the impact of higher input costs while continuing to execute on our strategic priorities,” Executive Director Chaitanya Ramalingegowda said.