Relaxo Footwears Ltd plans to increase its capital expenditure to ₹180-200 crore for FY28, up from around ₹130 crore spent last year, as the footwear maker accelerates product premiumisation, expands its exclusive store network and strengthens its manufacturing capabilities.
Speaking during the company’s earnings call, management said the planned investment will be directed towards both existing and new capacities, although a significant portion will be spent on moulds, facility upgrades and infrastructure rather than large-scale capacity expansion.
FY28 capex to rise sharply
The company said FY28 capital expenditure is expected to be in the range of ₹180 crore to ₹200 crore, representing a substantial increase over the approximately ₹130 crore invested in the previous year.
Management clarified that the spending will largely be allocated towards mould development, machinery upgrades, maintenance-related investments and the construction of an administrative office.
“There is no big capacity expansion, but a good amount will be spent on the molds,” management said.
Premiumisation remains a key growth lever
Relaxo said it continues to widen its premium playbook, particularly through sneakers and athleisure offerings, while maintaining its strong presence in the mass-market segment.
The company is expanding its product portfolio into higher price points under brands such as Sparx. While the brand traditionally operated in the ₹999-₹1,700 range, Relaxo is now looking to introduce more products priced around ₹2,500.
Management described premiumisation as a continuous process aimed at improving product mix and capturing higher-value consumer segments.
Women and kids emerge as focus categories
Currently, men’s footwear contributes around 70% of Relaxo’s business, while women account for 25% and kids contribute about 5%.
The company said future growth efforts will focus heavily on increasing its presence in the women’s and children’s footwear segments, where management sees significant headroom for expansion.
Price hikes implemented amid cost pressures
Relaxo recently implemented price increases of 15% to 18%, citing a sharp rise in raw material costs and a significant increase in labour expenses.
Management noted that wages in Haryana increased by more than 30%, creating structural cost pressure for manufacturers.
While raw material costs have begun to soften, the company does not expect wage-related expenses to decline, making the recent price hikes necessary to protect profitability.
Targets margin improvement after FY27 recovery
The company maintained an operating margin of around 13.8% for the full year, with performance improving significantly during the fourth quarter.
While management does not expect the strong Q4 margin performance to be repeated every quarter, it remains confident of delivering an operating margin that exceeds last year’s level.
The company is targeting an improvement of over 100 basis points compared with the FY27 operating margin of 13.8%.
Management said improving consumer sentiment, GST-related benefits and a healthy balance sheet are supporting confidence in the near-term outlook despite geopolitical uncertainties.
100 new exclusive stores planned
As part of its retail expansion strategy, Relaxo plans to open around 100 exclusive brand outlets (EBOs) under a revamped store format designed to improve customer experience and drive higher footfalls.
The company currently operates more than 400 EBOs and has already completed a pilot rollout of the redesigned format.
Management expects 30-40% of the planned stores to become operational during the first half of the year, with most of the expansion targeted for completion by December.
E-commerce and volume growth to support expansion
Relaxo is also investing in its e-commerce channel, which management expects to become a significant growth driver going forward.
The company is targeting annual volume growth of 4-5% over the next two years, supported by product innovation, channel expansion and premiumisation initiatives.
Management said while market conditions remain uncertain, it remains confident that both growth and profitability will improve from current levels.