Welcome to Metro Brands Limited investor call hosted by Prabhudas Lilladher Private Limited. As a reminder, all participant lines will be in the listen-only mode, there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amnish Aggarwal from Prabhudas Lilladher. Thank you, and over to you, sir. Hi. I welcome all to the conference call hosted by Prabhudas Lilladher for Metro Brands Limited for their second quarter earnings. Now I will introduce the management. Today we have Mr. Rafique Malik, who is the Chairman of the company, Mrs. Farah Malik, who is the Managing Director, Mr. Nissan Joseph, who is the CEO of the company, Mr. Kaushal Parekh, who is the CFO, and Mrs. Alisha Rafique Malik, who is the President, sports division at e-commerce CRM. Without wasting any time, now I hand over the call to Mr. Nissan Joseph to make the opening remarks, after which we will open the floor for Q&A. Over to you, sir. Thank you, Amnish, my apologies to everyone for the slight delay in starting the call. With that, I'd like to welcome you to our Q2 FY 2024 earnings call. I'm pleased to report that in spite of facing pent-up demand last year, a delayed festive season that moved most of the key festivals from Q2 to Q3 of this year, we've been able to close the quarter with a 15% growth over last year, along with a 15% PAT. This quarter has been very much in line with our expectations, we delivered numbers consistent with our continued guidance. I'll dwell into some of the key highlights that have contributed to our performance. In Q2 FY 2024, we saw year-on-year revenue growth, which reached an impressive 15%. This uptick in growth surpasses the 12% year-on-year growth witnessed in the previous quarter. A notable factor behind this growth is the slow but on-pace normalization of demand as we move past the pent-up demand experience in Q2 FY 2023 compared to Q1 FY 2023. This year's festive period has been slightly delayed, with festivities in FY 2024 occurring approximately two and a half to three weeks later than last year. As we progress through the quarter, as anticipated, we did start to see the positive effects of the approaching festival season. Our store expansion strategy remains on track with a net addition of 29 stores, including entry into eight new cities across all formats. This expansion reflects our commitment to enhancing our presence in both existing and new markets and strengthening our brand's reach and accessibility. E-commerce continues to be a driving force behind our growth, with Q2 e-commerce sales, including omni-channel, reaching INR 60 crores. This segment saw 45% growth, showcasing the increasing acceptance of our digital channels by our customers. Looking to the first half of FY 2024, we witnessed stable year-on-year growth of 13% when compared to the previous year. Our store expansion strategy continues to thrive with a net addition of 56 stores and an entry into 15 new cities in the half, spanning all formats. I'm also pleased to add an update to our store count, as earlier this week we announced the opening of our 800th store for Metro Brands. E-commerce sales, including omni-channel for H1, amounted to INR 121 crores with a remarkable 53% growth. Our digital investments, presence, and capabilities continue to be a source of strength, contributing to our overall performance. We've also been proactive in managing challenges with the first half at a standalone basis, very much within our guidance of 15%-17% PAT, with the half coming in at 17.1%. This despite incremental expenses of 100 basis points due to ESOP issuance and Ind AS accounting, the latter primarily due to increased new store openings. We remain vigilant in managing and optimizing our operations to maintain our profitability. Lastly, our premiumization strategy is making substantial headway with sales of footwear priced over INR 3,000 accounting for 48% of our business. This reflects a positive response from our customers and highlights our commitment to delivering high-quality products and an enhanced consumer experience. Before I close, I would like to add some color on our Fila integration. As we mentioned in earlier calls, the three-year plan is to clean up the inventory and rationalize the current stores and distribution. The second year to reset the brand and position it for success in the coming years, the third year will be focused on acceleration. As a follow-up to the impending BIS regulations, we're gearing up for the implementation of the compliance requirements in January of 2024, though we still lack full clarity on all aspects of it. However, as guided previously, we have front-loaded inventory to help mitigate any supply issues caused by the implementations. In conclusion, Q2 has been a period of solid growth and strategic advancement despite the many challenges faced by Metro Brands. I would like to thank the entire team at Metro Brands for their continued focus and hard work in ensuring we lead the way to serving India's footwear needs. We're excited about the opportunities that lie ahead and remain dedicated to delivering value to our shareholders and customers. Thank you again for joining us. Apologies again for the delay, we look forward to discussing our performance in further detail in the Q&A session. I'll turn it back to the moderator to open it up for questions. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tejas Shah from Spark Capital. Please go ahead. Yeah. Thanks. Thanks for the opportunity, and congrats on the decent set of numbers in the current environment. Just wanted to start with your read on the prevailing consumer sentiment in general, and specifically on the premiumization trend that we have witnessed since COVID till now. How is it evolving, and what's your read on the same going forward? Thanks for your question, Tejas. What we're seeing is probably a temporary headwind of timing more than it is a economic headwind that we're facing. The challenges we face were predominantly due to the pent-up demand from last year, number one, and the shifts in festivals, which really is a temporary headwind. It's a timing headwind, not an economic headwind. Overall, we feel the consumers in our segment remains resilient to the business and is appreciative of the product offerings we have. Sure. We have seen a decent traction in our online sales, we spoke about it also that our omni strategy is working well. Just wanted to understand the margin profile of that business, A, and the breakup of that business. Is it more platform-driven, or is it D2C, or is it largely third-party B2B in nature? One of the reasons our e-com business hovers in the low double digits, which it just crossed double digits for the first time, Tejas, is because we do not want to get into the discounting game, right? Which unfortunately is the mainstay of Indian e-tailing today. Our business is done in multiple ways. One of them is products we sell directly to the marketplaces. The main business that we really look at nurturing is what we call our omni-channel business, where we light up the inventory across all our stores onto different platforms. The advantage of that is twofold. One is we're able to increase our inventory utilization by getting products across the country and also reducing our time of delivery. The second reason we like that is we're also able to control any discounting that happens online, right? If there's a discounting that is unfavorable to us, we will be able to turn it off very quickly. Overall, the margin profile of that business is relatively healthy, in line with our regular business, but e-commerce is not an easy business overall with costs associated. It's just not a margin profile that you might be looking at. You might want to look at the end cost profile. I can tell you, if you look at all the pure-play e-com players, you get the sense that it's not the most profitable business in the world for most people. Consequently, it's the same thing for us. Having said that, though, the way we try to grow it is to do it through curating ranges that will add both brand salience and also not be in any way dilutive to us. Very clear. Then from my side about Fila. In last two quarters, there have been three WIP dimensions pertaining to Fila that you would have spoke about. One is on cleaning up of legacy inventory, A. Second is optimizing route to market or accelerate store expansion somewhere around second half of FY 2024, 2025, and product and brand positioning. Where do you want to place the brand? Whether you want to place at premium or semi-premium end. If you can give us some update on all the three dimensions. The first one probably is the first important step that we're going to focus on most of this year, which is cleaning up the existing inventory, because we don't believe that inventory is in line or reflects where we want to take the brand in the coming years. That's number 1. That work in progress is progressing well, but as we've always guided, it's going to be dilutive to our performance in this year. Hence, I would encourage you to look at our standalone numbers if you want to get a true comparative read on how our business is doing. That way it keeps Fila to the side, right? That's going to continue probably for most of this year, Tejas. The second one is store expansion. First, we need to rationalize the stores and the distribution, the route to market that we have today. We need to make sure that it is congruent with where we want to take the brand in the future, right? What I mean by that is when we look at our real estate deployment of stores, do they represent the brand correctly, both in terms of being in the right malls, but also being in the right locations in those malls? That makes a big difference in how your brand is perceived by consumers if you're in the right locations in the right malls. Our distribution to other channels outside of us needs to be tightly controlled so there's not extensive discounting or there's not overstocking of product going on that further leads to brand dissonance down the road. That whole distribution piece is a critical part of how we're going to be approaching most of the latter part of this year and the early part of next year. Last but not least is the positioning of Fila. We honestly believe that in the sports fashion space, Fila has, A, relevance, B, awareness that we can play to and build on, somewhat similar to making it akin to the China model, where China Fila does roughly $4 billion because they position themselves differently than your typical athletic brands. We see that consumer in India that is quite savvy going and migrating towards it as well. That's how we want to position the brand, which will be starting late this year and go well into next year, that leads us to the third year, where we will accelerate the brand, which will include store openings and positioning and so on and so forth. Sure. Sir, one follow-up there. You said legacy inventory will be cleaned up by FY 2024, or there will be some spillover in FY 2025 as well? By 2024 we should be done with legacy inventory. Great. That's all from my side then. Thanks all the best. Thanks, Tejas. Cheers. Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Sir, hi. Thanks for the opportunity. Just to take forward from the previous question on e-commerce sales, you indicated that your focus is on growing omni-channel sort of sales through your own stores. The numbers that we are reporting suggest that there is a significant amount of growth in the e-commerce channel omni-channel sales. Just wanted to check, does this mix in any way change the mix of e-com is increasing? Does this in any way sort of impact our margin or return profile going forward? I'm sorry, you broke up there for a second, Devanshu. Can you just go. We got you till the point that you read it as it was driven by other channels other than omni, and then we lost you. Sure. I was indicating, sir, you indicated that the focus is on omni-channel sales. The numbers that we have reported suggest that there is a significant amount of growth that we are seeing in the e-commerce space x of omni-channel in this quarter, per se. You also indicated that the other part of the business is slightly, I would say, margin diluted because of excessive discounting in the online channel. I wanted to check, does this increase in mix of online in any way impact our return on margin profile going ahead? Yeah. It's a good catch, and thank you asking the question. What that is really, as you know, right now is a period of the immense discounting sales and the festival sales that go on on the Amazons of the world and so on and so forth. What that was actually shipments to those channels being booked in that period of time, which is similar to last year, mind you. It's no different than last year, being booked in the last quarter. Hence you see that omni didn't grow as fast as the rest of the business. Having said that, omni still grew a very solid number over the last season, and it continues to grow relative to the rest of the business. Don't forget, the rest of the business was also a little challenged because of the reasons I mentioned. Got it, sir. Sir, among regions, East as a market is not doing well for us, while West has picked up quite well. Among regions, what is your outlook for store additions in the Eastern geography? Also if you could suggest if your margin or return profile is significantly different in the East geography versus rest of the regions. I think you got to be careful how you read some of those numbers, because it's not that the East is not doing well. Don't forget, the big season in the East is Durga Puja, which fell squarely in Q2 of last year, where it's flowing into Q3 of this year. That's the key driver. Now, if you're talking about penetration not being high in the East, you're correct. It is not the highest in the East. In fact, it's our smallest market. But it's just a matter of us not having gone after the East enough as yet. There's still opportunity in the East for us to go after. Typically, as you know, you establish strongholds where you are based first and foremost. I'm pleased that the West and the South really continue to be our stronghold. Devanshu, just to add to what Nissan said, in fact, East is one of our strong regions. If you see on slide 23 of our presentation, 13% of the store contributes 14% of the sales. Mind you, this H2, Durga Puja is in push to Q3. But East is a very strong region for us, and it's also one of the focus area in terms of expanding our reach. Got it. Last question from my end. Should we read this from Crocs penetration point of view? There is a relatively slower network expansion versus Mochi and Metro. Just wanted to check, is it a strategic move where we may see some slower expansion for Crocs going ahead? How should we read into this? Well, I think there's two parts to that question. One is it's not really much slower than the rest of them. What you've actually seen is a very accelerated growth of Crocs four years ago, where we grew it from almost zero stores in the last five years. We still added stores for Crocs. We added two stores in the last quarter. This year, in the 12-month period, we'll add somewhere in the 20-plus range of Crocs stores. It's not like it's falling behind. We've guided that we'd open 100 stores. It's going to be 20% of our growth. What it really is driven from is our focus to grow our Metro and Mochi brands as well, right? You're seeing a lot of focus being distorted to growing those brands, which are extremely profitable and extremely well-run banners for us. That's what you're seeing. Also, the market size for Crocs is not as significantly wide as that for a Metro or a Mochi, right? Metro and Mochi can probably go into 400 cities in India, whereas Crocs is probably not as big. It's still a very big opportunity for us. The other thing is also, the number you don't see in that growth number is that we closed five Crocs stores, and this happens a lot because either malls die or high streets go dead because a mall got built up. We went into the mall with a new store, but we had to close the store in the street, consequently, it looked like we didn't grow. There's actually another five stores that we closed. If you look at it net, it has a different number. If you just look at it, the hard number for H1 is seven stores. Got it, Nissan. Thank you so much for answering my question. Thanks, Devanshu. Thank you. The next question is from the line of Nihal Mahesh Jham from Nuvama. Please go ahead. Yes, thank you so much. Good evening, Nissan and Kaushal. My first question was on the numbers, that if I look at the standalone numbers separately, the OpEx growth is much lower than our top-line growth as well as the square footage addition. If you could just give some more clarity, is it that we have pruned our advertisement expenses or any other part of those OpExes given how the slowdown was? Just some clarity on that first. Nihal, that's a continuous exercise. We keep a close tab on all our expenses. If you closely see, more or less it's in line with how the sales have grown. Nissan also mentioned, if you see our overall at a PBT level, there is an impact of around 1% due to ESOP costs and Ind AS 116 impact, which generally comes when you are opening stores aggressively. Cost control is something that we do on an ongoing basis within our company. Point taken on that, Kaushal. In fact, even if I adjust for the divergence between the top-line growth and, or let's look at square footage addition and the OpEx, is even wider and something that's appreciated. Just any specific aspects which have been taken care of, if you just give better clarity on how this has been achieved. Nihal, I'll urge you to see the numbers. It's more or less in line. If you see it as a percentage to sales, because a good amount of our costs are also variable in nature. If you compare absolute amount, you may see it has gone down because obviously, rentals, staff salary, et cetera, to a certain extent are variable in nature. In Q2, as you know, is our smallest quarter. It's close to about 22%-23%. That also has an impact. If you see it as a percentage of sales, they are more or less in line with sales ratio. Sure. Point taken on that, Kaushal. The second question was on Crocs. I know we discussed it earlier, but just if I look at the last two-year evolution, the number of cities that a Mochi and a Crocs were wasn't similar. Today, obviously, Mochi is in 16 cities now. When you look ahead in terms of, say, adding these 20 stores and maybe the limited opportunity because of the price point, is Crocs going to see more density per city or are you all planning to take this brand wider as you look at the evolution for Crocs ahead? The reality is, every city that has a Mochi or a Metro cannot take a Crocs today, right? Don't forget, India is changing rapidly, and India is growing very quickly, and we know that tier 2 and tier 3 cities are going to be the new hotbeds for growth in the future. It's a matter of balancing and figuring out what is the right time to enter a city. We have our own internal formulas and vectors that we use to determine when we believe a city is right and ripe for a Crocs product. We don't see that Crocs being in any way reaching its full capacity of stores it can open. I think we've got some more runway, especially in the South and the West, for us to grow. We continue to grow it. We also sell Crocs in our existing stores, Nihal, so that gives us a good point of view on what that city and how that city will react to a Crocs if we were to do a standalone store. There are many, many factors we take into consideration. The short answer is, there's no way that every city that has a Metro or a Mochi will have a Crocs store because of what you said, the price points are different, the customer profile is different. Thank you so much. Just one last question was on the quality control order. It has obviously been pushed for most categories to post-Jan, which has given us some more time to assess. Is it that for most of our vendor network, despite, say, some of the uncertainty, we are comfortable that most of the implementation would be in place? Or maybe at this point in time, the approach is to keep the inventory in place, and then post-Jan, we'll figure out how things are to eventually be implemented. No, we are taking two steps to this, right? One is, of course, making sure that we do not see a disruption to our supply chain, and hence we are forward-buying inventory because we remain relatively certain that we will be allowed to sell any product that we own prior to Jan 1st into next year. That would ensure that we mitigate any supply chain disruptions caused by the BIS. That is number one. Number two, where the compliance outlines have been given to us where we have granularity and clarity on what these guidelines are. We have got our vendor base to go ahead and get certified and get the product approved. Part of the issue is not so much whether our vendors want to do it. They are more than willing to do it. We have vendors that are capable of doing it. We just want to make sure that we have all of the parameters required, because to be quite frank with you, it has been a little bit of a moving target, even at this later stage. Understood. Thank you so much. Thanks, Nihal. Thank you. The next question is from the line of Abhishek Getam from ICICI Securities. Please go ahead. Am I audible, sir? Yes. Thank you for the opportunity. Welcome. My question was regarding Walkway. We've seen Walkway store count come back to FY 2020 levels, and it's a commendable growth from FY 2022 and store expansion. I just wanted to have a little bit of flavor on numbers on Walkway on revenue side and how do we see this growing in our whole portfolio? One of the reasons you saw us only come back to those numbers is, as you remember, we closed about 17 Bmart stores early in 2021, right? That's another reason you've seen this go backward by about 25% of our store count and to build it back up, right? We think the Walkway consumer exists and is very strong. At the same time, we want to make sure that we understand that business well and good before we put all the gas on it and accelerate it. It is still work in progress. We will continue to devote resources to fully unlocking that consumer's potential. Once we do that, we see strong opportunities for a brand that caters to that segment of the market. Understood. Eventually, this Walkway brand expansion will focus more towards tier 2 and 3? Is that understanding right? Not really. I think they're focused to a different consumer, and that different consumer exists in all the markets that are out there. I was just in Chennai last week, and there was a mall we were in, and it was Walkway in the mall, by the way, right in the middle of Chennai, and we were able to see our consumers shopping that mall. It's just a different consumer that it targets. That consumer exists in all the cities. The big difference would be as a percentage of population, they might be more prevalent in a tier 3 city. As a velocity of volume of consumers, the units of consumers, big cities have people in all demographics of the economic spectrum. We don't see it as being limited to just the tier 2 and tier 3 towns. We see it having definite legs. In fact, one of our better markets today is Hyderabad, which is not really a tier 2 town. Understood. Can you share some numbers on Walkway business on the revenue side or anything? We don't give a number separately, Abhishek, so we won't be able to share anything on specific revenue, et cetera. However, if you see our presentation, we have shared all relevant details in terms of the average ASP, store size, number of stores, number of cities that Walkway is present, et cetera. In terms of CapEx, obviously, cost that goes into Walkway is lower as compared to what it is for Metro Mochi. Like, say, for example, Metro Mochi, average CapEx is around INR 1 to INR 1.2 crore. This includes all the 3 elements, inventory, store fit-out, and security deposit that we pay to the landlord. For Walkway, this comparative number would be somewhere close to around INR 70 lakh to INR 80 lakh. Just continuing to what Nissan said, in terms of profitability metrics, because Walkway is in value segment, it won't generate similar profits in percentage terms as what Metro Mochi would do. Our endeavor is to make sure that over a period of time, we build in a particular model that helps us generate the same return on capital employed as that of MetroMochi. That's our long-term plan. Understood. This is very helpful, sir. Just one last question, a broad level question on Walkway. Do we see this Walkway as growing to an INR 500 crore, INR 1,000 crore business for us, in that range? Abhishek, I think the reality is, as a business, we want to consider only businesses that can get to a significant level of our sales, right? There's no sense in dabbling in a business if it's not going to grow. All our business units, when we put them through the filter of capital allocation or even resource allocation, our big understanding and question is, where do we see this particular brand, this banner, in five years? To your point, if it doesn't have those kind of metrics, it would not be very attractive to us. Understood. Thank you. Thanks a lot. Thank you. Ladies and gentlemen, a reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Kapil Jagasia from Nuvama Wealth Research. Please go ahead. Thank you. Thank you for taking the question, good afternoon to all of you. Sir, looking at your average realization of H1 FY 2024, if I compare that with H1 FY 2023. If I then calculate that for this quarter of Q2, your average realization per unit seems to have corrected on a Y-O-Y basis. This I'm only saying pertaining to this particular quarter. Is it that average realization for in-house brands is reducing and that of our third-party brands is increasing? Is my understanding correct on this? Kapil, in Q2, we have end of season sale, right? Average ASPs move slightly lower in Q2 if you compare it with Q1. If you compare it with last year, we have seen an average ASP growth of around 3%. Okay. Probably even last year was a high pent-up demand, even pertaining to that, it would have been reduced, right? Yes, just adding one more data point. We have seen our contribution of end of season sale inch up slightly up as compared to what it was last year. Last year it was around 5%. It is close to about 7.5% for H1. That also has a slight impact on the ASPs as well as on the gross margins. Okay. Fine. This helps. My next question is, the revenue per square feet was down about 9% this quarter. Even with this lower revenue per square feet, gross margins for H1 FY 2024 is 58%. Would your guidance on gross margins still remain at 55%-57% levels? Or would you be revising it of course at a later date? I think there's a couple of ways to read that square footage erosion. A lot of it has to do with the mix of stores, right? Our most high productive sales per square foot is Crocs. Somebody pointed out earlier on, that's not where we focus a lot of our growth in. You're gonna see some of that naturally take place. We also know that we went into eight new cities, and new cities take a little while to get the store going. We fully expect the store to be cash positive in two years, but it still takes a little while to get going. It's a combination of things. Having said all that, we have guided, Kapil, that we can hit 55%-57% pretty consistently as we look to the future. We'll blip up a little sometimes, we'll blip a little bit below it sometimes, overall, we're pretty confident of hitting that range. Sure, sir. What would have been the gross margins for Cravatex in this quarter? It is close to around 35%. Okay. Just last question from my side. How sustainable is this growth in online channel? I believe, a majority of it would have been driven by Fila and Proline. Before this acquisition of Cravatex, e-com contribution to sales was around 8% or so, and now it has risen to 10%. Just your thoughts on growth patterns for this channel going ahead. First of all, let me address one of the statements you made, Kapil. It is not driven by Fila and Cravatex. It's only Metro Brands standalone numbers that we were reporting that went from 8% to 11%, right? It is really a growth without any consolidated numbers. It is not driven by those two. I think India is going to increasingly become digitally savvy and digitally adaptable. I mean, today, 75% of the Indian population has access to TVs. An equal percentage will have access to smartphones within a matter of minutes. We firmly believe that our consumers in the future will be starting their journey off online, digitally, and then moving to the offline space or continue to buy online, right? There's a lot of friction points with online for consumers as there is for the retailer. In shoes specifically, it has to do with fit. As you know, the fit of a shoe doesn't have much tolerance. You can wear a shirt a little bit loose, a little bit tight. You cannot wear a shoe a little bit loose, a little bit tight, right? That makes it a friction point because shoes typically run about a 30% return rate in the business, and that means a third of your customers are dissatisfied. Having said that, though, I think technology will ease the way as we continue to move forward. The good news for us is we see brick and mortar as continuing to have vibrancy and a need in the market simply because consumers enjoy a shopping experience. At the same time, we see the convenience of e-commerce coming into play, giving that channel more growth. Sure, sir. Any internal targets for this e-com channel, INR 60 crore run rate for the quarterly basis, around INR 240 crore, INR 250 crore. Any internal targets looking at INR 500 crore revenue from this or any percentage of sales number? Kapil, you don't give up, do you? I think our goal is to maximize the opportunity in every channel without in any way eroding the profits or more importantly, eroding the brand, right? If I wanted to hit a target of X double digit percent in e-commerce, we could do it day after tomorrow, but then we wouldn't have a brand by the end of the week, right? It's a matter of managing growth to where you're having growth, it's profitable growth, it adds to your brand value, and it's sustainable. That is an evolving number. I'm gonna tell you, the number I have in my mind today will probably be very far off in the next few months. It's a dynamic situation, and for me to make a comment on that, I don't want to box myself in either. Sure, sir. Thank you for answering all my questions. All the best to you. Thank you. Thanks, Kapil Jagasia. Thank you. The next question is from the line of Kinjal Mota from Banyan Tree Advisors Private Limited. Please go ahead. Hi. Thank you for the opportunity. My question was around ASP and product pricing. When I look at the presentations of this quarter on slide 26, if you look at product pricing sales mix, what I understand is more than 85% of sales is derived from products which are price range between INR 1,500-INR 3,000 and INR 3,000 plus. But when I look at average sales price, that is somewhere around INR 1,500. Since we don't have volume data, I'm trying to understand that why is ASP around INR 1,500, whereas it is more than 85% of sales is coming from products which are priced at more than INR 1,500 or even INR 3,000 plus. Kinjal, this is primarily due to impact of accessories. We sell lots of accessories below INR 500 as well. Classic case being, say, Crocs Jibbitz, which sells around INR 250-INR 300 per piece. If you see ASP for footwear specifically, it is close to about INR 2,200-INR 2,250. Okay. Got it. Thanks. Thanks. That's all from my side. Thank you. Thank you. The next question is from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you. Hi, Nissan. Hi, Kaushal. My question is with regards to the margins, really. See, if we see the margins ex of the Cravatex brands, it is very much still comparable to the last year H1 numbers. This is despite the fact that there has been some drag of the sales per sq ft, and also there is 100 basis points impact that has fallen out due to ESOP and the Ind AS impact. What is really helping to drive these margins? Even if you see the private label contribution, that has gone down by around 4% to 70% now. If you can throw some light, what are the efficiencies where we are getting this to negate the challenges on the margin front? Gaurav, if you see our gross margins, they're more or less in line. As you mentioned, we have seen increase in third-party brand, this increase to 30% is primarily driven by Crocs and FitFlop, where we enjoy gross margins similar to our in-house brands. Hence you don't see any significant impact of that on our incoming gross margins that you sort of see. Hence the gross margins have been relatively stable. Below the line, obviously, as I answered earlier, we also generally keep very tight watch on all the expense line items. Another important reason is most of our expenses are also variable in nature, it helps. When you see increase in sales, you will see increase in expense in absolute terms. In the slower quarter, it sort of helps. This is combination of all these factors that is seen in the numbers that we have delivered. It's largely the efficiencies that are showing up that is able to help to drive the margins despite the Cravatex impact. Hope that understanding is correct. I think, Gaurav, if you see standalone numbers separately, you will see that we're seeing slight increase in expense as such. Our sales have grown by 15%. If you see for H1, our sales has grown by 13%, and our PAT has grown by around 8%. I've given explanation for about 1% delta, which is on account of ESOP and Ind AS 116, and then balance 50, 60 basis points is on account of certain increases that we have seen under certain line items. The next question is with regards to the contribution from the 3,000-plus segment. That has consistently continued to remain near that 40% average now for H1, if I speak so. If you can highlight what kind of segments is really contributing to this 3,000-plus product contribution, and are there any specific brands that are really contributing to this? We have two brands of J. Fontini and Davinci, which is our own brands that we operate in the Metro and Mochi stores that focus on the more premium product ranges, which is our own brand. That's number one. We're seeing growth in both those brands. Number two, the Crocs average ASP is much higher than INR 3,000, and so is the FitFlop. FitFlop, the average ASP is closer to ₹7,000. We also carry key brands like Skechers and Birkenstock that also come with high ASPs. It's really about making sure that we have the right product for our consumers that shop our stores, and they tend to like the products like Birkenstock, like Crocs, like Davinci, like J. Fontini, that come with a higher ASP. Sure. Just one follow-up here. I mean, do you see this trend sustaining even going ahead, or is it really a short-term phenomena because of the K-shaped recovery that we are seeing in the overall economic recovery? Well, we've had this kind of growth over the last quite a few quarters, right? I would've attributed more of this being a spurt when they came out of the pent-up demand. They were cooped up inside for COVID for three years and decided they were going to go outside and treat themselves to a real nice pair of shoes, right? I would attribute it less to this period of time. The way we see it, this is more indicative of where the consumer is going in our segment, right? There's different segments of consumers out there, as you well know, Bharat. In our segment, this consumer is showing that they want to gravitate and maintain that level of quality and value in our products. Sure, Nissan. Thank you for answering my question. That's all. Thank you. The next question is from the line of Vikas from Equirus. Please go ahead. Thanks for the opportunity. My first question is with respect to the demand. As you did highlight that there were some sales that were being postponed because of the festive getting delayed, right? Is it something that you're witnessing that this is returning back since festive is near the corner now? I think our early indication, Vikas, is in line with our expectations. The East is getting closer to Durga Puja, and we're definitely seeing that. A lot of these things in retail you'll find is, no, you can't do a math formula and say, two weeks before Durga Puja, what did I do last year versus this year? There's lots of variables, right? Payday makes a big difference in all of retail. There are other factors, where as simple as, was the 2nd of October on a Monday this year versus a Sunday last year? That has an impact on your business. There's many variables. As we look through all those variables, we feel comfortable and confident that it bodes well to our statement earlier that this was a timing headwind and not an economic headwind. Got it. Very clear. Second question is more to do with the revenue per square feet. Of course last year, as you mentioned, there was some element of pent-up demand and demand remaining strong. We did see our quarter doing roughly around on an average of around 5,500 revenue per square feet, which for last two odd quarters. Can we broadly say that the new normal will be roughly at around this 5,000 revenue per square feet? It is just that timing issue as you just mentioned, and it can even return back to that 5,500 revenue per square feet number going ahead? No, I feel confident that we'll get back to that number. Like I mentioned, there's a lot of variables behind that number dipping down. A lot of it has to do with new stores that you open, right? The new stores that you open, depending on the towns that you open in and the concept that you open. Crocs is a high sales per square foot, but Metro, although it does significantly more volume than a Crocs store does, won't have the same sales per square foot. You got to look at it a little bit in balance. When we go back, even last year through Q1 when we had the pandemic, getting to that 5,500 number is definitely something that we could guide to feel very comfortable on an annualized basis. Of course, we're going to go up some quarters and down some quarters. Correct. Right. Got it. Okay. Yes, sir. Thank you so much. Yes, I got it. Thanks, Vikas. Thank you so much. Thank you. The next question is from the line of Anirudh Shetty from Solidarity Investment Managers. Please go ahead. Hi. Thank you for the opportunity. I had two questions. My first question is, something that we do uniquely is at the store level, we offer a high level of variable pay to our staff, which incentivizes them to get more sales. Just wanted to understand, at the store level, what is the split between the fixed and the variable component? Anirudh, broadly, the split would be somewhere close to 60-40, 60 being fixed and 40 being variable. It differs depending on which state and city you see, because in certain cities with a high minimum wages, it would be slightly lower. On a global basis, this is the average. Got it. Is this true for both the store manager as well as the staff, or does that differ? For manager, it is almost entire amount is variable. Got it. This is something that's fairly unique about what Metro is doing, which also differentiate ourself. Just wanted to understand, what are the other aspects of our culture and what are we doing differently that has allowed us to become such a leading player and allowed us to do so well in the past? Anirudh, thank you for the very nice things. What we see us doing is not brain surgery. It's not magic, right? What it is executing the details of retail every single day. I wish there was some magic pill or potion, I'd write a book and I'd retire. It is going through the grind every single day and making sure that you stay focused, keep ego out of the way, work on facts and data. We've got years and years of retail experience in this building, right? It's utilizing all of that every single day. Furthermore, I'm not so sure I want to talk too much about it because who knows who's listening, right, Anirudh? Absolutely. Thank you for those very nice statements, Anirudh. Thank you for answering my question. Appreciate it. Thank you. Thank you. you. The last question is from the line of Umang Mehta from Kotak Securities. Please go ahead. Hi. Thank you for the opportunity. I just had one question on Fila particularly. Do you think that with the brand repositioning you're planning to do, this year you're working on inventory, but next year, do you think that the brand could break even? Yeah. That's what we are all working on. To the end of FY 2025 and last quarter, our endeavor would be to sort of try and break even. It's somewhere in end 2025, 2026 is what we expect a break-even point to sort of come in. Understood. Yeah. That's it. Thank you so much. Thank you so much. Ladies and gentlemen, you may please press star and one to ask a question. We will wait for a moment while the question queue assembles. Ladies and gentlemen, as that was the last question of the day, on behalf of Prabhudas Lilladher Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.