Thank you. Good afternoon, everyone.

A very warm welcome to the V2 Retail Limited quarter three and nine-month FY26 earnings conference call. Thank you for joining us today.

We trust you've had the chance to review our results. The earnings presentation and the press releases are available on the stock exchanges and also on our website.

We are pleased to report a very strong quarter, reflecting continued momentum across our business. In Q3 FY26, we delivered a 57% year-on-year revenue growth, significantly outpacing the broader market.

This performance once again demonstrates the scalability, resilience, and execution strength of our operating model, even on a high base. Our ongoing investments in analytics-driven merchandising, supply chain responsiveness, and operational discipline have further strengthened our ability to scale efficiently in India's value fashion segment.

Customer traction across categories remained healthy. This reflects the continued relevance of our price-value positioning and product refresh cycles.

A steady flow of trend-appropriate assortments combined with strong quality standards and competitive pricing has supported growth across our store network. On the expansion front, our focus this year has been improving our geographic coverage through a balanced mix of rural market entry and deeper penetration in Tier 2, Tier 3 cities.

This approach has helped us broaden our customer reach and improve regional alignment through localized assortments and stronger store-level execution. During the first nine months of FY26, we added 105 new stores, and our pipeline planned openings remain robust.

Backed by a strong merchandising and inventory management team, we remain focused on disciplined expansion, efficient inventory deployment, and sustainable operating performance. Looking ahead, we continue to stay focused on profitable growth, capital efficiency, and disciplined execution, with a clear emphasis on enhancing shareholder value.

Now moving on to some key updates for this quarter and the nine-month period of FY26. First, the company successfully raised approximately ₹400 crore through a QIP with marquee investors.

Second, we completed a physical verification of property, plant, and equipment, and reconciled this with the fixed asset register. As a result, we've written off assets with a carrying value of ₹5.06 crore, and this has resolved the earlier audit qualification.

Third, we have been consistently sharing pre-Ind AS numbers to provide better transparency on our operational performance, and we will continue to do so going forward. While we fully comply with accounting standards for statutory reporting, the economics of retail operations are best understood when rent is included at the EBITDA level rather than below EBITDA.

Our annual business plans, budgets, cash flows, store-level metrics, and incentive structures are all aligned to pre-Ind AS profit numbers. Our revenue and profitability guidance is also communicated on this basis.

In line with industry practices and to better reflect the true profitability of our business, both under pre-Ind AS reporting and Ind AS 116 reporting, we reassessed the lease terms for our store leases. This reassessment reflects the evolving nature of our store portfolio and our strategic plans.

As a result, we re-estimated lease tenures to better align with the period over which we expect to operate these stores. This led to a change in the measurement of our right-of-use assets and lease liabilities, resulting in an exceptional gain of ₹27.69 crore, with a tax impact of ₹6.97 crore.

As of October 1st, 2025, ROU assets and lease liabilities were reduced by approximately ₹484 crore and ₹499 crore respectively. Lastly, the impact of new labor code is not material and has already been recognized in our financial results for the quarter and nine months ended December 31st, 2025.

Now moving on to the key highlights of our performance for the third quarter. Revenue in Q3 grew 57% year-on-year to ₹929 crore.

EBITDA in Q3 stood at ₹174 crore compared to ₹112 crore in the corresponding quarter last year, registering a growth of 56% year-on-year. EBITDA margin stood at 18.7%.

PAT for the quarter stood at ₹102 crore compared to ₹51 crore in the corresponding quarter last year, representing a growth of 99% on a year-on-year basis, and also surpassing the record FY25 full-year PAT. We opened 35 new stores during the quarter and achieved a net addition of 105 stores in the first nine months of FY26, taking our total store count to 294 stores with approximately 31.9 lakh square feet of retail space.

Reported SSG for Q3 stood at 2%, and normalized SSG adjusted for the Durga Puja shift stood at 12.8%. We recorded a 48% volume growth in quarter three, with full price sales contributing 92%, which reflects the strength of our proposition and reduced dependence on discounting.

Now let me briefly cover our performance for the first nine months of FY26. Revenue for the nine months grew 64% to ₹2,270 crore.

EBITDA for nine months stood at ₹346 crore compared to ₹200 crore in the corresponding nine months of last year, registering a growth of 73% year-on-year. EBITDA margin improved to 15.3% compared to 14.4% in the same period last year.

PAT stood at a record ₹144 crore compared to ₹66 crore in the corresponding nine-month period last year, registering a very strong 119% year-on-year growth. Same-store sales growth for nine-month FY26 stood at approximately 8.6%.

Our ROE continues to improve and now stands at 24.5% compared to 23.2% in FY25 and 10.7% in FY24, reflecting disciplined capital allocation and strong operating leverage. Now let me share our pre-Ind AS performance for the quarter and the nine-month FY26.

For quarter three FY26, on a pre-Ind AS basis, revenue was 57% up year-on-year and moved to ₹929 crore. Gross margin was at 32.4% compared to 32% last year.

EBITDA was ₹126 crore, up 50% year-on-year with an EBITDA margin of 13.5%. PAT came in at ₹82 crore, up 47% year-on-year.

For the first nine months of FY26, our pre-Ind AS performance reflects this: revenue was ₹2,270 crore, up 64% year-on-year. Gross margin improved to 30.2% from 29.7% last year.

EBITDA was ₹223 crore, up 80% year-on-year with an EBITDA margin of 9.8%. PAT stood at ₹138 crore, up 83% year-on-year.

Lastly, in line with our disciplined expansion, we've already added 10 net new stores in the current quarter, taking our total store count to 304 as of today. With that, I will now open the floor for questions.

Good afternoon, Akash. Congratulations for a great set of numbers.

I have few questions. First question is if you can explain in simple language regarding what changes you have made in your lease accounting and how is it compared to the industry practice?

To answer your question, firstly we always focused on pre-Ind AS numbers because the Ind AS should not apply to retail businesses like us. We obviously followed the accounting policy.

It showed a very big difference because our industry peers use this lease accounting policy that we just moved to, where our lock-in for every location is around one year, whereas the lease period on the lease is 9 to 12 years. We have a option of reassessing whether we want to continue running the store or not.

Now we've linked it to store sales performance. Every year there will be a review of the store yearly performance, and that's how their lease periods will be reassessed and updated in the accounting system.

Everyone, including Trent, Vishal Mega Mart, Style Baazar, V-Mart, they all moved to this new accounting standard. We wanted to be at par with our peers, and so we took a decision along with our auditors to move to the same.

Your pre-Ind AS numbers won't change because of this?

No, the pre-Ind AS numbers remains the same. Only the post-Ind AS numbers changes.

Right.

Is it fair to assume now that from now onwards the difference between your pre and post-Ind AS numbers would reduce significantly?

Yes, that is correct, especially because we are expanding and opening so many newer stores, the impact of pre-Ind AS versus post-Ind AS was much higher on our books, that should be diminished now.

Great. Okay.

Second is on your working capital. What I observed was that your inventory days are stable, but there seems to be a sharp decrease in your payable days, which has resulted into slight increase in your working capital.

What was the reason for it and was it by choice or was there some compulsion?

We raised around ₹400 crore from our QIP proceeds, and the needs of those funds for capital allocation would have been over the period of the next 12 months. We always have a bill discounting feature available to our vendors.

We prepaid our vendors about ₹300-odd crore because we want to be the best paymasters in the industry, and we always want to be in their number one priority. We helped our vendors by giving them the bill discounting feature.

Is it fair to assume that this line of credit from your payables will always be available to you whenever you require it?

Yes, that's correct. As and when we start using the funds for capital allocation and opening newer stores, you'll see the credit term back to 55, 60 days.

Okay. Okay.

Next question is on the difference in your numbers in your standalone and consolidated statements. Why is the difference, and as investors we should focus on which numbers, basically standalone or consolidated?

Because now we have shut down our three manufacturing units, the numbers you should focus on for the future is standalone, but we are still liquidating the inventory left in our subsidiary, and those inventory is being converted from fabric and accessories into finished goods. That is why you've taken an ex—

Hi. I was saying we're gonna merge both the entities now.

Going forward, we should always focus on the standalone numbers because we have almost liquidated and converted all the inventory. There is some left, which will be done in the next six months.

Basically there is no business in the subsidiary. The whole retail business into the standalone numbers and the subsidiary numbers as you said you'll merge and then we should focus only on standalone numbers.

Is it the conclusion?

Yes, that's correct.

Okay. Sir, lastly, what's your outlook on the demand side, both in the near term and medium term, and how's the response from the stores you have opened, say, in the last couple of quarters?

Are the PSF of those stores in line with your expectations or you have any other thing to tell me?

The benchmark that we use for newer stores is they should be within 30% sales PSF of older stores. Our older stores this year have already touched ₹1,200 per square feet of sales, which was the next ideal milestone for our business.

All the new stores that we opened last year, as well as all the new stores we have opened this year, both cohorts are performing better than ₹720, ₹730 per square feet of sales. They are contributing to EBITDA from the first month of operations itself.

Talking about demand, there's a huge wedding season coming up, and hopefully with the GST trickle-down effect and government trying to ramp up consumption because it has been a little damp for the last two to three years, we always try to have a positive outlook, and hopefully the decisions by the government also helps boost demand. We are taking a 8% to 10% SSG target for next year also, and adding 150 more stores next year also.

Any view on the gross margin side, because your margins are way below compared to your peers at the gross level? I understand that EBITDA levels you might be better than them, but at the gross level your margins are way below the industry peers.

Any thought on that? Is there a scope for improvement, or you feel that these would remain at these levels next year also?

Our gross margin strategy is by design. We want to pass on most of the benefits to the consumer.

The metric that most matter to us is EBITDA margin. We'd rather have more EBITDA margin by higher sales per square feet than higher gross margin.

Going forward also, we target a gross margin of 28%, 29%, and all the margin expansion should happen from operating leverage and from higher sales per square feet.

Okay. That's it from my side.

If I'll have anything, I'll get back into the queue. Thank you.

Thank you.

Thank you for the opportunity, sir. Sir, continuing from the question of the last participant, again, I would like to shed some more color on the mature set of stores, let's say when you started expanding in eight quarters you have added around 190 stores.

How are those older stores performing on margins and PSF and how are new stores performing?

There are three cohorts to talk about. One would be the stores that we had at the end of 31st March 2024, then there are about 72 or 74-odd stores that we opened in FY25, and then there are the 116 stores that we've opened in FY26.

Like I already mentioned, the cohort of stores that are mature that we had at the end of 31st March 2024, they are already at a level of ₹1,200 per square feet of sales per month. Both the other cohorts, FY25 new and FY26 new, they are at a level of ₹730, ₹740 per square feet of sales per month on average.

On margin, sir? How are the margins for the mature stores who are at 1,200 PSF?

The cost at company level is the same. The cost is around ₹190 per square feet, and the gross margins are 28%, 29%.

You can calculate the margins, because the costs remain constant for new or old stores.

Okay. That's helpful.

Sir, good slide on states. Going forward expanding, where is your focus?

Is it on emerging states or new states or states which are already mature? Like in percentage terms, how could we—

We entered about seven new states this year. The whole expansion strategy depends on the performance of each geography.

To give you an example, Karnataka was a relatively new market for us, but it was performing so well, now we have 14, 15 stores in Karnataka. The same goes for West Bengal.

So 60% to 70% of our new stores will come in existing strong clusters for us where V2 is already performing well, and the rest 30% to 40% of the stores will come in new geographies that are performing very well for us.

Sir, any difference in the geographies where you are entering where players are already present or if you are a new player there? Any difference in the performance of the stores there?

I think out of 304 stores that we have now, there would be less than 20 stores where we don't have any organized competition. Because competition has become the new reality, it's not an external variable anymore.

It's about surviving with multiple retailers around you. It's about focusing on your strengths and continuing delivering that value proposition to the consumer.

Okay. Sir, last question.

Your employee expenses, if I calculate on per-square-feet basis, have come down. Any reason for that, or is it just a seasonal?

If you look at consolidated numbers, whatever we used to make in our subsidiaries, a lot of the manufacturing cost used to be employee expenses. Whenever you compare employee expenses, you should do it at a standalone level.

Even at a standalone level, it has come down because we are adding more area. We are getting operating leverage, because the same head office is now servicing to 50%, 60% new area.

We'll continue to get this as we expand to more and more stores.

Sir. Yeah.

Thank you, thank you so much. That's it from my side.

Thank you, and all the best for the upcoming quarters.

Thank you.

Good afternoon to the team and thanks for giving me the opportunity. Sir, while most of the questions have been answered, I just want the clarification regarding your men's wear, right.

Sir, you have men's wear continuous to contribute 41% of revenue while kids wear remains 23%, 24%. Are you seeing faster traction in any specific subsegment like winter wear, occasion wear, or what that could structurally alter a category mix over the next two to three years?

There wouldn't be any significant change, but what we have seen over the last two years is definitely our women's wear category has been growing the fastest. That is because of the kurti department and the kurti category growing the fastest.

If you talk about any significant differences, I don't see any significant differences coming in the future. It will be very similar to the product mix that we have right now.

Okay. Second on the ABV increasing to ₹964 in quarter three FY26, is this being driven more by higher basket size or premiumization within categories or either that management sees scope to push ABV further without diluting the value position?

Just wanted an understanding regarding this.

No, if you see historically, Q3 ABV is always the highest. It's because of winter garments, the winter garments ASP is much higher than summer garments.

Because we sell jackets, sweaters, so that is why you see a bump in ABV during the third quarter.

Yeah. You are saying it's a seasonal effect or it's a category which is tracking more ABV?

Yes, correct.

Last one more bookkeeping question from my understanding. You have done ₹400 crore QIP, how does management prioritize capital allocation between faster store rollouts or either supply chain management or balance sheet strengthening, especially considering ROE dilution in the near term?

No, so that is why most of the proceeds would be used for general corporate purposes. That is a mix of new capital allocation for the new stores, that is a mix of additional working capital required, that is also some investment in the regional warehouses and the hub-and-spoke model that we're doing.

Most of the capital is being used for expansion itself, and these are the three biggest areas where we need to make the investment.

All right. Okay.

That's it from my side and good luck for the upcoming quarters.

Thank you.

Hello. Am I audible?

Yes, sir, you're audible.

Yeah. Just wanted to ask, why has the sales per square feet reduced?

Is it because of the new store rollouts?

New stores perform at about 70% of old stores throughput, and it takes about two to three years to mature. The share of new stores in our total portfolio has increased.

That is why you see a slight dip.

Can you guide about the trajectory of it going forward, the sales per square feet? How it will be?

If you talk about company blended level, we are targeting it to maintain at ₹1,000 per square feet even when we're adding 50% more area every year. Even if we achieve that, that will be a very good target.

Okay. Why was that one store closed?

The one store that we closed this quarter, it was below the EBITDA mark, and we tried to revive it. We found a better location about two kilometers away from it, with a bigger floor plate, we moved there.

You stick to your earlier 8% to 10% SSG long-term guidance for next year?

Yes.

Before, I had asked, now also just wanted to ask, are you facing any significant competition from low-cost online players like Meesho and all, because they are also operating in your market?

What you need to understand about pure online players is just logistics cost itself is around ₹65 to ₹70 in India if you move goods from state to state, and then you add customer acquisition, you add tech cost, head office cost. The total cost, if you're selling a ₹250 T-shirt, it becomes almost 50%, 60%.

Cost of retailing for us is around 18% to 19%. Pure online cannot deliver the same value that we're delivering, just because of additional costs associated with online-only players.

Whereas if we are doing omnichannel, which we are planning to do and we'll launch in the future, where you're using your store inventory as a dark warehouse and delivering from the store itself within a very small radius, then your logistics costs come down significantly. Only then you can sustain low ASP items selling online.

Okay. Why was the proposal to do stock split done and when it will be done?

I think now we've passed the resolution, it should be done very soon. It has been 25 years since the company was incorporated.

We started in 2001 and it's been a 25-year journey. We wanted to have a broad base of investors also.

It should be accessible to the retail investors also, and that's why we took the decision.

Okay. Thank you for answering all my questions and all the best.

Thank you.

Thank you.

Hi Akash. Thank you for taking my question.

Firstly just a clarification. You said older stores are at ₹1,200 sales per square feet and the newer stores are at ₹720, ₹730.

This number is for nine months or for Q3?

This is for nine months.

Nine months. Okay.

Have we changed any classification for older stores, I think earlier we had one-year-old stores were older stores, but this conversation today, you have sort of mentioned older stores are those that have been opened in March '24. Have we done some reclassification even for SSG?

No, we've always calculated SSG this way. For example, all the SSG that we calculated this year has been on stores that were operational throughout the last financial year.

We have used the same policy throughout our company history.

Okay. Basically, for FY27, you're saying that only stores that are open till March '25 would be considered for SSG?

Exactly.

Okay. Then technically, if we take the one-year threshold, then actual SSG would be higher, right, if we go by—

Yes. Because then you have to find out the weighted average of every new store, how many days they were operational, and the calculations become very complex.

Right. Fine.

Thank you.

Thank you.

Hello. My first question is can you help us with the absolute inventory amount at the end of this quarter, and what was this last year?

I don't have the exact numbers with me, but I think the inventory is around ₹900 crore. If you look at the stock turnover days, it is at a very similar level that was there last year.

There has not been any significant increase, whereas we have increased the pace of expansion. The inventory for the stores that we're gonna open in the next two months is already in the system.

Okay. All right.

We've obviously done well on the employee cost per square feet. I'm just trying to get some sense where does this actually stop at ₹65 PSF.

Is that the threshold that we should look at, or you think there's some more room in this line item to go down? Because I'm just looking at V-Mart and Vishal.

V-Mart obviously is operating at ₹70, ₹72 a square feet, and Vishal is obviously at ₹45 to ₹50. I'm just trying to understand with higher store addition, and you're adding at what, 45%, 50%.

Is there room for this number to actually go even further down?

Our head office cost currently is around ₹26, ₹27, and that is mostly employee expenses. I think it has the potential to come down to around ₹15, ₹16.

There's a scope of ₹10 per square feet reduction in the future.

Okay. Blended cost of retailing, you're at about ₹195 for Q3, and you were at about ₹205 last year.

Overall, including rent and opex, what should the cost of retailing be as we gain size and scale in terms of store addition? What is this number that ideally we should look at?

I think we can target ₹180 in the near future.

Okay. Sorry, just the last participant had asked.

Can you just clarify again SSG you're calculating? This is for a two-year period, is it?

Because when you're saying FY27, you're looking at stores which were opened by the end of FY25, so that's actually two years, right? You're looking at two years which have been in operation, is it?

No, it's not really two years. When you're in first quarter of FY27, for example you're in June, those stores have been operational for only 15 months that opened in March.

Are you getting my point? It's basically all the stores that were there, operational at the end of the last financial year.

Some stores will be two years, some stores will be 18 months, some stores will be 15 months, and it works like that.

Got it. Thanks and all the best.

Thank you.

Hi. I think I missed the number on revenue per square feet.

Could you just repeat that for the next year? What is your target?

We target to maintain it at ₹1,000 even after adding 150 more stores.

Okay. That is overall number, yeah?

Company blended level, yes, including new and old stores. Old.

You're saying old stores will be at around ₹1,200, ₹1,100?

Old stores are at ₹1,200 this year, and they will have an SSG, they will move even higher. The new store contribution in the total stores portfolio would be much higher.

That's why it'll bring the per-square-feet sale at the company level down.

Right. Okay.

That's it. Thank you.

Yes, hi. I'm sorry if this question's been asked before, but what is the kind of demand momentum that you've observed now that we're in one month already into the quarter, and what would your outlook be for the entire fourth quarter of this year?

The momentum has been the same. We are seeing the same kind of footfalls and demand in the fourth quarter.

That is why the next year guidance is also the same. We guide for a 8% to 10% SSG for next year, and at least a 50% revenue growth, and adding at least 150 new stores.

Got it. Thank you.

That's all from my end.

Good afternoon, sir. Congratulations for great set of numbers.

Hello?

We can hear you.

Most of my questions are already answered. I had questions related to what will be mature stores PSF into the future and how many mature stores we have.

Great, look forward for future quarters, sir.

I think I've already answered that question.

Yes. Thank you, sir.

No, thank you.

Hello, sir. My first question is sorry, I missed the point where you said 150 new store additions in FY27.

What would be the size of each new store?

Average size would be the same, around 10 to 11,000 square feet.

Average will be 10 to 11,000 square feet. Sir, what are we expecting in terms of new store addition in quarter four?

Quarter four, I think the total addition would be around 30-odd stores, 30

to 35. 30 to 35.

Sir. That's all from my side.

Thank you.

We have already opened 10, and we should open 20 more.

Hello, am I audible? Yes, sir.

Hi. Congratulations, Akash and team.

A very good number. My question is on an advance that we have paid ₹15 crore to BCCL in April '19.

Could you please throw some light why we have paid, what is the nature of this advance, and how we are planning to utilize it? Because it's being six years when we have paid to them.

It was a equity barter deal where they gave us this balance to use in their various publications and various channels of marketing, and they took equity in the company. We took it that time because we had a big focus, it was around COVID time, where there was a huge focus on e-commerce.

We thought we'll do above-the-line marketing for e-commerce, but that did not work out. Now, because we are present in 25 states in India now, a lot of new states that we've entered have big Times of India prominence.

We've started utilizing about ₹50 to ₹60 lakh of this every quarter, and the plan is to increase it to about ₹1 crore utilization per quarter. I think it should be finished in the next two years.

It says we will be utilizing in next four to five months, the agreement is till April '26 only.

We have a word with them, we have a verbal agreement with them. They have been extending our agreement for the last four years, and we've already had a word with them, and as long as we are utilizing ₹60 lakh to ₹1 crore every quarter, they are willing to extend the agreement again.

Okay. This is open to all other advertising.

It's not only for e-commerce, correct?

It covers all the publication, all the company assets, everything.

Okay. Sir, any threat due to this quick commerce thing in the business?

We haven't felt any impact, and if you look at the data also, apparel is a very, very marginal or a very small contribution of quick commerce. Apparel purchase is still an experience for customers, especially in Tier 2, Tier 3 towns.

I don't think there will be any impact or any significant impact.

Okay. Understood.

Thank you so much, and congratulations once again.

Thank you.

Hi. Just one more question from my end.

At an industry level, have you seen now in the light of competitive landscape having intensiveness right, have you also seen discounting inch up in this end-of-season sale season?

There is not a big significant change. We also sold more than 92% of goods at full price in this quarter.

In fact, our full price sales have been increasing. We haven't seen at the industry level also like other retailers, because see, everyone has a lot of margin pressure, I think putting discounts would increase that pressure.

Right. Discounting at industry is not inched up, accordingly?

No.

Got it. Just one more question is that when you're entering into newer markets where there is an existing value retailer, what is your observation as to how are they looking to gain back the lost market share which they land up losing once you enter the new region?

See, that's a very, I think, difficult question to answer because every retailer has a different strategy. There is no fixed template that everyone uses when we enter a market.

Somebody puts a special offer, somebody gives more incentives, somebody gives gifts items, but ultimately we've seen, no matter what marketing schemes you give, the retention of customer and the long-term performance of the store completely depends on the store's assortment. That assortment is obviously a mix of quality, price, fabric, size, color.

More than 95% of the locations we are at least 30% higher in terms of SPSF than our peers, whether we entered that market first or whether we entered that market last.

Got it. Thank you for answering all the questions.

Thank you.

Hi. My question is regarding the net working capital days.

We've seen a steep increase from 37 to 69, and I understand this is from the creditor payment cycles that we've given them better terms here. What is the sustainable level here, and do you see a corresponding improvement in gross margins due to discounting, or how should we look at this strategy?

Whenever we have extra cash on our books, we always give bill discounting to our vendors, and we get a 1.5% per month bill discount from those vendors. That becomes a part of gross margin.

Going forward, like I said, as we utilize this money for capital and capex, then you would see the working capital days will go up to around 60 days.

Got it. The improvement in gross margin from 29% to 32% in Q3, is that because of the bill discounting, or is this the sustainable level of gross profit you're expecting?

No, that is also a part of this, but you'll see a gross margin improvement in the first six months of the year also. We have done this bill discounting for the last two years, of course the quantum of it has changed in this quarter, and definitely it also had an impact on the gross margin.

Okay. Thank you.

One more question is regarding the capex per store. What is the maintenance capex you need to incur on the already built-out stores every year?

That is already covered in our ₹190 per square feet cost. It differs a lot, but yeah, that is already covered in the per-square-feet cost expenses that we talk about.

Got it. Thanks a lot, and all the best.

Thank you.

Hi Akash. Great set.

Akash, as we are expanding through newer states also, and we [unclear]—

—on the leadership hiring, just wanted—

Yeah. Sir, your voice is breaking.

It's not clear.

Okay. Am I audible now?

Akash, congratulations on a great set. Just wanted to ask with the kind of store network we have right now, what is the update on the leadership hiring?

Are we moving in that direction?

We had about, I think, 360 people in our head office just last year, and now we have more than 600 people. Like I always mentioned, a big emphasis and focus has been given on hiring and getting good leaders, because the growth that we're targeting, we need a very good foundation.

We have leadership team already in place, but to reduce the workload on each one of them and to make more broad-based management, we are regularly hiring, and every month good quality people are joining our organization.

Sure, on the leadership front only, just wanted to understand that do we have a CEO or something of that sort to handle the operations at these 350-odd kind of stores and 500 we would be eventually having by the end of next year? Just wanted some color on that.

We haven't hired a CEO. I'm the CEO currently.

I'm handling that part. We have a marketing head now, we have a HR head now, we have a IT head now.

All those positions are covered, and they are handling the department. Definitely we are on the lookout for a new CEO also, so that I can take a more strategic role.

Of course finding a good CEO is a long-term challenge. We have met certain people, but it did not work out.

Definitely we are always on the lookout for good professionals.

In this segment, the kind of customer assortment we have, the kind of demographics we have, just wanted to understand what is the kind of repeat purchase we have in value retail? What's the kind of retention we have for customers?

Some color from the older stores only. New stores are very skewed towards getting new customers.

Any color on that? What's the kind of retention rate we have or repeat per sale percentage?

For stores more than two-year-old, our repeat customer percentage on the total revenue is almost 68%. Okay.

This number used to be just 56%. The retention has improved significantly over the last three years.

The frequency? Average frequency used to be every five months, every 5, 5.5 months, and it has also increased.

Now it's every four months, 4.25 months.

Sure, Akash. That's very heartening to listen to.

Is it also because we have any loyalty programs for the customers, or is it purely organic because of the assortment and the kind of service we have?

Our gross margin, our assortment, our product, everything is the loyalty program. Because we work on such thin margins, I think it's not feasible for us to have a loyalty program, but because we believe in true pricing, customers know that we give the best value proposition.

That's why they come back.

Got it. Akash, on the omnichannel piece, if I can squeeze in, I think we are fairly doing well offline.

Is it that we are making a lot of investment into the omnichannel, or would it be a pilot sort of a thing? Because understanding the customer only, we are doing fairly well from our stores only.

Any color on that? What is the vision about omnichannel?

Is it going to be some percentage of the sale only, or are we going to scale it very rapidly?

The best thing about it is there is no additional fixed cost. There will be only variable cost, and there is no huge investment, because now all softwares and technology companies give their services as a software-as-a-service basically, the expenses are monthly.

There will be no additional capex, there will be no additional investment. In terms of sale, we're not looking at a huge or a big chunk of sales coming from that channel.

It's just to have a presence, and I think even when it matures, the sale from that channel should be around 5%.

Got it. This time, I think Eid and Holi both are in Q4.

I hope that we are able to maintain the momentum going forward also, because both the festivals are falling in Q4 for V2. Am I right in assuming that?

Yes, Q4 should be, but I think Eid, most of the sales fell in Q4 of last year also. There won't be much difference.

Both the festivals were in, yeah.

How has winter wear done for us this year? What's the kind of percentage sale we have done?

This is the last question which I had. Sorry, can you repeat that?

How has winter wear done for us? What is the percentage of sale from winter wear in Q3 compared to last year?

Any color on that? How has been the winter—

I don't have that number ready, but winter was very good. There was an early onset of winter.

That is why you're seeing this SSG and Q3 numbers, because bulk of the sales come from winter wear. It's a high ASP, high margin category for us.

Winter was very good for us, I think much better than last year. I don't have the exact number of winter contribution for this quarter.

Sure, Akash. I think that's it from my end, and wish you and the team the best.

The very best. Thank you.

Thank you.

Yeah.

Sir, can I know what is the capex per store that you incur?

The capex per store is around ₹1.1 crore, and the investment in inventory for that store is around ₹1.3 crore. Total investment is ₹2.4 to ₹2.5 crore.

Okay. Sir, can you repeat your outlook on the working capital cycle?

Why it has increased in quarter three? Right.

We did early payments. We prepaid our vendors, we prepaid about ₹300 crore of our creditors because we had that extra cash on our books.

We get a 1.5% bill discount from them, and we wanted them to help them with the working capital. As and when we start using it for our capex for new stores, the working capital will come back to normal.

We can expect it to go back to 60, 70 days?

Yes.

Thank you, sir.

Hi, sir. Sir, as you have classified your stores into three cohorts, the mature stores, right, and they are at 1,200 PSF, and the new stores that you are adding, they are starting at around 750 PSF.

Sir, my question is over the next two, three years, would your new stores, which are right now at 750, would they scale up to 1,200 number? If they would, what kind of factors do you see in contribution to this, and if not, what are the risks to this thing?

If you take out the data of FY23, in FY23, this old cohort of stores that are at 1,200, they were at ₹650 per square feet. It's the same journey that the new stores will take, and that's the plan.

Of course, if we keep doing the things right, because more and more customers come, there's word of mouth, you retain the old customers, and your catchment area of each store increases. It's about maintaining the offering and the customer service and the assortment at the store.

Every customer should feel that when they go to a V2 store, they would get the latest trends, latest fashion that they see the celebrities wearing or the fashion influencers wearing, at the best price possible. Once they get that brand positioning in their head, then the growth happens, and two to three years it takes historically.

All these stores should move towards that number.

We are reasonably confident to take this number to 1,200 PSF in the next two, three years for new stores?

We have done that for these stores as also. Looking at that, the new stores should also move in the same trajectory.

Do you think geographical location of the stores or anything plays any role in this growth figure from 750 to 1,200?

See, now we've moved away from trying to open a store in the middle of the market. We used to find market proximity as the number one factor, but what we realized later is what matters more is parking space, frontage of the store, floor plate.

Because opening in the center of the market might get you customers from the first day, but long-term sustainability matters more when customers get the best experience. Now we look for locations even if they are one, two kilometers away from the market, it should have a big frontage, good parking space, and good floor plate so that it's good in terms of customer experience.

Okay. Sir.

Thank you.

Thank you.

Hey, hi Akash. Hi, sir.

How are you? Congratulations to you and entire V2 Retail team for posting great set of numbers.

A very elementary question, Akash. Can you help me understand what is the store-level economics that work?

Let's say you're setting up a new store, what are the cost involved? Like you said, you incur around ₹1, ₹1.5 crore on setting up and then ₹1, ₹1-odd crore in putting inventories.

What are the costs involved in running a store?

Sure. The capex like I mentioned is ₹1.1 crore, then inventory investment is ₹1.3, ₹1.4 crore.

Total investment for a store is ₹2.5 crore. Store-level cost is around ₹140 square feet, and head office and warehousing cost together is around ₹40 to ₹50 per square feet.

That is how the costs are allocated.

Understood. When you're saying ₹140 per square feet, what are the cost heads?

Just a basic overview in terms of employee cost, in terms of what are the cost heads involved?

Rent is around ₹50, employee cost is around ₹40-odd, power and fuel is ₹20, ₹25, and rest is marketing and other miscellaneous expenses. These are the three main heads.

Okay. Akash, just harping on the previous questions, how much saving are we incurring on reducing payables, which is we have taken less credit from our vendors?

How much is the gain from that?

It depends on the number of days that we prepaid, but like I said, per month it's around 1.5% that we gain from our vendors.

Perfect. One one more last question if I can squeeze in.

In terms of employee attrition, are you seeing a big challenge there? How is it vis-a-vis your competitors or peer group?

Is it a challenge to retain people in a retail setup?

See, there are two parts to this question. One would be the floor-level staff, their retention is a challenge for every retailer in the country, because most of the staff is at minimum wage, they jump ship even for a ₹500 raise.

When you talk about the crucial manpower at the head office, then our attrition is well under control. Most of them have retention bonuses, and they've been with us for a long, long time.

Okay. In terms of definition of store, new store, you said any new store will become a old store when we consider it for a full financial year if it has been in operation, right?

Is this definition the same for all retail players, all your competition, or is it something which varies from player to player? It's very hard for me to comment.

I don't know how other people do this, but we have always done this historically. A store is old only if it has run for a whole financial year.

Understood. Thanks, Akash.

Cheers for the coming years. Thank you.

Akash, just one follow-up. When you're talking about 8% to 10% SSG, typically mature stores and the newer stores, what is the SSG that you kind of experience or you build in when you're talking about 8%

to 10%? See, even mature stores need to be broken down into different cohorts then.

There is a cohort that is, stores more than 10 years old, 7 to 10 years old, 5 to 7 years old, and so on. Of course the newer stores the newer cohorts perform at a higher SSG.

You can say that the newer cohorts will be at a 12%, older cohorts will be a 5% to 6%, the blended will be at 8% to 10%. That's how it works.

Got it.

In your experience, stores which are more than 5 years, 7 years old, SSG typically gets saturated at 5%, 6%? That's how we should look at it?

If you look at last two years, even the stores that were more than 5 years old, they grew at more than 20% SSG for us. There is no cap or there is no limit that I can tell you, okay, this is what happens.

Again, if we are able to do the things that we have done in the last two to three years, we might get a double-digit SSG on those mature stores also.

Got it. Can you just break that down?

How have the older stores done 20%? Is it largely because of the value that you're offering at those price points, or there is something more to it?

It's a combination of everything, and most of the growth was volume growth, there were more bill cuts, more and more customers were coming. I think it's a mix of better supply chain, a bit of assortment, bits of pricing strategy, fabric, color, and a robust back end, it's a combination of everything.

Okay. How big would our design team be?

If you talk about complete buying and merchandising including design, there are about 180 people. Just pure design is about 45 to 50 people.

Okay. Got it.

Thank you and all the best. Thank you.

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