Financial Performance Q2 FY2027

Revenue: INR 474 crore, down 3.5% year-on-year. The decline was attributed to the timing shift of Big Billion Days (BBD) sales from September (Q2) last year to October (Q3) this year.

Gross Profit: Grew 15.7% year-on-year.

Gross Margin: Expanded to 45.4%.

EBITDA: INR 89 crore, up 8.2% year-on-year.

EBITDA Margin: 18.9%, expanding by 204 basis points.

PAT: INR 36 crore, up 27.3% year-on-year.

Financial Performance H1 FY2027

Revenue: INR 955 crore, described as broadly stable year-on-year.

EBITDA: Increased 12.4% year-on-year.

PAT: Grew 22.7% year-on-year.

Operational and Business Highlights

Channel Mix: Online sales accounted for 31% of Q2 revenue, returning to a more historical and balanced mix compared to 22% in Q1. Retail constituted the remaining 70%.

Direct Website Sales: Sales through RedTape.com reached INR 31.9 crore in Q2, a significant increase from INR 3.9 crore in the corresponding quarter last year.

Retail Network Expansion: Added 49 Exclusive Brand Outlets (EBOs) and 5 shop-in-shops during Q2. The total network now stands at 756 stores across 369 cities. The expansion is largely franchisee-driven (FOFO), keeping the model capital-light.

Retail Store Models: The company operates three models:

1. COCO (Company-Owned-Company-Operated): Company manages the store and capex.

2. FOFO (Franchisee-Owned-Franchisee-Operated): Franchisee invests in capex, provides a security deposit, and is given stock. The company handles billing, software, and GST registration. Franchisees receive a fixed margin of 25% and bear all other expenses (rent, staff, etc.). Stock risk remains with the company.

3. Third-party Operated Company Stores: A few stores in specific regions (e.g., Kerala, Assam) are company-owned but operationally managed by a third party.

Category Revenue Mix: Footwear remains the core, accounting for 63% of Q2 revenue. The company continues to build its apparel and accessories business.

Product Design & Drops: The company has an in-house team of 18-19 designers. New product introductions occur monthly for footwear. For apparel, there are approximately two drops in summer and one drop in winter, totaling roughly 3.5 drops per year.

Management Commentary & Outlook

Management cited the 19-day shift of Diwali into November as extending the lean period and shortening the peak season, impacting Q2 sales. This is described as a cyclical event occurring every third year.

The company emphasized discipline on pricing, discounting, and channel management to protect profitability. Retail Same-Store-Sales-Growth (SSSG) was reported in high single digits, contributing to margin improvement as fixed costs were leveraged.

Management expressed optimism for Q3 FY2027, noting that consumers returned to shopping in October. They expect a "bumper Q3" driven by the festive and winter seasons, which include the shifted Big Billion Days event. The focus for H2 remains on strengthening the brand, expanding reach, improving productivity, and maintaining margin discipline.

Participants

Management: Mr. Arvind Verma (Director), Mr. Vivek Agnihotri (Chief Financial Officer).

Moderator: Ms. Kasturi Sharma (E&Y).

Analysts: Dheeraj Thakur (Elara Capital), Devanshu Bansal (Emkay Global Financial Services Ltd.).