Ladies and gentlemen, good day. Welcome to the Metro Brands Q1 FY 2026 earnings conference call hosted by ICICI Securities 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 and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon from ICICI Securities Limited. Thank you. Over to you, sir. Hi, everyone. Representing ICICI, it's our absolute pleasure to take you to the Metro Brands 1Q FY 2026 conference call. The management is today represented by Mr. Rafique Malik, Chairman, Ms. Farah Malik Bhanji, Managing Director, Mr. Nissan Joseph, Chief Executive Officer, Mr. Kaushal Parekh, Chief Financial Officer, Mr. Mohit Dhanjal, Chief Operating Officer. Over to Nissan for the opening remarks post which we'll open the floor for Q&A. Over to you, sir. Thank you, Manoj. Good afternoon, everyone. Thank you for joining. Welcome to our Q1 FY 2026 earnings call. As you all are probably aware, we posted a 9% growth in both our standalone and consolidated numbers. In the quarter, we had an offset Eid, a strong season for us that fell into the previous quarter, the early onset of monsoon, which though is key for our Crocs business, does dampen shopping in the markets. The two major markets with early monsoon were Gujarat and Maharashtra, where we have a significant dispersion of stores. Nonetheless, we were able to have an almost double-digit increase in top-line sales. Our EBITDA grew 8%, coming in at 31%, slightly behind last year due to increased spends in marketing to enhance our brand positioning for our various business units. Our PAT grew 7% to maintain our mid-teen performance of 16%. Gross margin remained consistent and healthy, running in the high 50% range as we achieved almost 60% margin for the quarter. Our e-commerce business stayed its course delivered another 45% growth. Fortunately, monsoons don't dampen online shopping. We're seeing traction in the quick commerce space, though it is very limited to a handful of metro cities today. For the quarter, we opened 23 stores and closed three stores. We've been working on repositioning Walkway and are now beginning to open stores for that banner. We opened four Walkway stores just in the last quarter compared to four for the whole year last year. We had delayed the opening of Foot Locker and FitFlop to allow for stabilization of sourcing given the BIS regulations that impeded imports for most of last year. We're starting to see that supply chain gain stability and have started opening Foot Locker stores in this quarter. We still plan on opening Fila stores later in the year as we continue to reposition the brand. As we announced mid-quarter, we are excited about the new partnership with Clarks Shoes. This premium brand of dress and casual footwear fits very well within our Metro Mochi business and also has a brand recognition to have its own mono-branded stores. We now have a long-term exclusive agreement for India and surrounding countries like Bangladesh, Nepal, Maldives, Sri Lanka, et cetera. This agreement makes us the exclusive supplier and seller of Clarks in India in all channels, online and offline. We will have more updates on the plans for Clarks in our next earnings call. One item I mentioned in our last call that's worth repeating is on the ESG initiative of Metro Brands. We may be the only footwear retailer in India, or in the world for that matter, that recycles a pair of shoes for every one that we sell. Let that sink in for a minute. I'm really proud of the ESG team that has worked so hard to build this ecosystem for us, and we hope to continue to increase our recycling efforts to consistently exceed the pairs that we sell. With that, I'd like to turn the call back to the operator and open it up for Q&A. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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'll wait for a moment while the question queue assembles. The first question is from the line of Videesha Sheth from Ambit Capital. Please go ahead. Yeah. Hi, good afternoon, team. Nissan, you touched upon this repositioning of Walkway. Can you please elaborate on that? What are the moving parts involved in the outcome that you're expecting over here? Well, we're repositioning Fila, Videesha, but we're not repositioning Walkway. Okay. We're getting into that whole value footwear chain piece. We've been working on it, looking at it from a sole presentation standpoint, how we come to life with our products, what the cost structure is for that business, and to ensure that it starts to get set up for profitable growth. As you know, we have not grown a lot of Walkway stores in the last few years. I believe we're at a point now that we can start adding Walkway to the list of banners that we can continue to expand. Okay. Just follow up to this. If you want to own the lower price point range in the entire pricing ladder, do you believe there's still some more work involved or to be done around the supply chain part of it? Because to those consumers, you have to offer a combination of both pricing and design, and front end is something that you guys are anyway on the top of. Just wanted your thoughts over there. In the business, the supply chain, the design, all the way down to the consumer accepting your designs and pricing is an ongoing battle. It's an ongoing thing. It's not a magic formula that you can apply and just sit back at it. We're very confident that we see roads and traction in the initiatives that we have taken, that we will now be looking at it much more closely. As you know, almost 80% of the footwear sold in India is below INR 1,000, and that's the space Walkway plays in. I think it has an opportunity to really take us and continue its growth. Got it. The second question would be around store addition. Considering that consumption has not yet picked up full-fledged, would you expect store addition to remain relatively lower at 80-90, or would you be crossing 100 this year? Where I'd leave that is, we're seeing traction in the deals we're getting, which is a good sign. I think if you remember a few calls ago, we talked about rentals starting to spike. Rentals are never coming down, but we've definitely seen them come off the spikes that they have been on. We feel pretty optimistic that we can continue now our trajectory of growth in stores. How many stores we open is really a matter of what the right opportunities are there, Videesha. We're not here to hit a number. We're here to capitalize on as many rental deals that make sense for Metro come our way. Got it. Super helpful. I'll join back with you. Thank you. Thank you. Thank you. The next question is from the line of Saurabh Kundu from Goldman Sachs. Please go ahead. Thank you very much for the opportunity. Nissan, my first question is to you. While we understand that the retail environment has been weak, a lot of companies have spoken about early monsoon and a few other factors as well. The growth that you are seeing in your case, would you say that it is only the result of these one-off factors, or is there anything specific to Metro Brands as well? I wanted you to share with us, do you feel that these initiatives, let's say Walkway, or even addition of Clarks mono brand stores, et cetera, now become important or they really need to fire for you to hit, let's say, a mid-teens growth? Do you think the existing scaled-up brands are enough for that mid-teens? All right. Saurabh, thanks for your question. Let me anchor what you're saying to some numbers that might put it in a little bit more perspective, right? If you go back, we talk about maybe a muted demand and whatever else you have. If you go back to FY 2020 Q1, which is calendar 2019, which is the last quarter we had before COVID. We're up 101% over that quarter, even after last quarter of muted demand, as you called it, right? Just to give you perspective, if I were to CAGR that, it would still come to a 12%, and I'm including the COVID year in that. I'm not pulling that out. I'm including that year. We would still have a 12% growth, right? What you're really seeing is us coming off some of the lumpiness caused by COVID for our business. We're not seeing any fundamental cracks or gaps in the business that alarm us. On the contrary, as I mentioned earlier, we are starting to see rentals start to make more sense. We don't see that being a core issue internally. There is a certain lumpiness. You always have dates going back and forth. The previous quarter, for example, didn't have a leap year day. You're always going to have these kind of things in retail. Despite all of those things, I do want to double down and say that it's a 12% CAGR, including the COVID year. If you look at our PAT, it has a CAGR of 15% over that same period of time. Our PAT margins back in '19 were 13%. Last quarter, as you know, we almost reached 16%. These are the things we're guiding to. What's really important to look at here is, we've guided to 15% CAGR growth. We've guided to about mid-teens in PAT. We've guided to 30%+ in EBITDA. We've never strayed from those numbers, not through the highs and not through the lows of the lumpiness of COVID. We see really a constancy of business. It's really things settling down for us. As far as the new banners go, that's going to be one of the three levers of growth we have. We have same-store sales growth, we have new store expansion, and of course, we have new banners that will come in. We don't add brands for the sake of growth alone. They have to have a significance to our consumer. We look backwards from our consumer. If they're significant and meaningful to our consumer as we quest to try and take more of the footwear wardrobe of a consumer, they have to make sense in there. Right. Saurabh- Yeah. Just adding to what Nissan said, to your second question, we expect close to about 15%-18% CAGR. I'm talking long-term, I'm not talking short-term here. Not only through our new formats, but ideally for each of the formats that we have. Individually, each of the formats, we would expect that kind of growth to come in. Metro, which is our biggest format, is just 350 stores. There's a huge room for growth. We feel each of our formats can grow 15% and upwards over a long period of time. Very clear. Thank you both. Just one follow-up. This is to you, Kaushal. This INR 4,350 per square feet that you've reported this quarter is obviously impacted by calendar shift, et cetera. Have you done an exercise where you can give us a number purely because of this calendar shift? What would this number have been if it was a normal quarter without these Eid festival shifts? This INR 4,350 would have been what? Broadly, CCR sales, we would easily would have been higher by about 2% to 3% if Eid was to be in Q1. Approximately around a similar percentage would get added to the sales per square feet also, the number that you see. Saurabh, the other thing you have to consider is the annualization effect of almost 100 stores that were opened in the last 12 to 15 months, right? New stores never have the same productivity as your existing stores. They're not supposed to, right? If they did, then there's something wrong with the existing stores. As you see those annualization numbers come, that's number one, depending on the mix of format that we open, all our different formats contribute differently to the sales per square foot. We don't break it out, but some are definitely more accretive to it, some are dilutive to it. That is probably a bigger effect than just one quarter of, whether it's an Eid offer, not that it doesn't affect it, but the bigger effect is the annualization of 100 stores, which is over 10% of our chain, that happened in the last 12 to 15 months. Thank you, Nissan. Thanks for sharing that information. Saurabh, you can rest assured that it doesn't, in any way, detract from our profitability, our margins, our EBITDA. That's a number that doesn't change, showing that it's healthy growth and not growth coming at the cost of those things. Okay. Thank you. Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yes. Hi, Nissan. Thanks for the opportunity. We are clearly noticing that preference of consumers is moving towards casual products as well as channels like online, right? Wherever presence is currently lower, albeit it is building up. Wanted to check, is this changing consumer preference also coming as a hindrance to overall growth? What's your sense on this? I don't believe it's necessarily just casual. There's a lot of consumer preference changes, right? There's personalization, there's comfort. These are all changing landscape of a consumer. That is not the big driver of what's going on. What I believe is it's just a normal change, the lumpiness of post-COVID. I must remind you, our growth has not, if you look over a period of time like we always guide to, we're always going to have a quarter here and a quarter there that doesn't seem to totally be in line with what we'd all like. However, when you look at our performance compared to the industry, compared to our space that we operate in, we continue to lead the way in growth, in maintaining profitability. I would say it's not so much the consumer preference is changing, albeit we know that consumers are adopting more into athletic footwear and casual footwear, as you mentioned. Our stores are geared to be able to pivot to take care of those consumers. It's not like we don't sell casual shoes. Casual shoes and casual and athletics are over 50% of our business today. It's not like we've been absent in that market at all, Devanshu. Interesting. Nisan, Q2 typically is a slower quarter relative to the first quarter. This time around, festive is relatively early, which is in Q2 itself. Versus historical trends, can we expect a better traction this time around? Or what's your view here? You'll see some dispersion of those sales into Q2. Then you'd have to come back and maybe offset some of that in Q3. It's just a normal cyclical nature of the business. Everything's getting earlier and earlier, right? Eid gets earlier every year. What's important to know is that the foundation of the business, the growth levers that we have in place, are all working and going in the right direction. Understood. Lastly, on Walkway, there is an uptick in expansion. Annually, if you could just provide some guidance on store additions here. A related question is, how do unit metrics of Walkway stores sort of differ from Metro Mochi stores in terms of revenue and margin front? We don't guide simply because we want to open as many stores that makes logical sense for our business. As far as the revenue numbers go, obviously it's not as profitable from a percentage standpoint as our Metro and Mochi business. However, it is an amazingly good deployment of our capital that we have from a ROC standpoint. It definitely standalone will make a profit, so that's not an issue. While it might be dilutive, it's not in any way negative by itself. With that, diluting too much the sales to square foot are not as much as the Metro Mochi, for example. You will see some dilution, but what we aim to do is have top-line growth without compromising on any of the key numbers that we've guided to. Devanshu, our long-term target for Walkway is, like take for example, for our core formats like Metro Mochi, our ROCs at store levels are upward of 40%-45%. For Walkway, if you think from a long-term perspective, ideally we would like them to deliver somewhere around 30% and upwards. Understood. Got it. Got it. Question. Thanks. Thank you. The next question is from the line of Rahul Agarwal from Ikigai Asset Manager. Please go ahead. Hi. Thank you so much for the opportunity. Sir, could you talk about a little bit on same-store sales growth for Metro Mochi and Crocs please? We don't break out same-store sales growth, but in the 15% CAGR that we guide to, a good portion of that will come from and has come from SSG. The other portion will come from ASV growth, I mean unit growth, and the other% will come from new store annualization and new store growth, right? We don't break it out. We expect all the stores to hit a good SSG depending on their aging. The newer stores tend to have a higher% of growth on an SSG basis, whereas more mature stores tend to have a little bit of a flattening out, but still will show growth. Yeah, I understand that. I was actually more talking about, let's say, past 12-18 months trends. Looks like most of the revenue growth is now essentially coming from new store additions. Hence, I was just a bit concerned on what's really happening on the Same-Store Sales Growth. Just from that perspective, anything qualitative also is helpful. Yes, Rahul, as Nissan earlier mentioned, at times, in retail, we see slightly lumpy cycle, right? FY 2023 was one of the best years with obviously pent up, et cetera, revenge buying, whatever you call, all clubbed into that year. In light of that, when you see FY 2024, you will see as if FY 2024 was muted. If we see versus Q1 of FY 2020, Nissan mentioned, right? We see a 16% growth which would come to a CAGR of around 3%. If we see slightly longer period, say 10 years, we've generally seen overall SSGs for all our formats ranging in that mid to high single digits. That is our long-term target for any retailer to ensure that profitability doesn't get impacted. That's a minimum SSG that you would want to target over a long period of time. Rahul, while it's an important metric, and we continue to gun for it, don't forget, sometimes we open our own stores on top of our own stores, right? We have a very successful Metro store. We will backfill it, which is part of our growth strategy. We will backfill it with another Metro, or we will backfill it with another Mochi store. If we see a very good Metro store, Metro or Mochi selling a lot of Crocs, we will backfill it with a Crocs standalone store. Some of the mutedness, the reason we wouldn't hit high double-digit SSG growth by itself is because we cannibalize ourselves to some degree. It's good because in overall, we gain market share without losing profitability. That's the ultimate goal, is to keep gaining market share as much as we can. If you look at the numbers over the last few quarters, as you alluded to, if you compare how we've performed versus our peers, we've definitely gained market share. If you look at our profitability, we have not compromised on our profitability at all. Perfect. Get it. Related question also was that the margins, which are anyway, I think best in class, I would imagine. Purely from an SSG perspective, looks like the contribution, assuming that's a bit lower than what it should be, the margins would actually have some upside from here, right? If you have better SSGs across your Metro, Mochi and Crocs. Is that understanding correct, or you think these margins are at a peak here and we should actually sustain here and we're not looking for incremental margins? Yeah. What we're really looking for here is to have a business model that sustains over many years, right? It's not about increasing a number, because at some point it'll come back to pay itself off. It will not be a profitable way to grow. What we want to do is to continue to grow along the way we've guided. We've been guiding this since we went public, and I think you should be pretty pleased that, especially when it comes to profit PAT and EBITDA, we've always been in our guidance, if not better. That's more important to us than talking about just one singular number. Got it. Lastly, one small question on UKFTA. Is there any benefit do we expect on the business purely from India-UKFTA signed up? No. We're 100% India. We source almost 95% of our goods in India. We sell 100% of our goods in India. We don't see that impacting us, benefit or otherwise, in any way. Right. Perfect. Thank you so much for answering my questions. All the best for the rest of the year. Thank you. Thank you. The next question is from the line of Gaurav Jogani from JM Financial. Please go ahead. Thank you, Nissan and Kaushal, for taking my questions. My first question is with regards to the marketing spends that you alluded to in your PPT in Q1. Would you say that it is kind of front-ended and whatever we spend on the annual basis, that would remain? This year we could see a higher marketing spends for the year? We target around 3.5%-4% in that category. Last year, if you looked at it, we did not spend that much in the quarter. We really want to continue to invest in our brand building efforts and making sure that all our brands continue to be top of mind. We're not going to see that level up. However, you will definitely see that we are going to invest in marketing. Sure. If I understand it right, Nissan, it would be in the 3.5%-4% range, right? Yeah. Which if you were to do a comparative basis, it would probably be slightly higher than last year. Okay. Sure. Nissan, the next question again, is with regards to the same-store sales growth only. Now, I'm not taking a one-year, two-year view, but even if we look at from FY 2023 onwards, I mean, still we are lagging on the revenue per square feet number. Now, there could be two parts to this. One is because of the store additions have been higher, and second could be that we are also opening stores in tier 2, tier 3 towns, which would be impacting the revenue per square feet. Which one would you allude to a larger portion, the demand slowdown or the other bit? Gaurav, if you see FY 2023, that was our highest sales per square feet, right? Because we all know that year had a quantum of pent-up buying, et cetera. Ideal number to compare would be FY 2020. If my memory serves me right, it was somewhere around INR 17,000, and we are trending higher than that. This is a blended number, and it depends on, since we have eight formats now, it becomes slightly difficult because, based on if we increase Walkway significantly, obviously we'll see some impact on these numbers. Certain formats would have upward impact. Best way to see is compare sales growth and see how the profitability of the company is moving rather than just being fixated with this particular number. Yeah. Gaurav, we are very keen on continuing to grow, keeping in mind that our costs grow as well. That's what we focus on to make sure that our growth covers our costs and gets beyond it as well. That comes in many different ways, right? Again, I think we might read too much into the sales per square foot. If indeed it was affecting our business like a lot of people would think, you would see that in the other numbers come through very quickly. Sure. Appreciate that. The last question is with regards to the Fila format. There were certain losses that we had incurred when we had acquired the brand. If you can help us out, where are we on that journey? Are we breakeven in that format? How much losses are there? Anything here would help us. Gaurav, in the first year, FY 2024, losses in Fila format were around INR 58 crore. Last year, we reduced it by around 40 odd%. This year it will further go down. Sometime next year is when we feel we should break even with respect to Fila. Okay, sure. Thank you. That's helpful. Thank you. The next question is from the line of Shraddha Kapadia from SMIFS. Please go ahead. Thank you so much for the opportunity. My first question is majorly regarding the ASP. Would it be possible to give the ASP excluding the accessories, majorly for the footwear, would that be possible? Also, if you could help with the current ASP for Clarks. ASP, if you take ASP only of footwear at our stores, it is somewhere around INR 2,700. We have seen growth of around 3.5%-4% in that. Overall ASP also, we have seen growth of around 3%. If you look at our premium business, it represents almost 56% of our business today, Shraddha. While we try not to give too many forward-looking statements or give too much information on our business for competitive reasons, Clarks would definitely be north of INR 3,500-INR 4,000 as an ASP. Okay, sir. That was quite helpful. Also, just continuing with the statement which you said. Currently, if we take a look, then our premium mix, which is there, is 56%. Do we have any target, or do we have a target so as to reach, say, 60%-70% of our total, which would be there? We don't have any target. If you even see our last three years trend, right? This number has gone up by 1% year-over-year. FY 2024, if I remember correctly, our contribution of sales upward of 1,500 was around 86%-87%. Last year it was around 88%, and this year, for first quarter, it is around 89. It's been very stable. We are already at a very high number. Obviously, with addition of formats like Foot Locker, Clarks, et cetera, we will see upward movement. We are also planning to increase Walkway, so it will sort of balance it out. We fully understand that certain banners of ours play to a premium segment, Shraddha, and certain banners play to a value segment, right? Each of those segments, each of those banners needs to stay in their lane and perform in their lane, and that's what's important to us. Sure, sir. Thank you so much. Thank you for taking my question. Thank you. The next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead. Thank you for the opportunity. Sir, last year, wedding season was weak, that had impacted our sales in Q1. This year, Eid moved in Q4. How would you see consumer sentiments between both the periods? I think it was quite consistent with what we would have expected. Though they were wedding dates in this quarter, most of that shopping was done previously. We also had to offset some other things in there. Consumer sentiment for us, what I can look at is as a slightly longer term. You've seen us go from flat sales to now being at an almost double-digit growth for two straight quarters now. Obviously, we're leveling off again and getting back on our growth trajectory, which is really the consumer telling us what they're doing. We're not seeing anything that causes great concern. When we sell out of products we expect to sell out of, and we sell out of some that we didn't expect to sell out of, and there are some others that don't do well, which is just par for the course. We're not seeing a consistent trend that points that the consumer is shying away from this or that. Okay. Any color on urban versus I mean, tier 1 versus tier 2, tier 3, where the demand is really showing up? Any region-specific comments that you would have for consumer sentiments? Yeah. From time to time, we do see certain regions not perform, rather, I should say. For example, we had early monsoons, as I mentioned, in Gujarat and Maharashtra that impacted our sales in those stores there. We're seeing some slowness in the South from time to time. We see some erraticness from even states like Punjab. It goes up, it comes down. For me to categorically say that there's one continuous offender, so to speak, would not be a fair statement. Okay. Sir, my second question is on premiumization. We're seeing ASP growth coming in now every quarter. Would you please share which brands are contributing to this premiumization? We are seeing ASP growth across our banners. Only exception would be Walkway, where obviously we have reintroduced price points below INR 500. There we will see slight downtick in terms of overall ASPs. Otherwise, all the banners we are seeing a normal ASP growth of anywhere between 2%-5%. Okay. Any price hikes that you have taken, which would help us understand whether it is premiumization or it is the price hikes? Nothing out of the ordinary. It's really sometimes it's more of a mix of goods, Prerna, because we also have Foot Locker now. We have other brands that are now kicking in. Fila is also to have much higher ASP than the average that most of the other businesses run. It's really a mix of goods more than anything. Of course, we do take price increases in a steady way, but we've not had to because of any spikes in supply or input costs. Okay. Sir, one more question on Clarks. Where do you see this brand coming in? As per media articles, this brand was about INR 250 crore-INR 300 crore with erstwhile license holder. How do you see this brand shaping up in your umbrella? I think we'll give more color on that on our next call. As you know, Metro always is able to leverage the power of brands and bring it to life in this country, as we've proven with Crocs and FitFlop and other brands. I think we'll give you a little bit more color on that in the coming quarters. Prerna, as we have mentioned earlier, we generally don't get into strategic relationship unless and until we see potential in that particular brand, that brand being synergistic to our existing offerings, especially our MBO formats like Metro Mochi and others. We see good potential for Clarks over a long period. I must add, though, we were one of the largest sellers of Clarks in India when they were with the other partners. We have a good understanding of the brand. We know what the brand is. We were one of the best sellers of it, I think there's a lot of synergies there that we plan on capitalizing on. Sure. Thank you so much, all the best. Thank you. The next question is from the line of Umang Mehta from Kotak Securities. Please go ahead. Yeah, hi. Thank you for the opportunity. Sir, the first question was again linked to the ASP question of previous participant. We've seen this growth after some quarters. Would you say that Crocs has grown faster, given that we've seen contribution of outside brands go up a bit, and you also alluded to early monsoon. Was Crocs meaningfully faster than the other banners this quarter? The early monsoons helps Crocs more than any other brand, right? As I mentioned in my opening comments, that it's Crocs Diwali when it rains. They got lucky that they caught it early, and all of it fell into last quarter, whereas in normal years, most of it would trickle into this quarter, actually. That's not the biggest driver. Don't forget, we also have other brands coming on, right? Like Foot Locker, and then New Era is not exactly a low-end brand. We were liquidating a lot of Fila at low price points last year. This year, we're not liquidating as much at those price points. We're selling more at a higher price point. There are various factors that are causing it amount. Understood. It's more sustainable then going forward. The second question was on Clarks. Now, what we have seen is that they struggled for several years with even scale and profitability. While you said that you might share more on your plan in the next call, any assessment on what was wrong back then, and what could potentially change? In some color you can share. It's hard for us to know what's wrong behind the covers of different organizations, right? We try not to focus on that. What we're focusing on at cultural side is when we evaluate a brand, there's a couple of filters we put it through. First, is it meaningful to our customers? And of course, we know it was because we sold a lot of Clarks when we sold it through our Metro Mochi stores. That's number one. Number two, do we think we can play stronger and do a better job with it? I think we've proven ourselves that we are able to do that. That's what we look at more than about what went wrong and things like that. It's about what we can do with the brand and what our customers want from us with that brand. Sure. Makes sense. Just one last one. Do you think for now you have enough banners, or do you think that the potential to add more, if it makes sense, is still there for the foreseeable future? Just that direction. I think you should ask our customers that, right? If our customers show us they want us to carry more banners, we're happy to. At the same time, we also have some amazing brands in our own portfolio, such as Metro Mochi, Davinchi, J. Fontini, that we're able to cater to a lot of the demand out there. It's really a matter of balancing between something we can do versus something we cannot do. It's not just a matter of getting banners at all. It's a matter of making sure that we're getting banners that mean something to our customers in a space that we're not able to do the same thing. Sure. Perfect. Thank you so much. Thanks. Thank you. The next question is from the line of Tejas Shah from Avendus Spark. Please go ahead. Hi. Thanks for the opportunity. A couple of questions. First, we keep on referring to that revenge buying or surge demand that we saw post-COVID. If I remember correctly, we also responded in that time by opening many stores to cater to that demand. Now when the demand is normalizing, are we seeing that some of the store economics that we would have budgeted then are not holding up and there's a pressure to kind of revisit the stores or perhaps relocate the stores? It's a constant circle there. It's not about just that demand opening. Every time we open stores, we'll have a group of stores that don't perform. We'll have some of them that overperform. A good way to gauge that is if you look at our failure%, Tejas, it's very low, right? It means that most of our stores are hitting the profits that we want them to. It's not about just that. Don't forget, we talk about consumer demand. The amount of shopping that was done post-COVID, and for the couple of years that followed it, was quite intense. Now consumers are having much more options for their disposable income as well. I think they're still spending. It's just a question of the dispersion of spending is changing a little bit, that's why we look at a little bit more of a long-term perspective. I think you'd be happy to see that we've been able to control our input costs very well to keep our profits there and keep it our margins in that range that we guided to. Clear. Second, we have now, the Crocs has been a very successful story in our portfolio. Now when I see our portfolio, we have, let's say, two or three established projects on the left-hand side of balance sheet, and on the right-hand side, as a use or application of funds, we have many projects which are in WIP. How do you allocate or how do you prioritize managerial and financial resources or bandwidth? How are you planning to prioritize the same now? Well, I think it's from what we put together as a plan that we see for that banner. We realize that a lot of these banners need significant investments to grow. That's why we look at, see what is the potential for every brand that we acquire. It has to be significant and meaningful to us. Each one of them, it's like children. Each one of your children have a different need. They're at different stage of growth. I can't categorize just all of them on the right side of the balance sheet as a certain amount. The good news as you know, we have capital ready to deploy. We've deployed it well. Then we also invest a lot in people, in putting teams in place to take care of those businesses. I say between the people investments and the promotional marketing investments that we make in these brands, the design investments, that's what would take up a lot of the capital. It is worth it for us, and it's not going to significantly move the numbers crazily on any given point in time. Tejas, just adding to what Nissan said, BIS implementation also led to some delay, especially in Foot Locker and Fila. Now, in this year and coming year, you will see those brands also growing meaningfully. Perfect. Just to extend that point, do we have enough children now, or we have space to accommodate more children? You got to ask the wife, who's known as a consumer, that question. We serve the customer, and if the customer is telling us that we're not meeting their needs, we're happy to continue to explore brands. Brands come and go too, right? Today we may or may not see a brand. Tomorrow we will see a brand. We understand there's an evolving landscape. I think somebody alluded to that about customer preferences changing, right? Not only have they changed so far, they're going to continue to change, that's for sure. Perfect. Thanks, and all the best for coming quarters. Thanks, Tejas. Thank you. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead. Hi, sir. Thanks for taking my question. Firstly, on the Walkway repositioning, I'm not sure if I understood what exactly is the change here, and what was the problem earlier which you're trying to fix. Having done this, will it still be a trial and error kind of a pilot? Now with all this done, you are targeting full-fledged expansion here? Let's start off with the basic concept of the size of the market, right? As I mentioned earlier on, 80% of the footwear sold in India is under INR 1,000, right? That's not a space we were playing in. The question becomes, why weren't we playing it in the past? We had a lot to do to get positioned for the growth that we've had. Listen, since COVID, we've opened almost 400 stores, which is 80% of what we had pre-COVID. That's a significant growth that takes a lot of bandwidth, that takes a lot of planning. It takes a lot of head space out of management, right? We had to prioritize our growth levers. We've prioritized those growth levers. We've now come to Walkway to say: how do we grow that? Honestly, Walkway, as I mentioned earlier on, is not as profitable from a PAT% standpoint, but I must reiterate that it's a wonderful use of our capital. As you know, we do have a lot of cash at hand, it's probably a very effective use of our capital, that's what we're gearing towards. Okay. There is no real repositioning here, it's just that now you'll focus on it. There's no repositioning, but there's of course, there's a lot of tweaking and refinement that requires, before you grow any chain of stores. Listen, when you have 60, 70 stores, it's easy to say, "This is what they do." But to get it ready for growth in line with the rest of your company, that requires a whole different approach to whether it's your supply chain, whether it's your people talent availability, whether it's how you're going to manage this business as it grows back to your real estate and BD team. It's a significant amount of things that need to move, to raise a child. Got it. With this, we are saying that the tweaking and refinement is now done. Now we can grow it as we grow the other brands. I think that's a safe comment. Okay, fair. On Foot Locker, the earlier communication was that we are still having a cautious approach here, wait and watch as to things the way they are developing. Are we still in that mode or now things are clearer and I see that we are opening another store in Mumbai now. Is that now behind and now things are sorted? Yeah, it was only BIS that made us hesitate, Sameer. It was nothing else. It's not that we're not sure about the chain or the concept. It was the BIS uncertainty from the brands. As you know, Foot Locker is primarily a multi-brand store that is serviced by all the major brands, global brands, essentially. All of them were at various stages of the journey in mitigating the BIS risk until we had clarity that they were past a certain point. I would still say they're not through that entire mitigation, but it's to a level where we're comfortable enough, and as you mentioned, we've subsequently opened two stores. We plan to open more stores before the end of the year, and we'll continue that growth. We had taken a pause there for a good seven months while we wanted to see how the BIS played out. Okay. Suffice to say that the BIS situation now is not sorted completely, but still is at a situation where you can go ahead with your store opening at Foot Locker. Correct. Got it. Lastly, if I can squeeze in one more on Fila. I still see that EBOs, we have been consistent in this, not saying anything over here, if the EBOs are to be opened from second half, what is it waiting for? Is it still the marketing that needs to come out before you open stores? Is it still a buffer that you are keeping for some more uncertainty that can come in? Just your thought here. It's a combination of things, right? One of them obviously is BIS, right? It would've been easiest for us to launch it because we would get the assortment, we would get all the product we needed from our global partner of Fila, right? That would've made it a lot easier. We didn't have that luxury. We had to go create an entire supply chain for it, right from raw materials onwards, right? Because we had to do it in India. That has taken a little bit of time. It also takes a lot of thought and planning before you get into that. We've also been busy testing those products or some of the products that we think would make sense in the EBOs in our key Metro Mochi stores. The journey was not just to say, "Let's open stores." The journey was, "Let's test and see how we start repositioning the brand in our Metro Mochi stores." When we have learnings from that, by then we'll be ready to execute at a certain period of time. We've always guided that it would be in the latter half of this year or this calendar year that we would open stores in Fila. We've not strayed from that. Sir, my question is that now if Fila or the BIS thing, we have already replicated most of the supply chain in India. This six months of buffer, we are still keeping only for the testing portion or is there anything else? Even when we open stores, it's not like, oh, you got the magic formula, now run with it, right? It's an ongoing trial and test, trial and test. It's not like you get a formula together and say, "Okay, now we're ready and let's open up 100 stores." Each of those iterations of product, each of those iterations of strategy Make it much harder when you don't have access to an evolved supply chain in India, right? There are challenges there, and as you know, we're taking a cautious, but in that, no way does that detract us from what we believe the brand can be when you look at it over the next three to five years. Maybe I'll take this offline, sir. Thanks. No problem. I'll come back in the queue for any follow-ups. Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yes, hi. Just one follow-up. From online perspective, we have seen very strong growth trends here. Typically, Q1 and Q4 are relatively weaker in terms of online sales and Q2, Q3 are relatively better. I wanted to check, is this a sustainable trend or there is any one-off to call out which has happened in Q1? Maybe there was a big EOSS that happened across online platforms. I just wanted to check your thoughts here. Devanshu, if you check our e-commerce numbers for last year first quarter, they were slightly weak. On base of that, obviously, it's a very strong growth. FY 2024 Q1 was around INR 61 crores. Last year, Q1 was around INR 58 crores, and this year is INR 84 crores. Growth, obviously 45% over last year's is 45%, but if you take that into consideration, that would, I think, answer your question. Typically, Q2 is a better quarter. Sorry, yeah, Q2, Q3 are better quarters from online perspective. Is that a right takeaway? They're better both for this year and for last year. If you're looking at a comparative number, it should be the same, right? Understood. Lastly, from a region perspective, you mentioned that West has seen relatively slower trends, but the South as a region is also sort of seeing muted trends, while North and East are doing relatively better. Any specific reasons that is sort of impacting the growth there, and what are the steps that we are taking to sort of improve the growth trends? I mean, listen, we'd be reaching if we knew what was happening, but we all read the news about what's happening in the tech sector which would affect two big cities in the South. There's a lot of things happening that could be affecting it. We've heard that in some of those states, there's a depression of real estate prices are quite compressed and depressed. All these things affect the overall demand situation. The good news is, while we see it go up and down, it actually doesn't disappear. It actually starts to come back at some point, because at some point, shoes become a necessity, too. And sir, why I'm checking was that there are few players that have indicated that few markets like AP, Telangana have started to show some green shoots. Are we also sort of witnessing those green shoots in those particular regions? Like I said, they seem to come back, too, so it doesn't go away. We are seeing a resurgence in some of the In fact, we've seen it, but we've also seen it go back down. We think it's come back again. It's a little cyclical, right? I don't think we're immune to it. At the same time, I wouldn't say that we're getting hammered over there. Noted. Thanks. Thank you. The next question is from the line of Aditya Bansal from Motilal Oswal. Please go ahead. Hi. Thanks for taking my question. My first question is on e-commerce. The share of e-commerce in our overall pie has been going up. Is there any change in the channel strategy for us? Like earlier, the commentary was it will be around 8%-10%. Any changes there? One of the things we've been able to successfully do, Aditya, is to take part in the omni-channel initiatives where we light up the inventory in our stores across the e-commerce channel, and that we've been able to turn on more and more stores in there. The other initiatives that we do is, we've been focusing on driving our B2C business also. There are initiatives that we are taking that leads to that number. It's not just something that magically happens. What I must maintain is we continue to ensure that we don't grow because or through discounts, because that, I believe, is brand erosion. Sure. A follow-up on this. You said you are averse from giving discounts, there has been some impact on the gross margins versus last year, and in last year we had Fila liquidation impact. Would it be fair it is because of e-commerce growing faster or are there some other moving parts? It's a combination, Aditya. Obviously, e-commerce has some quantum of discount, and hence the gross margins are slightly lower. That is one of the impact, but there are multiple other points that have led to the numbers. Yeah. Gross margins. Yeah If you see the change, it's 0.3 basis, so nothing much to read into that. Yeah, just because Fila was in the base, that's why I was checking. Yeah, well, a lot of that also has to do with the mix of outside brands. We sell inside brands. It has a mix of e-commerce and omni-channel. It has a lot of variabilities, but bottom line, though, this quarter was our second highest quarter compared to Last five quarters, the last quarter is the one you're comparing it to was the highest quarter we've had in five quarters. We've guided to the mid to higher 50% gross margin range, and we've achieved it. Sure. Another question was again on South. If I look at last two years, revenue has broadly been flattish despite around 20% store additions. It cannot be the near-term tech sector impact. Is there any structural that is wrong with the South, especially for us? Aditya, we don't think there are any structural changes apart from what Nissan mentioned. South remains one of the key regions for growth for us going forward. Sure. Thanks a lot for answering my question. Thank you. The next question is from the line of Saurabh Kundu from Goldman Sachs. Please go ahead. Saurabh. Thank you for this opportunity again. I wanted to confirm on, I think Sameer's earlier question. Nissan, did you say that Walkway, if I can use the word that the playbook is now all set and it's only a question of replicating stores now? Or there's still work to be done? The playbook is never set in retail, right? It's a constant evolution. It's a constant tweaking. That's why I think Metro Brands does such a great job because of our operational rigor that watches what's happening every single day. Having said that though, I think broadly, we feel good about the guardrails and the lanes that we've identified and the levers for Walkway growth. I'd say broadly, we feel confident that we're in a good place with Walkway. Okay. Any constraints you would like to mention that are there even now, other than locations? Any other constraints? Well, I would like it to do more per square foot. I would like it to do more sales. The rentals, obviously, as you mentioned, needs to be coming in line. Finding the right real estate at the right rental. I always want to do more on per square foot. I always want to get better throughput in that value chain. That doesn't mean it's not where it should be in the right place. However, we're not gonna stop working on it. Okay. One last one, please. I recall that most of your other MBOs, like your Metro and Mochi MBOs, when you enter new geographies, from what I recall, you do have a component of localization, having local designs. Is that the case or planned to be the case for Walkway as well, or will Walkway be slightly more uniform in terms of the merchandise it has across the country? No, I think in India it's important to be regionalized because our preferences are so varied from one region to the other. Having said that though, in that range of product, the price range, the value range, there's a lot of homogenous products that go across the country. The biggest thing that changes is weather. If you were to do stores in the north versus south, you would see some significant differences. Otherwise, it's largely homogenous. Okay. Thank you very much. Thank you. A reminder to the participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. A reminder to the participant. As there are no further questions, on behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.