Key Financial Performance

Revenue Growth: Second consecutive quarter of 5%+ value growth, volume-backed.

Reported PBT: Showed decline of 94% due to exceptional items, but underlying PBT growth was 11% after adjusting for:

  • Exceptional item towards closure of manufacturing facility
  • FX impact on licensing agreement liability (INR 220 million non-cash impact due to Ind AS translation at closing exchange rate)
  • Lower gains on lease closures (INR 36 million vs INR 84 million in previous year, INR 48 million non-cash delta)
  • One-off exceptional reversal in Q4 FY25 (INR 60 million)

Cash Flow: Cash flow from operations grew 18%.

Employee Costs: Reduced by 10% structurally due to plant closure benefits.

Operational Highlights

Store Network: Crossed 2,000 Exclusive Brand Outlet (EBO) network milestone.

Zero-Based Merchandising (ZBM): Expanded to 700 stores as of May 2026, contributing 70% of COCO store sales. Target to reach 75-80% of network by current quarter end. ZBM stores showing mid-single digit delta growth better than rest of network.

Channel Performance:

  • Retail: Volume-led DOS growth
  • Franchise: Significant double-digit growth, now at 700+ stores, target to reach nearly 1,000 stores in next 12 months
  • Multi-brand distribution: Expanded to 1,670 towns, showing improved momentum
  • E-commerce: Fastest-growing channel at 81% YoY growth, contributing 12-13% of total business
  • B2C business contributes 5-6% of total, within which bata.com contributes 14%
  • 700+ stores fulfilling online orders through omnichannel network

Inventory Management: Inventory reduced 28% over 2 years consecutively YoY and 13% down over last year, despite:

  • Customer availability improved by 1,000 basis points
  • 30% reduction in complexity
  • Fresher stock, better availability across sizes, improved turnover

Product Performance:

  • Premium portfolio (Hush Puppies and Power) outpacing overall growth
  • Full price sales driving growth with commensurately lower markdowns
  • Hush Puppies contribution at 18-20% of turnover, fastest-growing brand

Brand & Marketing:

  • Marketing investments continued at elevated levels
  • Brand consideration improved to 66 (highest)
  • Strong response to Ballerina Campaign

Strategic Initiatives

Growth Vectors: Focus on three key pivots:

1. Product enhancement with investments in technology, comfort, and style

2. Expansion through franchise route (target 1,000 stores) and SIS expansion

3. Digital commerce expansion leveraging omnichannel network

Sneaker Proposition: Work in progress to strengthen relevance among younger consumers, with specific focus on sneaker world overlap.

Cost and Inflation Impact

Raw Material Inflation: Currently at 5-6% blended across materials (EVA, polyurethane, leather), considered dynamic situation. Company monitoring and may implement judicious price elasticity.

Minimum Wage Hikes: Impact from state wage hikes (Haryana, UP, Karnataka) considered structural and perennial. Some insulation as company already paying above minimum wage in many places.

Financial Metrics Clarification

Gross Margin: Not reflecting full price sales improvement due to:

  • Channel mix dilution (franchise being accretive at EBIT level but optically dilutive at gross margin level)
  • One-off provision reversal in Q4 FY25 affecting base comparison

Trade Receivables: Increased 65% YoY due to:

  • Expansion of accounts across channels (wholesale, franchise, e-commerce B2B)
  • Faster growth in credit-based channels
  • No deterioration in days outstanding or quality, minimal provision for doubtful debts

Franchise Model: Outright sales arrangement, Bata does not pay lease rent on franchise stores.

Consumer and Market Trends

Demand Trends: Momentum accelerated within Q4 (March better than January), continuing positive consumer sentiment.

Price Segments: Less than INR 1,000 segment stabilized after 3-4 years of decline, now contributing 35-40% of turnover and growing in line with overall 5% growth.

Premiumization Strategy: Conscious focus on bringing better value through product reimagining, with only 10% of investment work manifested to consumers so far.

Internal Metrics Tracked

  • Google and NPS ratings
  • Brand consideration
  • Zero-based merchandising performance
  • Online repeat consumer sales (doubled last quarter)