Ladies and gentlemen, good day and welcome to Metro Brands Limited Q4 FY 2025 earnings conference call hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen only mode, and 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 Devanshu Bansal from Emkay Global Financial Services Limited. Thank you, and over to you, Devanshu. Yes. Hi. Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Rafique Malik, Chairman, Mrs. Farah Malik Bhanji, Managing Director, Mr. Nissan Joseph, Chief Executive Officer, Mr. Kaushal Parekh, Chief Financial Officer, Mr. Mohit Dhanjal, Chief Operating Officer, and Miss Alisha Rafique Malik, President, Sports Division, E-commerce and CRM. I shall now hand over the call to the management for the opening remarks. Over to you, sir. Thank you. Good afternoon, everyone. Thank you for joining and welcome to our Q4 FY 2025 earnings call. I am pleased to share that our revenue continues its positive trajectory as we grew over 10% on a consolidated basis with the standalone business reporting over a 9% growth for the quarter. Of course, if we did not have the leap year day last year to offset, our standalone business would also have been at a double-digit growth. I am very proud of the financial discipline shown by the team as our EBITDA and PBT growth outpaced our revenue growth with the numbers improving 18% and 13% respectively. Additionally, our EBITDA for the quarter came in at 31% in line with our guidance. For the year, our revenues grew by 6% for both the standalone and consolidated business numbers. Similarly to the quarter, our EBITDA and PBT outpaced the revenue growth, posting an 8% EBITDA and a 7% growth for our standalone businesses. As you may remember, H1 was challenging for our business as we were impacted by fewer wedding dates, the distraction of a national election, and unusual weather patterns that affected footfalls in various states. H2 had our business back towards our normal growth numbers, with the consumer coming back to shop in our various different banners. Our gross margins remain healthy, running in the high 50% range and above our guidance of approximately 55%. While our revenue per square foot showed a slight degrowth, this is very much in line with our expectations as this number is always going to be influenced by new stores and the mix of banners that we open, not a reflection of our business disciplines, as is validated by our profit growth. Our e-commerce business continues to perform as it grew 45% for the quarter and wraps up with a 20% year-on-year growth. We continue to monitor and prudently expand our quick commerce space. We'll continue to test this channel to ensure that we capitalize on any meaningful opportunity that it may present to us as it evolves. For the quarter, we opened 18 stores and closed five stores, which takes us to 70 net new stores for the year. We've had quite a few milestones for the year. We opened our first Foot Locker store. We cleaned up the last of the Fila inventory. We were able to overcome the BIS issues for our core business, though its impact was minimal, continue to grow profitably despite there being a much more aggressive discount environment in the market. We also crossed the 900-store mark in the quarter. Last but not least, our consistent effort towards sustainability also yielded tangible results. We achieved our goal of recycling one pair for every pair sold ahead of our schedule, reinforcing our customer trust and our commitment to responsible retailing. I'm proud of the efforts of the team to continue to grow our various banners while sticking to our foundations of operational rigor and financial discipline. With that, I'd like to turn the call back to the operator, open it up for our Q&A session. 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 withdraw 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'll wait for a moment while the question queue assembles. We have our first question from line of Sameer Gupta from IIFL Capital. Please go ahead. Sameer, are you there? We'll move on to the next question from the line of Gaurav Jogani from JM Financial. Please go ahead. Thank you for the opportunity. I hope I'm audible. Yes, Gaurav. We can hear you. Yeah. My first question, Nissan, is on the Fila part. Fila last year, because we were consolidating, and there were certain losses in the business. If you can give us a sense, what kind of profitability we have been able to achieve or rather, had we break even on the Fila business this year in FY 2025? Yeah. Thanks, Gaurav. As you know, last year, the first two years of the Fila acquisition was meant to be a cleanup phase, right? It took us a little bit longer than I would've liked, the good news is it's behind us. This year is gonna be all about repositioning the brand. This year and next year is gonna be about repositioning the brand. I don't see where Fila is gonna play a significant role in moving the needle for the overall company business, it's definitely not gonna be diluted to all that we're doing. That's all. Nissan, just on the follow-up of this, if you can give us a sense, last time as per our calculation, there was a INR 38 crores kind of EBITDA loss that we did in that business. At least that has been now become flat on a YOY basis. There is no incremental loss, or there is some loss in that business? Gaurav, last year, if you remember, overall loss that we had posted for Fila was around INR 58 crores. This year, we have been able to reduce this amount significantly, somewhere close to about 50-odd%. We expect to see further improvement in this number, as Nissan mentioned, in the coming year. Obviously, much better performance from next year onwards once we start opening our EBO stores. Sure. Thanks, Kaushal, for that. My second question is with regards to the overall demand trajectory. As you have clearly mentioned, that the first half was impacted due to pure wedding day and also the elections happening. Last year also, we saw a lower number of store openings. Are you confident of reverting back to the historical revenue CAGR that you have witnessed of 15%-18% from FY 2026 onwards? What would be the guidance in terms of store openings for the next few years? I think when it comes to going back to our growth trajectory, we've had two quarters of double-digit gains, Gaurav, which bodes well. It shows a trend. It's not a one-off. We're going to continue to see things affect the business from time to time. We've had some disruption with our neighboring country. Those kind of disruptions will come and go. Overall, we are seeing the consumer sentiment settle into now a pattern that I would say is more reflective of a steady state of business as opposed to the lumpiness of the post-COVID highs and the post-COVID lows. I think we're starting to see a little bit more of a trajectory of consistency. With that, we remain committed to our guidance of 15% CAGR. Don't forget, it's CAGR, so we're not going to jump right back up to 15, but we see the business heading back that way. As far as new stores go, it's not about the number of new stores we open, Gaurav, as is shown by the financial discipline we have. We didn't add as many stores as we would've liked, but we were more than okay with that because we didn't feel that the commercials on the stores that were presented at that time were correct. What we're committed to doing is opening stores that are meaningful and profitable for the organization, however many that adds up to, right? If it comes to a certain number, it comes to a certain number. It's not a target fixation of the number. It's a target fixation on continuing to operationally and financially deliver to the Metro Brands promise. Sure, Nissan. Thank you for the detailed answer. I will come back in the queue for more questions. Thanks, Gaurav. Thank you. We have our next question from the line of Sameer Gupta from IIFL Capital. Please go ahead. Hi. Good evening, everyone. Thanks for taking my question. Sir, firstly, on Fila, I understand that last quarter you had mentioned around five to six stores in Fila by August this year. Just wanted an update on where are we on those. Second sub-question to this would be that we have had our cleanup done by third quarter. BIS-related issues are sort of sorted now with local manufacturing coming in. What is really stopping us in this particular format? I understand there is a repositioning of the brand which is to be done. Are you still iterating between how that reposition needs to be done, and that is what is taking time? We're not in any way confused about how to reposition it. We're very clear that, A, it needs repositioning, and B, how it needs to be repositioned. Repositioning a brand and establishing brand saliency, Sameer, is not an overnight task, right? If it was, everybody would be doing it. It takes a little bit of time, and it takes a little bit of trial and error as well, right? We're not going to get everything right the first time around. Even as far as BIS goes, while we've been able to duplicate a lot of the production to India, it's not everything either. That is still a challenge for our Foot Locker and our Fila business. There are some challenges, but equally, we see the opportunity that if we reset the brand correctly, reposition it properly for the Indian market, for that consumer that's discerning, it has some legs behind it. Sir, where are we on that five to six stores by August? As per the last guidance, are we still on track, or are there more hiccups expected? We definitely intend to open more stores in H2 of this year, right? In fiscal H2 of this year, that's definitely staying on track. We're not deviating from that. Okay, sir. That's fair. Sir, second question is on store expansion. Now, I understand that there were issues in FY 2025 related to rentals, and you mentioned commercials were not viable in the previous participant's answer. Where are we on those now? Are those now coming back to sort of more viable so that we can come back to, let's say, a desirable retail area growth this year, or it's still a challenge? No, it's a good question. Sameer, we are seeing rentals never come down, right? It's like taxes and rentals always keep going up. The good news is, I think it's coming off its peak that it had earlier in the year. We're starting to see that peak flatten down a little bit. It's not going to go back to the levels, and we're acutely aware of that, but we are seeing it get more favorable for us to open stores. Super, sir. That's all from me. I'll come back in the queue for follow-ups. Thank you. Thank you. We have our next question from the line of Saurabh Kundan from Goldman Sachs. Please go ahead. Thank you very much for the opportunity. Nissan, as you mentioned in your opening remarks, that revenue per square feet, as you said, will always be impacted by store addition and the mix of stores that you add. Can we sort of assume that in that case, at the current store addition pace that you're adding stores at, this number may just remain flattish in the near to medium term? Is that a fair assumption? Yeah, I think flattish with some inflation at some point in time. If we open up more Metro and Crocs stores, that is going to grow. If we open up other banners, it's not going to grow as fast. It's really a mix of stores, Saurabh, than it is anything else. There is constant inflation happening as well. I would say, I wouldn't factor much of that kind of growth coming in. It'll be just growth coming in from SSG, which will then translate to square foot growth. Right. Thank you. Nishant, thanks for that. My next question is actually around Walkway. While we understand your plans and aspirations over the long term for this format and the kind of TAM it can open up for you in the overall footwear market, can you share with us where we are right now, and what are the exact store-level variables that we are still testing that are holding us back from expanding stores here as of now? That's it. Thank you. I think like you rightly said, that the TAM for the Walkway consumer is significant. We're acutely aware of that, Saurabh. I don't think there's anything holding us back, per se. Just like Fila, positioning, evolving, getting a brand right, getting a retail concept right, is an ongoing work in progress. At some point there, we start to feel good about where we are with it, and that's when we start pressing down on the accelerator. Don't forget, it's going to be dilutive to my square footage that you just asked about. On the flip side, I think the opportunity is intense, and I think we definitely feel that we're closer to cracking that, and we don't see any obstacles from where we sit today for us to get that banner growing. Right. Thank you. Thank you. We have our next question from the line of Sagar Chetvani from PhillipCapital PMS. Please go ahead. Thanks for the opportunity. How do you expect the footwear realizations to move in FY 2026, given that we have added Fila, Foot Locker, and New Era? Of course, they are in the ramping up stage, and also we are adding the Metro, Mochi stores. How do you see that realization going up? Sagar, if you see historically, our ASP growth has been in that range of around 3%-5%. With all this format coming in the last question, obviously we will be growing our Walkway segment too. We'll see growth all across. Our e-com is also growing. We broadly expect our ASP growth to be around the range that we have seen historically. We don't expect it to change materially, at least if I was to speak about, say, next year. Once this format starts contributing significantly to the revenue, obviously, we'll see changes in averages over a period of time. Okay. Also, if you could comment on the footwear realization split between the Tier 2 and beyond towns versus Metro plus Tier 1 cities, that would be helpful. See, we don't see a significant difference, to be very frank. Obviously, you can't compare, say, a Phoenix in Mumbai to, say, a store in Patna. I'm just saying, broadly, we don't see a significant difference. In metro cities, certain malls, et cetera, ASPs tend to be higher than, say, on an average that you see for a country as a whole. Largely, wherever we go, we see that kind of population who aspires to buy a product from us, and they're more than happy to buy at the price that we operate. Lastly, what were the footwear realizations this quarter? As I said, overall, if you see our ASP increase is around 3%. If I were to specifically talk about footwear, it is somewhere in the range of 5% to 6%. Okay. Thank you and all the best. Thank you. We have our next question from the line of Shraddha Kapadia from SMIFS Limited. Please go ahead. Hello, am I audible? Yes, Shraddha. Yes, you are. Thank you just so much for the opportunity. Sorry to interrupt, Shraddha. Your voice is quite breaking. Can you use an headset? Hello, is it better? A little bit, ma'am. Just a feedback to the performance. What is in growth? Is it the channel mix, higher ASP, or customer acquisition? What is the expected contribution which we expect for FY 2026? Shraddha, can you please repeat your question, at least the initial part? We couldn't get exactly what you wanted to ask. Basically, this is with regards to the e-com, which is there. It has grown 45% for the quarter. What is driving this growth? Is it the channel mix, higher ASP, or new customer acquisitions? If you could help with the targeted FY 2026 contribution. If you see our five-year CAGR for e-com has been around 53%. For last quarter, we grew at 45%, and if you see for the year, it was around 20%. To be very frank, we are growing across all the channels that are available for us to tap. Obviously, our focus, as we have discussed this multiple times, is on growing our omni-channel business, which is predominantly full price products getting delivered from our store. It's a mix of products that we see. Apart from that, obviously, we keep pushing and strengthening our positioning across various categories. For example, men's and handbags will be our focus area, and we expect that to increase in the coming years. It's like, over a period of time, strengthening and using all the avenues that are there to grow this channel, and most importantly, to grow this profitably. We don't want to grow this by offering significant discount. We want to limit that. At the same time, we would want to target and be among the top player across all the categories that are available online. Sure. Thank you for the detailed answer. Sir, any contribution which you expect for FY 2026, if you could just give a brief number. Would it be similar to the current FY 2025? Shraddha, as I said, e-com has been growing at a pace slightly faster than offline business. We expect this contribution to keep rising over a period of time. It is 10.6%. Maybe if you force me to put a number, maybe I will say it will increase by 1% or 2% in the coming year or so. Yeah, that's how we will look at this. As I said, we don't want to push this sales by offering discounts. We want this to be profitable. Sure. Thank you so much for your answer. Sir, is it possible to give the ASP for footwear excluding the accessories? ASP for footwear broadly is somewhere around INR 2,400 odd number, if you just see for footwear. Okay, sir. Are you planning to take any price hikes for FY 2026? Not specifically. We are not seeing a significant increase in our input costs. Broadly, what we will see is a mix of some cost increase and predominantly mix change. We expect our ASPs to be in that range as we have seen historically, around 3%-5%. Okay, sir. Thank you so much for your answers, all the best for future. Thank you. Thank you. We have our next question from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead. Thank you for the opportunity. Just wanted to understand the Crocs brand. You've opened only 10 stores in the year, 10 to 11 stores in the year. How do we see this brand shaping up over the next two to three years? I think there continues to be an opportunity to grow the brand. As you know, Crocs tends to be a slightly higher priced item. It's not easy to go into your lower tier markets with Crocs right away. As India evolves and as India becomes more and more aspirational and there's more disposable income, we see a long runway for Crocs in India as we look to the future. Should Crocs grow at a higher rate than the company average going forward, is what I was trying to understand. Yeah, no. I think we don't have a plan to grow any faster. We don't have a plan to grow slow, necessarily. What we're really focusing on is to move all the growth across all our banners. How do we see the scale-up for Fila and Foot Locker going forward in terms of stores and online presence? I know online is someone else, but for Fila online presence and for Foot Locker in terms of offline presence? Yeah. Fila is in our offline Foot Locker store. It's also on the online Foot Locker store. It's also online by its own.com in India. We also have Fila starting to go into our Metro, Mochi doors as we start to reposition the brand. It's in all of those places, and it's performing to our expectations. It's not an overnight journey to build a brand, but it is performing to our expectations, so we're quite pleased to see that happening. Okay. Last question is profitability. How do we see the profitability going forward with respect to the non-BIS inventory that we have, and do we have to take some discount measures to reduce them in the near future to medium future? No, we don't see BIS having any impact on our margins. Prerna, broad guidance as we have always given gross margin in that range of 55%-57%, EBITDA in that range of around 30% and PAT around 15% is what we would continue to endeavor to achieve. Okay. Thank you so much, sir. All the best. Thank you. Thank you. We have our next question from line of Umang Mehta from Kotak Securities. Please go ahead. Hi. Thanks for the opportunity. Nishan, my question was on store opening. I just wanted to check, what changed versus last quarter? Demand environment, if anything, has only been steady, right? Rentals you said have started to improve. Is it just that you don't want to put a number, but nothing has changed meaningfully or has there been any change in the underlying kind of model for you? What has changed, as I mentioned earlier on, Umang, is the fact that we do see rental peaks coming down a little bit. That's always very encouraging. What has not changed is our commitment to growth, the availability of capital for the CapEx to the stores, the multiple banners that we have that we can expand with. We're quite optimistic about opening stores, right? Putting a number on it, listen, it's just a number that you and I pick. The reality is we're going to be very aggressive on store growth, and we're going to open as many stores as we see is meaningful and profitable for the organization. Understood. That makes sense. Basically, there's no number, but you're remaining as optimistic as you were before. Correct. The second one was on Fila. In the interview today, earlier, you said that 50% of Fila and Foot Locker you manufacture in India. I'm assuming you have some suppliers already who are shipping you half of the line. Is there any capacity constraint at their end? Because right now, since you are still ramping up, I'm assuming your requirements might not be that high. What exactly is the issue? If you can shed some more light, it will help us understand. When you try to do a brand, you really need width of assortment more than you need depth. It's not a question of having scale, it's a question of having capabilities available to you in different models and different parts of the assortment in India. If there's anything that's going to be a challenge and going to continue to be a challenge till the ecosystem in India evolves, is to get the kind of products we would like to see. Now, having said that, there are ways to get it through BIS-certified factories abroad, and we are pursuing all of that. It would've been a lot easier if we didn't have to deal with it, Umang. It's just that it's one more wrinkle that we have to work through. I understand. That's very helpful. Thank you so much, and all the best. Thanks. Thank you. We have our next question from the line of Soumya S. from Insightful Investments. Please go ahead. Hi, sir. Thank you for the opportunity. I just wanted a clarification. According to what I have understood, Mochi, Metro, and Walkway are the stores through which you sell your own brand shoes. Am I right? Correct. Going forward, as you are looking to expand Fila and Foot Locker, will we be seeing some reduction in the own brand sales, or will the increase in number of Mochi and Metro stores sort of make up for that? Yeah. The numbers we share with you are the numbers of own brand sales that we sell in a Metro, in a Mochi, in a Walkway, right? We have been running that numbers for quite a few years, so we don't see that changing, Soumya. On an overall basis, immediately, we don't see any shift in that overall math either. Okay, sir. Understood. Thank you so much. Thank you. Before we move on to the next question, a reminder to all participants, if you wish to ask any questions, you may press star and one. We have our next question from the line of Devanshu Bansal from Emkay Global Financial Services. Please go ahead. Devanshu, are you there? Yes. Hi, Nishan. H1 has been a weak base, which was impacted due to multiple factors. There were fewer weddings, elections, sequels, et cetera. If we were to segregate growth across the two halves of FY 2026, how would it look like? Can H1 see better trends vis-à-vis H2? Just wanted to take your thoughts on this. I like your polite way of asking us for a guidance Devanshu, that we don't do. I think it's a sensible math in retail that if you look at a lower base, the propensity to have a better performance is higher than if you look at a higher base. However, there's also something called momentum in retail, and once we start seeing that pick up, what I would encourage you to just think about really is in the long term, we are pretty confident that we're going to get back to our 15% CAGR. This year wasn't there. That would at least tell you an indication of how we are looking at it long term. Understood. Secondly, wanted to understand how has been the initial traction in the Foot Locker store that we have opened, and whether this is leading to uplift in the confidence level for the expansion for this format. Yes. To be honest with you, with the product that we got, we're actually quite excited about what's happened with Foot Locker. What's unfortunate is we haven't been able to get all the product we need due to BIS limitations, right? From that standpoint, our commitment, our excitement on the opportunity and runway for Foot Locker remains untouched. Having said that, there are some short-term challenges. We fully expect the brands to step up and figure out and close the loop on manufacturing within the next 6-9 months, at which point we will accelerate the growth of Foot Locker. We do have more Foot Lockers planned to open later this year, so it's not like we are hitting total pause on it. We have slowed it down till we get full visibility of how the brands are going to respond to BIS. Understood. Last question from my end is for Kaushal. Kaushal, there is some increase in other financial assets. It is about INR 179 crore versus about INR 13 crore last year. Can you help us understand what is this increase related to? Devanshu, our investment in FDs, because of the accounting classification, it goes into other financial assets, depending upon the tenure for which that FD investment is for. The increase that you see is basically our treasury investment in bank FDs. Understood. From a capital perspective, because dividend was quite high relatively versus previous years, from a capital sufficiency perspective, our balance sheet remains solid? Yeah, it remains solid. If you see our balance sheet, we have a treasury of around INR 775 crore. In terms of our expansion plan, as we've always said, our annual cash accrual should be enough to fund all the store openings and plans that we have. We don't see any problem from that point of view. We have enough dry powder ready in case if something comes up. Okay. Allied to this, from a working capital optimization perspective, it has been a pretty decent job this year. Can we expect some continuation of moderation in working capital, or we have sort of achieved whatever efficiencies were there to be taken? Right. Devanshu, as you would know, if you see on a long-term basis, our working capital has been around that 70-75 days, in that range. It was inflated in last three years predominantly on account of BIS-related frontloading of inventory that we had to do. We are seeing now that thing tapering off. We expect our working capital to be around this range. We don't want to become too efficient and then lose our sales. It is a fine balance that we have to hit there, but around 70-75 day working capital is a decent number, and that is what we would want to hold on to. Got it. Thanks, Kaushal. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have a follow-up question from the line of Sameer Gupta from IIFL Capital. Please go ahead. Hi. Thanks again. Two different set of questions from me. Firstly, overall CapEx in FY 2025 I see is at around INR 86 crore, and this is quite low versus last year. I understand store openings were low, but we had an understanding that you were investing in a new warehouse, and that investment was around INR 40 crore. Just wanted to get an update. Is this done or we expect this to get staged in the future year? Sameer, that cash outflow should happen in current year. Most probably, most of it will happen in the H1 of this current financial year. That clarifies. Thank you. Secondly, sir, it's a different off-beat question. When we are following retail this quarter, what we find is that South as a market, and particularly the states of AP Telangana, have been called out for a very weak performance for different reasons. Just wanted to get an update. Have you also witnessed something similar, and any reasons that you can figure out why that is happening? We are seeing a slight softness there. I think it's hard to pinpoint what exactly might be causing it. Yes, you're not incorrect that we noticed that other retailers have also, in our communications with them, expressed that same sentiment. Could it be some of the slowing down of the IT sector? There's also a lot of public works going on in Hyderabad. These things happen, typically, when you look at the macro level stuff, there's no reason that that area of the country should lag significantly. From time to time, we've seen when tourism is affected, the tourist areas get hit. These things always rebound. At the worst case, they lap itself, Sameer. It's not significant enough for us to be concerned about. Got it, sir. That's very helpful, sir. Thanks all. I'm done. Thank you. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. A reminder to all participants, if you wish to ask any questions, you may press star and one now. A reminder to all participants, if you wish to ask any questions, you may press star and one now. A reminder to all participants, if you wish to ask any questions, you may press star and one now. A reminder to all participants, if you wish to ask any questions, you may press star and one now. As there are no further questions, I now hand the conference over to the management for closing comments. Thank you. We don't have any closing comments, and thank you everyone for attending. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your line.