Key Quantitative Figures and Performance Highlights

Q1 FY27 Financial Performance:

  • Standalone business growth: 14%
  • EBITDA growth: 9%
  • PAT growth: 13%
  • Gross margins: ~60% (matching highest of past 5 quarters)
  • EBITDA margins: 30%
  • PAT margins: 13%

Store Operations:

  • New stores opened: 13
  • Stores closed: 4
  • Net addition: 9 stores
  • Revenue per square foot: Consistent year-on-year despite new store additions

E-commerce Performance:

  • Total e-commerce growth: 9%
  • D2C website growth: ~60%
  • Marketplace omni business growth: ~60%
  • SOR 3P business: Growth pulled down overall e-com numbers due to lumpy seasonal orders and conscious reduction of lower price points/discounts

Operational and Strategic Updates

Quarterly Sales Pattern:

April and May were soft due to: 1) Overhang of U.S.-Iran conflict affecting consumer sentiment, and 2) Shift in marriage dates linked to Adhik Maas (0 wedding dates in April-May vs. rebound in June). June recovered extremely well with mid-teen double-digit growth.

Brand Performance:

  • Clarks: Very good sales performance, particularly women's collection launched in late calendar 2025
  • Marketing campaigns in Metro and Mochi performed well
  • Crocs business affected by absence of early monsoons in June but performed to plan as monsoons arrived

Distribution Center:

New 250,000 square feet distribution center launched in March 2026 is now fully operational with all integrations complete.

PAT Margin Impact Factors:

1. Increased investment in brand-building marketing

2. Modest increase in occupancy costs driven by new format additions and new stores

3. Lower treasury income compared to high-performing previous year

4. Investment in talent and technology for future growth

Format and Brand Specific Updates

FILA:

  • Opened 3 new EBOs, closed 1 old store
  • Behind schedule but on track to get back on growth path
  • Work in progress to revive a brand that had been on discount for 18-24 months
  • Acceleration expected towards end of FY27

MetroActiv:

  • Opened 3 stores - couple performed well, one underperformed
  • Impacted by BIS issues similar to Foot Locker
  • Testing different expansion strategy before full rollout

Walkway:

  • Base of ~70 stores, opened over 30 stores (50% growth rate)
  • Some stores underperforming but reasons identified
  • Committed to Walkway as growth driver catering to lower base of pyramid
  • Target ROCE: 25-30% over medium to long term (vs. treasury returns of 7-8%)

Clarks:

  • Women's collection launched in 200 doors, expanded to 350 doors, target 700 doors by year-end
  • Men's collection launched in ~100 doors, performing well
  • Production moved to India with dedicated supply chain
  • EBO openings to begin Q3 FY27
  • Runway: 100-150 stores in foreseeable future
  • Not cannibalistic to existing brands

Market Conditions and Consumer Sentiment

Management noted improving market conditions and consumer sentiment across:

  • Multiple price points
  • Multiple geographies (metro cities and Tier 3 cities)
  • Multiple banners (demand across all brands)
  • Right demand for right occasions

Guidance and Outlook

Full Year FY27 Guidance:

  • PAT growth: 15% (give or take a couple of points)
  • Gross margins: Maintain 55-57% range
  • EBITDA margins: ~30%
  • PAT margins: 13-15%

Quarterly Expectations:

  • Q2 may see some shift into Q3 due to later Diwali (shopping season spills into Q3 instead of Q2)
  • Confident of making up any Q2 impact in Q3

E-commerce Strategy

  • Conscious effort to reduce discounts while not losing new customers
  • Expect 20-30% growth as healthy sustainable rate (vs. historical 45% 5-year CAGR)
  • D2C and omni business expected to produce double-digit gains for the year

Sports Division Strategy

Growth Avenues:

1. Through ~700 Metro Mochi stores contributing 10-15% of sales from sports

2. FILA EBO, Foot Locker, and MetroActiv targeting 300-500 stores in 5-7 years

Organization Structure:

Four verticals with dedicated leadership:

1. Core business (Metro and Mochi)

2. Value vertical (Walkway and Shoe Depot)

3. Strategic brands (Crocs, Clarks, FitFlops)

4. Sports division

Input Costs and Pricing

  • Input cost inflation: 3-5% normal inflationary pricing
  • Mitigated through forward buying and price locking 4-5 months out
  • No unusual price hikes in last quarter beyond normal inflationary adjustments
  • No significant impact from oil price fluctuations yet

BIS (Bureau of Indian Standards) Issues

  • Continued challenges with inconsistent implementation
  • Factories getting approved but renewals slowed/stopped with little notice
  • Particularly affects high-end athletic products
  • Not out of the woods yet for athletic category
  • ASEAN countries not getting BIS renewals having significant impact

Capital Allocation Parameters

Management evaluates new opportunities based on:

1. Additive vs. dilutionary to existing business (cannibalization risk)

2. Capital allocation relative to other opportunities

3. Consumer unmet needs and demand

4. Financial discipline

PAT Growth Drivers and Normalization Expectations

Factors affecting PAT margin (~200 bps impact):

  • ~100 bps+ from increased marketing spend (top of funnel investment)
  • Lower treasury income (teens last year vs. current market rates)
  • Dilution from new stores (140 opened, 20 closed last year)
  • ~40 of 140 new stores were Walkway format with significantly lower PAT
  • Investment in talent

Normalization expected through:

  • Treasury normalization
  • Marketing spend normalization (lapping last year's investments)
  • Talent investments paying off
  • New store performance improvement

Premiumization Trends

  • ₹3,000+ segment contributes ~57% of sales (up from 40s few years ago)
  • Further premiumization opportunity in Metro Mochi, Foot Locker, FILA, Clarks, FitFlop
  • Closely tracking volume growth to ensure no market share loss
  • Quarterly normalization expected (Q1/Q3 higher, Q2/Q4 closer to long-term average)

Acquisition Strategy

  • Not currently active priority (reference was from original IPO deck)
  • Focused on growing existing portfolio of 9 banners
  • Would consider acquisitions only if consumer wants something not currently served

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