Thank you, Muskan. Good afternoon, all.

On behalf of Avendus Spark, I welcome you all to the 3Q FY26 earnings call of Metro Brands. I'll now hand over the call to Mr.

Nissan for the opening remarks, post which we will open the floor for Q&A. Over to you, Nissan.

Thanks.

Thanks, Tejas. Good afternoon.

Thank you all for joining and welcome to our Q3 FY26 earnings call. As you're aware, we posted a 15% growth in our standalone business and our consolidated business.

It was good to have a quarter without any unusual events or any offset from the year before. The key Diwali and wedding season performed well, and we're pleased to see that the traffic stayed steady both in our online and offline channels.

Despite a slightly earlier festive Puja season that fell into Q2, I'm pleased to see that sales did come through with a strong mid-teen percentage growth, and we crossed ₹800 crore mark for the first time on a consolidated basis. The GST benefits continue to help specific parts of our business, and our ongoing focus on premium products kept our sales of over ₹3,000 at a 55% share of business.

I'm also pleased to see the consistent growth from our multiple e-comm channels, with our digital commerce business as it grew [24%?] and now reached a 12% share of our total revenues.

On the EBITDA side, we grew by 16% for the standalone and 18% for the consolidated business, and we delivered a 33% EBITDA for both. On the PAT front, Ind AS accounting and a ₹3.3 crore accrual for the new proposed labor code from November 2025 dampened our PAT, which was offset by a one-time tax charge in the same quarter of the previous year.

Nonetheless, our PAT grew by 33%, and we achieved 16% for the quarter for both the standalone and consolidated business. We opened 35 new stores this quarter and closed 11, bringing our total new stores this fiscal year to over 100.

Additionally, we are excited to announce the launch of three new Metro Active stores. These stores are designed for athletic, performance seekers, featuring brands like Nike, New Balance, Asics, and Fila, along with workout apparel to provide a complete experience.

We'll continue to invest in and refine this concept over the coming quarters. Meanwhile, our Foot Locker stores will continue to cater to lifestyle sneaker fans, which is a different customer segment than the performance seeker.

As I mentioned on our previous call, our new Clarks partnership is off to a great start, and we plan on opening Clarks stores around Q3 of this coming fiscal year. In closing, I'm pleased to see our business improving steadily and growing with double-digit increases, and more importantly, our key metrics of EBITDA and PAT staying consistent to our guidance while we continue to invest in marketing initiatives and a significant amount in our new stores.

Our differentiated banners, each with a runway for growth, positions us positions us well to cater to the complete footwear wardrobe of the Indian consumer. With that, I would learn I would like to turn the call back to the operator and open it up for the Q&A session.

Thank you for the opportunity and congratulations on a strong set of numbers. Nissan, we had been seeing some slowdown across most of the discretionary consumption in Q3, also because of the early Pujo and early festive that has happened in Q2, but you completely are defying that trend.

What is really helping you in this, and how confident are you of sustaining these trends going ahead?

I think the evidence is in the numbers that we've now had our third quarter of double-digit growth. We see business trajectory headed the right way.

There is a lot of initiatives that we've put in place in almost all of our banners to see how we can continue that growth trend. We don't see anything significantly one way or the other that could dampen this or a massive tailwind coming our way necessarily either.

As always, we just see consistent growth happening, and we hope to see these numbers continue. We see no reason for these numbers not to stay in the range that we've always guided to.

Nissan, one of the issues in the past for us had been the store openings, but this time around the store openings have also really picked up. Any guidance or anything that you can guide us towards the store openings?

Can this be the new normal in terms of store openings? In addition, with the new formats also coming in, would there be any revision in the guidance in terms of the store opening that you used to give in the past?

I would like to point out that we've invested in opening up six Foot Locker stores and three Metro Active stores. That's our commitment to stay relevant both as a footwear retailer to the Indian consumer, right?

It's not like we're hesitant at all to invest in new stores. As all new store concepts have a gestation period for it to get up and running, and we're happy to do that, and we see that as a necessity for growth.

That's number one. Number two, we will continue to open as many stores as makes sense.

Fortunately, Gaurav, we're not capital starved in any way to do that. We want to make sure that we open stores for profitability, we open stores for growth, we open stores to capitalize on market and market share, and we're not going to be driven by a fixated number.

I think our results speak for itself that, as and when time comes, we do accelerate growth when we see the right opportunity.

Sure. Just one last question for Kaushal in terms of the accounting bit.

Kaushal, this time around, the absolute depreciation, if you look at it, has hardly increased on a Q-o-Q basis. The other income has also dipped this time around, and also the finance cost.

Anything to read on these spends, especially the other income because it has dipped quite sharply in Q3?

Gaurav, you are right in terms of other income, but this is purely the effect of payout of special dividend that happened in Q4 of last financial year. In the first half, although our treasury was lower by ₹450 crores, but we saw benefits of fall in interest rates that happened in H1 of this financial year.

If you see for entire 9 months in absolute amount, our treasury income is still higher than last year though at a much lower investable surplus base. This quarter vis-a-vis Q3 of last year broadly return in terms of percentage has been same.

The delta is purely on account of lower treasury funds post payout of special dividend.

That of the finance cost and the depreciation, because there are multiple store openings that has also happened. Ideally, because this finance cost will also have an element of the Ind AS the finance cost, but still it has gone down.

Anything to read there?

No, if you're comparing it with last quarter, if you remember we had mentioned that in that particular quarter, we opened four Foot Locker stores and hence absolute hit on account of Ind AS was higher in Q2 as compared to, say Q1 or say when you compare this 9 months as a whole. If you see 9 months versus 9 months, our notional costs on account of Ind AS is almost close to about ₹39-40 crores versus ₹28 crores, ₹28-29 crores last year.

Got it. Thanks, that's helpful.

That's all from me.

Hi, team. Thanks for the opportunity.

Nissan, I wanted to better understand this growth improvement from 11% in Q2 to 15% in Q3. The main aspects, right?

In terms of revenue per square feet, we were flat in Q2. Are we flat in Q3?

Our omnichannel growth was about 30% odd in Q2. This time around it is 25%.

What exactly has driven this growth improvement? I guess within the core retail aspects, the performance is more or less in line with Q2.

In addition, we report these channel-wise revenue. That indicates that the DRM sales that we do plus some subsidiary sales, have near doubled on a combined basis.

Also if you could comment on the sustainability of growth in these segments.

All right, Devanshu, first things first, while you refer to a flat square-foot growth, it's disguised because we opened up 100 stores this year, right? New stores seldom come in at the same rate of sales as your base stores do.

So 10% of our chain is actually that was new, came in below. The fact that we are flat to last year is a sign that we're actually doing well in our existing doors to maintain and keep that propped up.

That's number one, right? Number two, we also have zero wedding dates in January this year, right?

We should have seen that impact in December and that should have affected our sales in December. While I'm not trying to single out a single month, it didn't have an impact to us not because it wasn't an impact, but it was because we were able to mitigate it through our performance of our regular products and what we're doing out there, right?

There are no extraordinary subsidiary sales, there are no sales that are hidden in there. These are all our stores performing, getting better at performing, both at an SSG level, both at a square-foot level, though you won't see that at the total numbers.

Overall performance has started to improve, and that's the bottom line to it.

Yeah. Devanshu, just wanted to clarify on the first point on sales per square feet, and this is for everyone.

Our formula is very simple. We are dividing total sales by total square feet which for the entire company at the end of the period.

Although for all the stores that we opened in current year, we might just have 4, 5 months of sales coming in in this financial year, but the denominator is full in entire square footage. We are not using average here.

No, Kaushal,

my question was growth pickup between Q2 and Q3, right? Obviously you have added stores.

That 100 stores on a LTM basis was true for Q2 also and that is true for Q3 also. In Q3 our growth was 11% and in Q3 in Q2 our growth was 11% and in Q3 our growth is 15%.

Ideally, when there is no pickup in revenue per square feet in both the quarters, and then in online channel, omnichannel also, we reported 30% growth in Q2 and this time around it is 25%. I just wanted the bridge as in between Q2 and Q3 what has led to this improvement?

You're anchoring what you're saying, Devanshu, on sales per square foot, right? That's the entire anchor that you're basing it on.

It's obvious that we are having comp store growth. We're having new store growth as well, but we're having comp store growth.

You cannot hinge it on per-square-foot sales when, as Kaushal mentioned, if I open the store at the very last day of the quarter, we're taking all your revenue, dividing it by that square footage, right, and our quarter revenue and dividing it by that quarter. It's always going to be a little bit muted if you open new stores.

I think your entire formula would be reversed if you just did it on a comparable store basis, which, as we don't disclose, but I think you should be able to infer that quite easily.

Sure, Nissan, I'll discuss this offline. The second question was on sports and athleisure space.

There is new player, Abhilash, who has deep funding, manufacturing capabilities, there are celebrity endorsements as well, and they have recently come up with a unique format like Sportsyard in Bangalore. While I agree that we play across the consumer needs for fashion, comfort, functional, etc., but our salience towards this particular category is currently lower.

How are we sort of working towards improving the internal agility so that our portfolio salience is also aligned to the evolving needs of the consumers?

I think the market size for athleisure is big today, both for performance and for fashion, and I think it's going to continue to grow. That's number one.

We're not talking about a static or a shrinking market. We're actually talking on the contrary, a growing market.

That's number one. Number two, what we are are retailers first and foremost, right?

If you notice the concept of Foot Locker and Metro Active, they're retail concepts. These concepts carry brands that are in that sports space to create that salience for themselves, and then we capitalize on it by giving them an avenue to sell and reach different parts of India, different consumers in India, right?

It's not necessarily for us to have that. Where it is of utmost necessity for us is in the Fila business, right?

We have to have that competency in the Fila business. We've invested heavily in design studios.

Have we been a little bit set back on Fila because of the BIS norm? Absolutely.

Do I believe that we've got all the right things in place to capitalize on that growth? Absolutely there, too.

You got to look at it holistically and as opposed to, I hope there's many players that come into this space because the space is huge, and the more players that come in, we actually increase the size of the market more than you realize, right? It is something that we're very good at, which is the retailing part of it, which all said and done, every brand comes to life only because it has an amazing retail presence, right?

I think it's not like we're missing the entire formula here. There are bits and pieces we don't have, specifically for our Fila business, that we're growing, that we've invested.

We have a design office in China, we have design teams here, we have marketing staff, we have agencies working on it. It is putting that ecosystem together.

No, really encouraging, Nissan. It's just that the BIS-related challenges are just getting extended quarter by quarter, so that reflection is still not happening.

That was the main concern here.

What is being extended quarter by quarter?

The BIS-related challenges.

Yeah. No, because we work seasons out, right?

In that business, you're not working on a next-day delivery program. We have to, quite simply put, buy componentry from around the world and assemble them in India, some of which there isn't the technical expertise to do so.

There are some obstacles to it, absolutely, more than just a BIS reason. It is a challenge, and we're okay with that because we're here for the long run with Fila.

Sure. Just couple of bookkeeping questions.

The store closures were a bit higher in Q3. Is this a one-off or are we making some strategic portfolio corrections and this closures can continue in the next few quarters as well?

Secondly, there must be some loss related to these write-offs. In which line item does this get recognized?

On first question on store closure, Devanshu, nothing much to read about. If you see overall store closures for 9 months, it's around 18.

On a base of almost 1,000 store, it is still sub 2%, and we don't expect our store closures to change significantly from here on. Broadly, every year it would be in that range of around 2% to 3%, which is baby clean up that we keep doing every year.

In terms of your second question on loss related to store closure, this will all go into other expense line item.

Is the amount significant, Kaushal? Can you call that out for this quarter, please?

No, it's not significant. It's not material.

Otherwise, I would have called it as I did for other expenses.

Sure. Last question from my end.

From a pre-Ind AS PAT margin that you have reported, the difference is 1.5% for 9 months, but for Q3 the difference is 1.1%. Going forward, what is the run rate to go ahead with?

Also placing a request, if you can consider sharing the detailed pre-Ind AS P&L, like most other retail companies do in the listed space.

On an ongoing basis, I think you know it should be around that 1.2%, 1.3%. YTD that percentage is higher because as you remember in Q2, we opened four Foot Locker stores.

Whenever we open this big-size stores where the rent-free periods are slightly higher because the stores are higher and it are bigger and it takes more time for you know in the fit-out of the store, that's why you get that higher hit. If you take Q2 exceptional hit on account of opening those four, five Foot Locker stores, broadly it should be in that range of around 1.2% to 1.3%.

Obviously, if we increase our store new store openings, it will move in line.

Sure. Kaushal, please consider that P&L request.

If you can provide a detailed P&L across line items, it would be very helpful to better analyze your performance.

Sure, we'll evaluate.

Hi, good evening. This is Rahul from Ikigai Asset.

Just two questions Nissan and Kaushal. Firstly, just on the top line, right?

Positive surprise on the growth side of it. Incremental color on SSGs or bill cuts, average order value would really help just to understand the volume and pricing bit.

It could just throw some more light in terms of how are the cohorts looking across India and across categories. That'll help.

That's question number one. Question two was on the inventory health.

Last quarter we were about ₹785 crores of inventory. If you could throw some light on how is that moving into December and how do you see that settling down over the course of the year?

Thirdly, just as a bookkeeping question, just wanted to know the exact square foot area you have used to calculate the revenue per square foot. Those were my three questions.

Thank you.

Sorry for this inconvenience. I think our line got dropped.

Rahul, on your first question on top line, on a medium to long term scale, we have always guided that our average CAGR should be around 15%. Broadly, if I have to give you a back-of-the-envelope calculation as to how we reach that, it's basically broken into three parts.

The first one being like-to-like growth, broadly in that mid to high-single-digit range. Every year if we open, say, 100 store on a base of 1,000, that is about 10%.

That 10% is expected to give you half revenue for the first year in which you open, so that is another 5%. Then the last 1/3 is impact of annualization for the stores that we opened last year, which will have full 12 months revenues this year.

Broadly, that's the break-up. When you see our number, you would broadly be able to gauge as to what particular quadrant has performed.

Though we don't give specific numbers, but we give enough details to sort of gauge in terms of the overall top line. With respect to inventory, as of December, we have seen slight built up of inventory, which is in line with the season, Q3 being the season, and also considering our store opening plan.

Broadly in line, nothing much, we don't see anything abnormal there, broadly in line with what we see year on year.

Got it. Just a bookkeeping question on the exact square footage you have used to calculate the revenue per square foot, please.

It is 13,90,000 odd square feet.

Okay. All right.

Thank you so And For sales per

square feet, we only take store revenue.

Got it. That's the standalone store revenue, right?

Overall store revenue. That is something I was trying to explain, that even if we open store say on last day of December, we will not have anything in top line, but the denominator will have square footage of that particular store.

Got it. Thank you so much, and best wishes to surpass the 1,000 store milestone next quarter.

Thank you.

Thank you.

Hi, team. Good afternoon, and thanks for taking my question.

I'll just have two questions. Firstly, I understand there is some benefit of GST reduction this quarter.

Last time around, you had pointed out that 40% of Metro, Mochi and 90% of Walkway typically will benefit due to the GST cut. Now, if you could help us understand this quarter, if you just gross up the sales, let's say you include GST, and you calculate growth, what would that number be?

Broadly, if we take that 40%, it would be about 3% higher, broadly.

For the whole company. 3% lower

3% lower you mean, the growth?

Gross would be 3% higher.

Higher.

There is no impact on the net sales, Sameer, because the entire GST amount is now broken up into two parts. One is GST that you pay, and the remaining is being offered as discount to the customer.

Sameer, we recognize gross sales lower.

Yeah.

To your point. Correct,

correct.

If GST was not there, we would have had gross sales that were 3% higher.

Yes.

Let me rephrase my question. Let's say in 3Q you had a ₹811 crore of sales and in 3Q of the base you had ₹703 crore of sales.

If I gross both up and then calculate the growth, which is 15% on net, what would this number be?

I want to make sure I understand your question exactly correctly, right? If you took last year's gross and this year's gross, what was the delta caused by the GST, right?

No, I'm just interested in a total growth number

and

which will imply the GST, yeah.

Sameer, let me try and explain. On a net sales basis, that is what I was trying to explain you, on a net sales basis, there is no difference because earlier it was gross sales minus, say, 18% GST for simplification, right?

That is how you are getting net sales. Right now we are selling at MRP, offering discount to the customer for differential GST, and the remaining GST is been paid to the government.

On a net sales basis, there is no difference at all between pre, post GST numbers, and that is the number that you are seeing in the financials.

I understand, Kaushal. What I basically am trying to understand is what the consumer at the end of the day is paying, what is the growth in that number, because ultimately post four quarters, that is the sustainable number.

This anomaly is because you are paying lesser GST to the government versus what you were paying last year.

Around 3% to 4% less is what the customer is paying on our entire portfolio. On specific sales, if it is below 2,500 if the item was with MRP was below 1,000, the overall differential would be around 6%, 7% from a customer point of view.

If it was between 2,500 to 1,000, the differential would be somewhere in the range of 11%. These are the percentages based on which customer would pay slightly lower.

Got it. It is safe to say that on a consumer level, the growth will be somewhere in the ballpark of 12% versus the reported 15% that you have clocked?

No, no,

that's what I'm trying to explain. On a net sales basis, there is no difference.

Okay. I'll take this offline.

That's fine.

Earlier it was 100 118 minus 18, that was giving you net sales of 100. Right now it is 11% discount, ₹7 goes as GST, and again 100 gets recorded as net sales.

On a net sales basis, there is no difference at all. Huh, but

the consumer is paying 11% lesser, right? Because that 11% is now the discount.

Right.

Correct.

Correct. Right.

That, Sameer, that adds up to 3% on a company-wide basis.

Got it, sir. This is really helpful.

Second question is on Foot Locker. Now, the commentary in the press release suggests that the expansion from here on would be measured.

Is this a correct interpretation? Would this mean a pause in Foot Locker store addition in the near term?

If at all, what can we expect for FY27, '28, if any number you can give? Lastly, is it solely BIS which is the constraining factor here?

Yeah. Thanks for asking that question, because BIS is something that affects not only us, but also global companies that operate in India, right?

Some of the best global companies are also dealing with it. Yes, it is primarily because of BIS that we've slowed the growth down.

We haven't stopped the growth, but we've slowed it down till we have visibility. We were actually assured that by this quarter, the BIS issues would be resolved, which it hasn't been, by the global brands.

Now we're being told it would be Q4 of this year, Q2 of next year before it will be resolved. Again, it's a wait and see, right?

Till we have visibility, it's hard for us to invest significant CapEx and also significant OpEx in getting these stores open till we know that it has fully the inventory it needs. Having said that, it's not like these stores are not doing great sales.

They're just doing about 20%, 25% less than we would have anticipated had we had the right product in these stores. It's not like we're going to stop growing these stores at all, but we're going to be much more measured, because you don't always get good real estate as and when you're ready, and we want to make sure we don't miss on those opportunities.

That's what I meant earlier on by saying we are investing in new stores despite the fact that it may not be profitable right away, especially these new concepts, because of BIS mitigation issues.

Sameer, just to add, what we mean is we will not be aggressively scouting for space for Foot Locker. At the same time, if we get a good real estate property at a good rent, we will be more than happy to go ahead and open a Foot Locker store.

Got it. This is very, very clear, sir.

Thank you very much for taking all these questions. Nissan, best of luck and congratulations on a real good point.

Thanks, Sameer.

Hello? Am I audible?

Congratulations on the good set of results, and thanks for the opportunity. I just have one question.

It's regarding will we also be getting benefited from Indian-Europe FTA? If yes, then how are we planning to tap this opportunity towards better monetization?

We don't see any benefits directly come to our business from the European FTA. However, I think it encourages footwear manufacturing to keep investing and growing their capabilities, which in the long run is always good for us because we sourced a vast amount of our goods from India.

That's where we see the advantage, but that's a little bit more long-term, Navneet.

Also on the Metro Active, why did you open the first store in Indore? Why not Delhi or Mumbai?

Yeah. What we want to do is come up with a format that can cater to Tier 1, 2 cities, not so much the metro cities, and that's why we've opened up in stores like Indore and Jodhpur and Dehradun.

Also, we want to use these places to really refine the concept, learn from the concept. You don't want to do that in your metro cities from day one, right?

That's how we wanted to do it, and eventually we think it's a great play for those kind of markets as well.

Yeah, 100%, and even I appreciate that because I also feel this is a good strategy. Usually anybody would like to tap the metro cities first, but I think this is underrated market, and there is a lot of penetration which we can get from that markets.

Congratulations once again, and looking forward to meet you soon in the next quarter.

Thank you, Navneet.

Sir, we have a format called Shoe Depot, which we started couple of quarters back. Just wanted to know how we account for that.

This is like a factory outlet, which I have seen in multiple cities. How does the store you know because all the brands are housed in this format, how do we account for that, and what is the all the inventory which is leftover from end of season sale, is what do we sell in that format, or how do we you know manufacture separate inventory for that store?

All right,

let me explain the concept, and then Kaushal will walk you through some of the other questions you had. We do need outlets, as any retailer does.

Typically, retailers will have anywhere from 1 to 10 1 in every 10 stores to 1 in every 15 stores as an outlet to clear goods, right, instead of relying heavily on a very concentrated period of time, which we call end of season sales in India. It would be good to have an outlet valve all year long.

That's the first point. We have about 19 Metro and Mochi outlets and Crocs outlet stores.

It's not like we were not operating the outlets before. We were just never called out because they operated under the Metro banner or the Mochi banner or the Crocs banner.

From a real estate perspective, when you go rent 1,000 square foot Metro, 1,000 square foot Mochi, and a 500 square foot Crocs, you're not going to get as good a rental deal as if you rent 2,500 square feet and house all your brands in there. That's number one.

You're able to get some economies of scale on the rental side. Number two, it's not always that everybody has the same inventory problems.

Sometimes Mochi may have a little bit more to get rid of, sometimes Metro may have a little bit more, sometimes it might be Fila that has a little bit more, right? This gives us the flexibility to put in there what we need it to do to liquidate and perform its primary function, which is to liquidate products.

That's the reason for the concept. Ankit, I wanted to make sure we explain that because I don't think we've ever called that out today.

We have eight Shoe Depots operating today. Seven, seven operating today.

The concept's only a little over a year old, but it actually replaces our other outlet stores.

In terms of number, Ankit, it is currently being classified under Metro.

Understood. My second question is on online traction.

Do we manufacture separate inventory, low-quality for the price points we are selling online, or is it purely the liquidation channel for the stores inventory, which is not getting sold?

It's a combination of both, right? There are no low-quality products.

I want to make that very clear. You can achieve price points differently when you manufacture shoes, and it's not a question of quality.

It might be a question of embellishments or the manufacturing method you use. We do create an online line of goods and that's exclusive to the e-commerce channel because we don't want it to create a dissonance with our inline stores.

We also want to be able to cater to the eyeballs and the zip codes that e-commerce can penetrate to, right? It's important for us to play in that area not because we don't think we're serving the consumer well in the places where we have stores, but because we believe a disproportionate number of those sales are going to zip codes where we don't have a present penetration, or probably never will have a penetration for the foreseeable future.

That's why we play it that way. It's not a discount game for us.

It's not something that we just want to make sales at any cost. It has to make sense.

It's got to also be with price points that don't in any way affect the stature of the Metro, the Mochi brand. Sure.

My last question is if you look at the price point between 1,500 and 3,000, and lower than 500 for this quarter, we have seen more than 100% growth in price points which are lower than 500. At the same time, growth in price points between 1,500 and 3,000, the growth is single digit.

Ideally, that price point should have grown the fastest given that the GST cut is maximum there and more footfalls would have drive there because the product could have become significantly cheaper for the consumer. Anything to read at these two price points from the consumer uptake?

Did you say that?

Ankit, broadly what we're seeing is the number percentage has remained almost similar. 4% below 500 versus last year, 8% between 1,000 between 500 to 1,500, again same as last year.

We have seen slight dip when you see Q3 numbers between 1,500 to 3,000, and above 3,000 has increased by 1%. Broadly similar, nothing much to read into because all our formats are growing.

Obviously, over a period of time, if we expand Walkway slightly more aggressively, you might see some change, but that also won't be material because all other formats of ours are also growing simultaneously. We don't see any significant impact there.

Sure.

My last question is regarding the GST benefit which you're passing on to the consumer. Now it's being nearly 4 months now.

Does the discounts still there, or with the new product pricing coming in, with the new season being there, discounts will go off across the stores, and now the new products are at a cheaper price point, or we will keep some benefit with ourselves, and or in some product categories pass on the full benefit to the consumer? At the end level, how does the bill you expect now in coming season?

Ankit, all the existing inventory, wherever we have a GST benefit on account of rate rationalization, discount continues. Please go and visit our store, buy something, you will see that discount on your invoice.

This was on a lighter note. Second point, for all the new products that are getting added, we are evaluating what is the final GST that we have to pay to the government, and accordingly realigning our MRPs.

We believe in maintaining our markup and passing on benefits to the customer wherever we get, just to make sure that customer continues to see value at the price point at which the product is offered. For all the new articles, we are revising our MRPs accordingly in line with the GST percentage reduction.

That's how we are taking this forward.

To be fair, we also have to keep an eye on our input costs, right? If their input costs increases, then we might use it as a way to mitigate some of those price increases.

It's a balance of things. Foundationally, anything that was manufactured before the date of the new GST draw will continue to get a discount in our stores till the very last shoe is sold.

Sure, that's helpful, yeah. Sure, Kaushal, I'll definitely go and buy something, yeah.

Thank you.

Hello. Am I audible?

Thank you so much for the opportunity, and congratulations team on a good set of numbers. To continue with the previous participant's question on the digital and e-commerce business, currently if you take a look, then the digital contribution is approximately 12%.

Is there any medium-term targets for the e-commerce and the omnichannel mix?

It's not so much as a target for that mix. We want to make sure that it is a profitable business at all times, right?

I think in healthy companies, it's always sub 20. Healthy when I say, healthy where they have good brands, good retail operations, and customers understand their product.

I think the range can be anywhere between where we are today and 20%. That's not necessarily a growth target we want to chase because we could get there tomorrow by discounting.

We don't want to do that, we will not do that. We want to create a business that's accretive both to our sales, but also to our brand value.

Sure, that is quite helpful. Also, if you could help me understand the margin differential between the e-comm and the physical stores.

Is there a huge differential?

There is a differential because obviously we do use e-comm as liquidation channel also, apart from promoting full-price sales which is primarily driven through omnichannel sales that happens through our stores. Since discounts are offered online, the reported gross margins, if you see at the division level, would be slightly lower than gross margins that we report on an overall basis.

Sure, sure. Thank you.

Also if we take a look at current quarter, we have witnessed good EBITDA margin expansion. Is there any range which we should be considering going forward?

[laughter]

I think 33% is a real good range, isn't it? It's one of those things that I would tell you that what we need to do is to ensure that we continue to provide value to our consumers, right?

Are there operating leverages that we can get, potentially? I think maintaining that number is not an easy task in itself, but we've done it quite consistently.

We've guided to it, and I'm happy to say that we've hit our guidance almost every single time, Shraddha.

Sure. Thank you so much.

That was all from my side.

Just thank you for taking my question again. I had just this one question on the margins bit, that what is the kind of drag that you're seeing on the margins because of the new ventures, Fila, Foot Locker, or even Metro Active?

Because these are now under a gestation period, and they would be incurring certain losses. Or maybe at the SBU level, they would be profitable, but at corporate level, there would be losses.

If you can quantify the drag because of them?

Gaurav, as we have informed earlier, formats like Foot Locker, Metro Active, since we are largely dependent on third-party brands, almost like 90% of our revenue would come through third-party brands, and hence our incoming margins there are lower as compared to margins that we report on an overall basis. Obviously, over a period of time, as these grow, you will see some impact on our overall reported gross margins.

In terms of Fila, we had completed our liquidation last year itself. In terms of Fila, we are not seeing any significant drag in our gross margins.

We had also told that, once this format sort of stabilizes, I'm talking about Fila here, we expect it to be at least equal, if not accretive, to the gross margins that we are reporting currently in that 55% to 58% range.

Sir, Kaushal, the thing was that, I understand on a gross level there will be differential, but I'm assuming that on the EBITDA level, there would be some drag, and by drag because these would be making lower profits. Is that an assumption right that as this business kind of scaled up, there is a scope for you to improve the EBITDA margins?

That was largely what No,

it's a drag for a couple of reasons, Gaurav. One is that it is a new format.

It takes a while for it to settle in. Number two, we're also investing heavily in the marketing of it.

Those are things that start to taper off as the concept starts to establish itself. Yes, going forward, it should have room for EBITDA improvements.

Having said that, Gaurav, as of now, contribution from our new formats, Foot Locker, Metro Active, Fila, is not significant, and hence we don't expect significant improvement in the margin guidance that we've always given. Gross margins in that range of 55% to 58% is what we are comfortable with, EBITDA in that 30% range, and PAT in that 15% range is what we are guiding for medium to long term.

Oh,

sure. Kaushal, just one last bit.

The break-up that you give into PPT in terms of the in-store, omni-channel, online, and others bit, this time around, there is a decent amount of growth that we have seen in the other segment. If I get the contributions, 2% odd for this quarter, and the H1 was just 1%.

Is there something that has led to a decent ₹25 crores kind of a number for the others bit, especially in this quarter? Actually

at times, these numbers also change on account of decimal. There could be that effect of decimal there, but we don't see any significant number being present there.

Okay. Sure.

Thanks.

Hi. Thank you.

I just wanted to see if you can quantify the volume growth over the last three quarters, let's say three to four quarters. What has been the trend in volume growth?

Broadly, Saurabh, we have seen our ASPs grow up by approximately 2% to 3%. We have reported overall 12% growth, balance 9% is coming from volume, which will include both same-store as well as new store addition that happened during the year.

Understood. If you could tell me what it was, let's say, in 2Q and what it was in 3Q on a Y-o-Y basis, the volume growth, [unclear] Yeah.

Our ASP growth, Saurabh, has been in that range pretty much, 2% to 3%. Take, for example, in Q2, our overall growth rate was around 12%.

Take out 3% from there, and that's how you get the percentage. In this quarter, our overall growth is 15%.

If you take out 3%, 12% will be volume growth. Broadly in that range, our ASPs growth has been largely consistent in that 2% to 3% range.

All right. Thanks.

Thanks. That's helpful.

Thank you.

Thanks for the opportunity, and congrats for a good set of numbers. I just have one question pertaining to BIS, right?

What does a typical inventory look like for a Foot Locker store, because we have six stores? Ideally on such a small base, we shouldn't be having BIS-related issue, right?

If we have it for Foot Locker and Fila, why don't we have that similar issue for our Metro Active stores?

I don't think we ever said it was a big drag on us. We're talking about why we would be cautious in our aggressive growth plans for Foot Locker, right?

It wasn't we were going to stop growing Foot Locker, we just weren't going to be as aggressive about it till we have clarity. To answer your question as to why we're concerned about it, it is only 20% of the sales, but it is the 20% of the high-heat sales that create uniqueness, that create a brand position for Foot Locker.

Why is it not affect everybody else except Fila and Foot Locker? Foot Locker is everybody in the world in imported sports is affected, right?

Fila falls in that category. It doesn't affect the rest of our business because 85% to 90% of the goods we sell are sourced in India, right?

BIS does not apply loosely to us. Metro Active is also impacted by it because heavily reliant on outside brands.

However, they don't need as much high-heat product all the time. They have a different set of products.

It may not impact our Metro Active stores as much as it would impact our Foot Locker stores. To reiterate, as Kaushal said, these aren't significant parts of the business.

What's significant to note is that Metro continues to invest knowing fully well that we may not get payback the very next day in some of these new concepts, but we're more than happy to grow our business for the long-term positioning of Metro Brands.

Sure, this is helpful. Just a clarity, when you say high-heat footwear, does it imply that the higher end of footwear is largely still imported while relatively lower end, when I say lower end, maybe below 10,000 and below, that is kind of domestically procured?

It's a lot of things, right? It's collaborations that are done at a one-off factories.

To answer your question loosely, it definitely is product over 10,000. I would even go as high as saying most of it falls well over ₹15,000.

That's the kind of product we're talking about. Got it.

Got it. This is helpful.

That's all from my side. Thank you so much.