FY 2026 earnings call hosted by Ambit Capital 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 0 on your touchtone phone. I now hand the conference over to Videesha Sheth from Ambit Capital Private Limited. Thank you, over to you, ma'am. Yes, thank you. Good afternoon, and on behalf of Ambit Capital, I thank the management of Metro Brands for the opportunity to host their 2Q FY 2026 earnings call. We have the following members of management 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; Ms. Alisha Rafique Malik, Whole-time Director and President. I will now hand over the call to the management, Mr. Nissan Joseph, to walk us through the quarter. Thank you all, over to you, Nissan. Thanks, Videesha. Good afternoon, thank you for joining our quarterly earnings call. As you all are probably aware, we posted a 12% growth in our standalone business and 11% growth in our consolidated numbers. We had some challenges and some tailwinds in the quarter. We had prolonged monsoons through the quarter. Customers waiting on doing their major shopping for the GST benefits to take effect. On the other side, we do have a slightly earlier festive season that helps our sales. Through Q2, we also go through our summer end of season sales. I am pleased that we were able to drive sales growth while increasing our gross margins by 40 basis points over the previous year. On the EBITDA side, we grew it by 12% for the standalone and 10% for the consolidated business for the quarter, which is very much in line with our sales growth. Ind AS accounting dampened our PAT due to the opening of 42 stores. We had four closures bringing us to a net new store addition of 38 stores. Of this, we had four high-profile Foot Locker stores open in the quarter as well. I'm also pleased to note that we opened 10 Walkway stores, which is the highest addition of stores for Walkway in any quarter. We continue to invest in our core business as well. We opened a reimagined store format for Mochi in October in Ghatkopar. The early results look good for this new store design. This is also the second quarter in a row that we have consciously spent almost 100 basis points more on our various marketing initiatives, thereby investing for awareness and intent to buy with our varied group of customers. Our e-commerce business continues to grow as it achieved a 39% growth across the multiple digital channels and contributes now a total of 14% to our revenue. We were also able to launch Clarks footwear into 200 of our Metro and Mochi doors, and it has done extremely well. We plan on expanding this to 300 doors in the next quarter. The GST changes have been very positive for our business. We've seen as much as 11% reduction in footwear priced between INR 1,000-INR 2,500, and a 6% reduction for footwear under INR 1,000. As you know, this positively impacts almost 90% of the footwear and Walkway and approximately 40% of the Metro Mochi footwear business. In closing, I would like to reiterate that our business continues to grow through the various challenges we face and the teams remain focused on operational rigor and financial discipline to ensure that we achieve our guidance. With that, I'd like to turn it back to Videesha for the question and answer session. Sure. Danish, we can now open the floor for Q&A. Sure, ma'am. Ladies and gentlemen, we'll now begin with 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 headset 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 Tejas from Avendus. Please go ahead. Yeah, I think Tejas, are you there? Danish, we can move on to the next question then. Sure, sir. The next question is from the line of Gaurav Jogani from JM Financial. Please go ahead. Hi. My first question is with regards to Fila. We understand in your presentation you have written that there has been some resolution to these BIS issues. With respect to Fila and Foot Locker, at what stages are you right now, if you can help us out with that. For example, one year when you launched Fila, as per that, what is the benchmark that you have reached right now? Yeah. The BIS issues aren't fully resolved, though we've made considerable headway in resolving them. I think by early part of next year, we should be ahead of the curve on that. We are gaining traction in mitigating that BIS issue. Our Foot Locker business shares the same issue, which is why you've seen us only open four stores this quarter. I think had we not had BIS, we definitely have wanted to open many more stores for Foot Locker. I think we're in a good place where we started the reposition of Fila. Fila is being carried in over 100 of our Metro Mochi stores as we continue to reposition the brand. As I said, it would be a 12 to 18 month repositioning of the brand, Gaurav, and that's when, after which you'll start seeing acceleration of it. We are looking at opening our first Fila store since the closure of all the Fila stores, later on at the end of this calendar year. Nissan, just related to this, as per your own internal expectations, where would you benchmark Fila right now? For example, if you would have maybe hypothetically, expected it to reach, say INR 300 crore, INR 400 crore sales. In that context, where are you in that journey? Are you confident, at least not this year, but next year onwards, it will be again back to the growth path that you wanted it to be? Yeah. I think, when I look at the BIS implications that we've had, I'm quite pleased to see where we are. Having said that, we couldn't have possibly gotten close to our aspiration that we had pre the issues of BIS. The other part of your question, as I look to the future, we remain very confident that Fila can reposition. We did, as I said, launch it in about 100 of our doors, and we've seen the right amount of success from some of the assortments that we've put in. It looks like it's on track. It doesn't cause us any concern, but at the same time, repositioning a brand is not easy work. It's not for the faint of heart. We're working on it, and I'm pretty confident that our investment in Fila will be a terrific one for the company. Okay, sure. Thanks. My next question is with regards to Clarks again. I do understand that you have very recently acquired Clarks, and it has now been also introduced in 200 odd Metro and Mochi stores. What is your entire plan here? By when you expect the full additions here? Second part of the question with regards to Clarks is that I understand, you have the full gambit, the online piece as well here, and also the distribution piece. What are your plans going ahead? When can you see the full launch here? In addition, given that Clarks, you were already selling in your Metro Mochi stores earlier as well. Do you expect any kind of cannibalization impact here, in terms of sales for your existing Metro Mochi assortment that you have? In its heyday here, Clarks, I believe, had upwards of 50 doors, if I am not mistaken, and we were carrying it in a considerable amount of our Metro Mochi doors. It is not a question of cannibalization, it is going to be more of a question of reintroduction into the Metro and Mochi chain. We would probably start our new store growth on Clarks probably the back half of next year. A lot of that has to do with we want to first take care of the proverbial low-hanging fruit, which is the ability for our Metro Mochi stores to sell it. Then we would rationally start opening stores for it somewhere in the August timeframe. We are very excited to see that the customer has not lost their appreciation for Clarks and has come back to the stores quite well and strong for it. One of the reasons we wanted Clarks was we did not find a good substitute for them while they were absent from our stores. Bringing them back in will be accretive to us as we go forward. Sure. Thanks, Nissan. I have more questions. I will come back in the queue. Thank you. Thank you. Next question is from Videesha. Please go ahead. Thank you. My first question was in continuation to what Gaurav asked. In case of Clarks, if you can talk about the online ramp-up of the portfolio since pre-acquisition online used to be a sizable chunk. In terms of both the assortment and the platforms wherein Clarks can retail, if you can just give us an update on that, please. Yes. I think, pre us, it was sizable simply because I think it was more of a discount-led show. It's going to be a big part of our business. E-commerce with Clarks is going to be considerable. We want to play it differently, as you know, Videesha, we don't like the discount game. That's not how we want to position the brands that we sell. We are taking it. The clarks.in site is live. We are linked up to marketplaces and omnichannel in our stores. We've already started that journey and process. It's just a matter of how fast we can scale both the brick-and-mortar standalone stores, get it scaled into more Metro Mochi doors, and at the same time, we'll start investing in the performance marketing required to drive it digitally. I just wanted to add to what Nissan said. In over next two, three quarters, we expect complete supply chain of Clarks also to get sort of stabilized. Currently, we've just started with Cloudsteppers range for women, which is broadly around 35%-40% of what Clarks has to offer. We expect this new merchandise to sort of come in over next two, three quarters. Obviously once that's stabilized, that's when we start ramping up both our stores and go full hog on online as well. Sure. That's clear. The second question is if you all can shed some light on the consumption and demand outlook for the second half of the year. Well, I think when you look at it from a offset standpoint, we've gone through a couple of things over the last few festive seasons. One of them was the lumpiness caused by COVID. The second one was the erraticness caused by wedding date shifts and lack of wedding dates and so have you. The good news is we look towards this quarter, we see none of those factors coming into play. On the contrary, we do see the fact that the GST reductions have taken place to create and spur more demand for our products. Overall, we don't see any tailwinds. Some headwinds from where we sit, and it should be a like-for-like quarter finally, after many, many years. Noted. I have a few more questions and I'll join back with you. Thank you, ma'am. Our next question is from the line of Gaurav Jogani from JM Financial. Please go ahead. Thanks again for taking my question. My question is to Kaushal now. Kaushal, we have seen a very aggressive expansion for Foot Locker stores. I mean, the whole deck got launched. In effect, if you see the square footage, the square footage would be on average 24,000 in total for all the four together. How does this impact the depreciation and interest piece, and how should one forecast that going ahead? Good question, Gaurav. In fact, we have tried to highlight it in our presentation as well. If you see, PAT for Q2 has got impacted predominantly on account of, obviously, 42 new stores that came in and four big Foot Locker stores that came during the period. Overall impact was almost close to about 1% in Q2. When we open the store, impact in that quarter is high because of the way Ind AS 116 accounting works, especially with respect to rent-free period accounting. From next quarter onwards, it would sort of normalize. Having said that, as you would be aware, under Ind AS 116, I'm just giving a hypothetical example here. Suppose if your lease is of 10 years, your notional cost, which comes as depreciation and finance expense under Ind AS, that is much higher as compared to what actual rental that you pay. In the next five years, from year number six to 10, your overall charge in P&L would be lower. Till the time we continue to open store, you would see a higher impact of Ind AS 116 accounting in our books. If we see last year, FY 2025, on an annualized basis, there was a charge of around INR 37 crore non-cash expense in our books because of which our profits were lower because of that Ind AS 116 charge aggregating to around INR 37 crore. Yeah, I think the number that we would probably say makes the most sense to your question in the light of all these openings of stores and the Ind AS effect would be to look at the EBITDA performance, Gaurav, because I think that kind of neutralizes that effect and flattens it out a little bit more than the Ind AS does. When you look at our EBITDA last quarter, it was very much in line with our growth. Also, I'm pleased to point out that our sales per square foot for the quarter maintained its same number from the last year, so it's not like these things are diminishing our sales per square foot. Having said that, if we grow more and more Walkway stores, we are going to see that sales per square foot number start to move a little bit. The bottom line is, we want to ensure that the EBITDA and the ROC in our company stays intact. Sure. Nissan, just one thing allied to this sales per square feet thing. Given that the GST would also mean lower realization for the same footwear that you sell now, at least the 40% Metro Mochi stuff. Does that in any way is expected to impact the revenue per square feet, though it might not impact the EBITDA per square feet in that sense? Yeah, logically, yes, Gaurav, to the extent of discount that we have passed on to the customer, our top line to that extent comes down, as you rightly said, it will not have any impact on profitability. Next quarter, we'll try and give some details on that number too. Okay, sure. Thanks. That's all from me. Thank you. Our next question is from the line of Tejas from Avendus. Please go ahead. Hi, am I audible this time? Hello. Yes, you are. Go ahead. Yeah. Hi, Nissan. Thanks. Nissan, you mentioned in your opening remarks about GST-led benefits reviving sentiments. We have also seen supporting policy moves earlier, like monetary easing, income tax cuts earlier this year. Do you think that the earlier interventions have also started translating into some demand recovery? If we have to see in terms of footfalls, conversion, and bill size, are we seeing any of these three levers that all those moves are kind of showing some recovery? Yeah, I think it's a multitude of factors. It's not just anything singular. Of course, all the things that the government has done previously from the tax code and things like that do help. So does the GST, so does normalization of business and getting away from the lumpiness of COVID a little bit. The last couple of years have been quite muted, but if you look at the growth since pre-COVID, we've grown over 100% in sales. I think a lot of those external factors and one-off events and those national elections that we had or other things that seem to affect business, those things don't exist in this quarter, and also not for the following few quarters coming up. It should be pretty steady streaming, with all accretive and added to what we do. We've had a lot of variabilities, monsoons coming early affecting business. We've had the GST people holding off at the same time and coming back and shopping. The good news is, I think we're past a lot of those things where you can see a certain normal trajectory of business come to light. Okay. Got you. Second, you mentioned that we are dialing up on Walkway. We have typically, as a company, operated in the premium segment, and then it comes very naturally to us. Not to say that Walkway was not there before, but as we dial up there, how are we ensuring merchandise supply chain alignment? Because that's very execution heavy or cost-sensitive segment. If, let's say, as a customer, if I walk into Walkway today, what kind of new value proposition versus what we were doing earlier I should expect, and what is your core customer profile there? What are we targeting? Is there any regional bias there, or is it targeting the same cohorts of mass and audience? Let's talk about the target consumer first and foremost, right? We are targeting customers more in Tier 2 towns. Not saying that that customer does not exist in metro cities, right? There is that customer that exists even in Mumbai. That's not where we want to focus our growth, and it's the Tier 2 towns further down the pyramid of the consumers in India. We also think that's a play where we are able to start tapping into the unorganized market, and which is, as you know, in our business, in our industry, it's almost 70% of our business is done in the unorganized market. It's also for that aspirational customer. Listen, aspirations vary by your socio-demographics, right? There's people that aspire to move up from unorganized to organized, from organized to mass premium, to mass premium to premium, and so on and so forth. What we want to do is to ensure that we are offering formats that can cater to a vast majority of Indians over the next few years. To speak about the growth in Walkway coming through, you would have noticed in the last two years, we've very much dampened the growth of Walkway. In fact, we cut it down to almost zero growth. As you rightly pointed out, it is a different business model. It has a different cadence to it. It is definitely heavy cost and throughput-focused, and we had to get those models right internally, and that's why we kind of took a breather, got that right. We weren't sitting on our thumbs as it might have appeared from the outside. Today, I believe we're confident that we found the model that we can now scale relatively quickly. As you know, we don't do anything in a rash hurry, but we can scale quite quickly in this space. Okay. That's all from my side, and Diwali wishes to you and the team. Thanks. Thank you. Thank you, sir. The next question is from the line of Sameer Gupta from IIFL Capital. Please go ahead. Hi, everyone. Good afternoon, and thanks for taking my question. Sir, first question is on Foot Locker. I understand it's still early days, but, we still have one store, which is almost about one year of operations now. Just a sense on what is the kind of throughput that it is clocking. Is it materially higher, in line with overall blended company average? Any color you can give on it will be helpful, sir. It definitely is clocking well for us, but don't forget, we've had that BIS impact that has limited our ability to maximize the opportunity that Foot Locker presents. From a metric standpoint, from a productivity sales per square foot, despite it being much larger stores than the rest of our chain, that's very much in line. It's not going to be diluted there at all. As you know, what we sell in Foot Locker is primarily external brands, so you're not going to see the same margin flow-throughs that you do in our normal business. We do need to chase growth as a company, and we've remained focused on two things. One is that we want to be sensitive to margins, but we want to grow. Number two, we want to take care of a majority of the Indian consumers' footwear wardrobes. To do that, you have to play in different spaces, and some of them come with different margins and different flow-through of profits. I didn't catch that number. You're saying the store sizes are larger or throughput is also larger, but the margin is lower? I didn't catch that, sorry. Sameer, obviously, as you know, Foot Locker store in terms of size would be, say, 3x of what our Metro Mochi stores are. Even ASPs would be in the same range. As Nissan mentioned, we are seeing throughputs which are broadly in line with what our expectation was from that format, despite of supply chain disruptions and despite of us knowing that the merchandise is still not up to the mark, which we expect to further improve over next two quarters. Second point was on the profitability. Since here we deal with all the third-party brands, our incoming gross margins in Foot Locker would be lower than what gross margins you see us reporting at a company level. Obviously, since these stores would be bigger, we will see benefit of efficiencies of scale on all the expense that comes below gross margins. Obviously, we feel that our overall investment in this format would be slightly efficient as compared to, say, our other traditional formats. All in all, our thought process is profit in terms of percentage from, say, format like Foot Locker would be lower when compared to Metro Mochi. However, our endeavor would be to make sure that we can generate ROCs upward of 20%-25% from this format over a medium to long-term time scale. Got it. Just a clarification here. Throughput in line with expectations, I understand, but I would assume that those expectations would be at least company average throughput, or I'm wrong here? No, you are absolutely right here. Fine. Great. Thanks. That answers. Second question is on the EBITDA growth. I understand Ind AS 116 has kind of distorted, but I try and find out the pre-Ind AS EBITDA by using it from the cash flow statement. I find that first half the pre-Ind AS EBITDA approximate growth is just 3%. Even if I look at the pre-Ind AS EBITDA margin, it's at 17.8% for the first half. That's a 120 basis points contraction. Does this imply pressure on SSG growth? Is it in general rentals have escalated? Is it just Foot Locker where the rental per sq ft is substantially higher? Any color on this can you give? Broadly, obviously, if you see strong overall top-line growth, rentals escalation doesn't hurt. If they are slightly muted, obviously it will get reflected in the numbers. Having said that, predominantly, if you see our EBITDA are broadly in line with the top-line growth as we have reported both in Q2 and H1. There are two big levers that I think Nissan also mentioned earlier. We have invested in marketing that is higher by at least 1% versus last year. There is impact of Ind AS accounting, which if you see at H1 level, it is close about 0.6% on PAT. That's how you can see the numbers. Kaushal, let me just explain what I'm asking. What I do is typically take the EBITDA, which is reported in the first half. I look at the cash flow statement where you report repayment of lease liabilities and interest costs pertaining to lease liabilities. I presume that is largely the rent, which is not part of my P&L above EBITDA. That is my clean EBITDA after incorporating the rentals. Marketing cost 100 basis points higher is already in corporate reported EBITDA. Whatever is below is the fixed rentals. There I'm seeing a sharp increase and fine top-line growth is higher, I understand, but even the EBITDA growth adjusted for this is just 3%. Rentals are growing faster than a high top-line growth as well, right? Sameer, I answered that question. I mentioned the same thing that when we see slightly muted top-line growth, obviously, that means your rental increase is slightly higher as compared to what your overall growth from the store is. There is slight increase in our rentals. Our rental range generally what we say is around 13%-15%. We have seen it move up slightly, and that is reflected in the numbers. Got it. Basically it is a function of lower sales growth or top-line growth, and that will get addressed with the uptick in demand and GST reductions, et cetera. Also important thing to note here is H1 for us is 46% of annual revenue. You see lots of normalization also happen in Q3, Q4 because these are quarters where our revenues are higher and your rentals, say if rentals are fixed they remain the same and then you see improvement in overall rent to revenue ratio for the store and for company as a whole. Got it, Kaushal and Nissan. Thanks for answering very clearly and happy Diwali wishes to all of you. Thank you. Same to you. Thank you. Our next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Hi. Thanks for the opportunity and congratulations on the good pick up in store additions. Firstly, I wanted to understand in first half, our inventory has increased by about INR 150 crore and we've done a CapEx of about INR 60 crore and overall, we have opened about 60 stores. Obviously, there must be increase in inventory in anticipation of festive season. I just wanted to check overall if we see it's about INR 230 crore-INR 235 crore of additional capital employed in the business and we opened, say about 60 stores. I just wanted to request you if you could just provide a breakup in terms of inventory increase in existing stores or comment if there is increase in general inventory employed at the store level. Devanshu, the right way would be to compare. Every year you see our inventory goes up slightly in September. This is in preparation for the season period that's going to come in Q3 and Q4. If you compare it with September 2024, our overall increase I think is around INR 80-85 odd crore. Second point is obviously the inventory that we carry is also in line with all the new store additions that we are planning to add over next two quarters and also the new format that we have started. Take for example, we started with Clarks, we launched four Foot Locker stores. There is some inventory that you carry even for those formats. Although we have just filled the stores, sales from those formats is going to come from here. It's a combination of all these three factors that has led to a slight increase in inventory. Also, Kaushal, if you could comment on CapEx, because there that normality will not be there, right? We have opened 60 stores, typically our CapEx was between INR 50-60 lakh for formats like Metro Mochi. Here also, it is slightly on the higher side. If you just throw some light on that as well. Yeah. There are two, three points here. CapEx for Foot Locker stores are significantly higher than what we incur for Metro Mochi. That is one. We have opened 60 stores. We also have renovated a few stores. It's a combination of all these three factors that is leading to that CapEx cost of around INR 60 crore during the year. There's no increase as such in the average expense that we incur for our other formats like Metro Mochi, others. Those are broadly in the range as we used to incur earlier. Fair enough. One more thing I wanted to check, if you could throw some light on like-for-like increase in inventory at the store level. If you could give some color on that. Suppose whatever a typical Metro store was carrying at September end last year, now what is the increase that you've done at the store level? If you see like-to-like store, there won't be any significant change. Somewhere in that range of six and a half, seven months of inventory is what we carry in any particular store. The inventory would have remained in that range. Fair enough. Lastly, a bookkeeping question. Can you comment on Pre-Ind AS depreciation and interest expense? The run rate, quarterly run rate that is there currently, that will help us do the projections in a better manner. I don't have that number handy with me, Pre-Ind AS, Post-Ind AS, difference in EBITDA would be somewhere in the range of Let me catch up to you off the line. Thanks for taking my questions. Thank you. Thank you. Our next question is from the line of Ankit Kedia from PhillipCapital. Please go ahead. My first question is regarding the A&P spend. With the new crossover collection, we have spent nearly 1% extra in A&P. This is the first time, at least since listing, we have done such aggressive ad spends. Just wanted to know under which brand are we doing this, what is the potential you're looking at for this collection, and how do you plan to roll it out across stores? I think we are committed to driving awareness and the relevance of our brand in the core targets of the consumers we serve. All of the chains will be investing in marketing to drive that business. What you saw was just one of the first ones we've done. Subsequently, we'll be doing more in both Metro and Mochi. Walkway has a different cadence of marketing. In all of those formats, we continue to invest in marketing. The biggest investment lift or increase that you're going to see is going to be focused on our Metro Mochi business. Can we expect the A&P spends to remain elevated at these levels, or this was a one-off case? We do plan on investing in marketing. Some of that marketing ends up with immediate sales in that same quarter. Some of that marketing flows through another quarter. You might see the benefit the following quarter where the relative marketing spend may not be as much. Last quarter and this quarter is the ones that we would spend the most money on our marketing because this is where we do most of our business. Sure. My second question is regarding the GST cut. If I see at the consumer level, you're giving a discount on the GST back to the consumer, and that is SKU-led. Going forward with the new inventory coming in the system, are we expected to take some price increases, or how will the billing to the consumer happen with the new SKUs? Will the MRP get reduced when you're doing it, or partly we will tend to increase the MRP and try to give some discount to the consumers? No, listen, we want to be priced where the customer always sees value in our products. Whether it's a premium product or whether it's a Walkway product, we want the customer to see value. Like with everything, when we look at a product, we start off with what are the attributes and at what price point would the customer see value, and at what price point will we make our margins. We work from that angle. If you're talking about new products, we're not going to continue the discounting on new products because we're going to have the new GST factored into that price tag. That's not going to continue past the product we have in the system today. Whatever we have in the system will continue to be discounted till it sells through. For new products, we always take a look at it with fresh eyes and see how do we bring value to the customer at whatever that price point may be. If it's a similar inventory, we might not take a price increase. We will? If it's the same product, no, we won't take a price increase. Sure. Except your normal inflation cost that you always have every year on every little thing you do in the manufacturing and procurement of shoes. Sure. Regarding Fila, you alluded that by the end of this calendar year, we'll see a first store launch. How has been the Fila response now in the Metro Mochi stores? I also see that you have just onboarded On also in your stores, which is slightly premium end footwear. How does that go with Skechers at one end, Fila expected to enter, and also having On in the Metro Mochi stores. Primarily, we were able to get some On products just for the Foot Locker stores, right? Then there's some very, very key stores and styles that we thought we'd test across to see how we did in other banners. That's what you're seeing. It's not a question of that we want to sell at that kind of price point. We're constantly testing to see if there's consumer demand for the various price points. Mind you, that's not a high price point for us necessarily. We've sold men's dress shoes, not albeit, closed shoes, in the INR 25,000-INR 40,000 range too. It's not a new price point in our stores. We're just always constantly testing. How is the new range uptick in the Metro Mochi stores? If you can give some color on that. Yeah. As with any repositioning of a brand, it's following the normal course where of the 10 shoes you test, three of them didn't do what you expected them to do, four of them perform up to scale, and three of them pleasantly surprise you. We're seeing that same ratio in our tests that we're conducting across over 100 Metro Mochi stores. Sure. That's helpful. Thank you so much, and happy Diwali to you and the team. Thank you, Ankit. Thank you, sir. Our next question is from the line of Avinash Karumanchi from MOSL. Please go ahead. Good afternoon, sir. Thank you. In the online channel, is there any change in the status? Earlier, the channel used to be topping at 10%-11%, and all of a sudden, in the last two quarters, we are seeing this channel going up to 13%-14%. I'm sorry, I didn't get your full question. You're talking about the e-com sales ticking up? Is that what you're saying? Yes. What was your question, though, Avinash? Is there any change in the online strategy that we are following? Earlier it used to be peaking at 10%-11% annually in the last five years or so. All of a sudden we are seeing foreign bits of contribution increasing from this online channel. We've made significant investments into our D2C site. We've made significant investments into the technology that utilizes omnichannel capabilities with the different marketplaces. I think we're also investing more in digital marketing. Our ROAS, our customer acquisition cost, our spends are increasing, but the productivity, thanks to the technology and the talent we've added on, is more productive. Overall, if you look at it, I think the e-com business should be somewhere between 15%-20%. It's not like we're over-indexing in that space. We don't want to rush into that space and do it at the cost of discounting and not having a full premium range in those stores. What you're seeing is the effect of some of the investments we've made in the digital space. Got it. If I had to look at it like a three years or five years time frame, what the contribution would look like from the e-commerce mix? Well, I think, like I mentioned, somewhere in the 15% range, 15%-20% range is the right thing for a brand like such as Metro, because it is a well-known brand. You also saw in the last couple of This is when they go through all these big billion-dollar sales and all their End of Reason Sales and so on and so forth. To answer your question, at a longer term, I think a healthy e-commerce business in our space for our kind of consumer, for our kind of brands and banners that we own, is somewhere in the 15%-20% range. Okay, got it. This distribution of the e-commerce, is it same across the brands or is it just because recently the Fila, Clarks and these other parts that we are doing, are they the reason that there's sudden jump in the increase apart from the investments that we have done? The investments we've done are primarily focused on our own brands of Metro and Mochi, and that's where we've seen the growth come from. Not saying we're not seeing growth in Fila, not saying that Clarks hasn't been a good addition to it. For example, Walkway, we don't sell directly online. It is strictly done through the marketplaces. You also have seen that we are investing a lot more in the handbag selection that goes online, which there's a high uptake for handbags, not just shoes. Handbags disproportionately sell online for us compared to their ratio in stores. Okay, got it. That's it. Thank you. Thank you. Our next question is from the line of Tejas from Avendus. Please go ahead. Hi. Just one follow-up, Kaushal. If I heard you right, you mentioned that Walkway's revenue per sq ft won't be dilutive at the company level. Given that our current productivity is among the best in the industry, matching that through in a Walkway or value format would mean that we'll also match some of the best value retailers as well on productivity. First of all, did I hear it correct? And any comments to make? Are we already seeing some good throughput in the new formats or the new stores that we have opened there? Tejas, I think you've got it slightly wrong. What we mentioned is, if we expand Walkway aggressively, obviously you will see adverse effect on the overall sales per square foot because throughput in Walkway stores is lower as compared to what you see in Metro Mochi. Barring Walkway, I think all the other additions that we have done, Foot Locker, et cetera, this should all improve or should assist in improving sales per square foot as you will see today. Perfect. Very clear. Usually such formats are margin dilutive also in terms of where we stand today at overall company level. Over there also, if you can clarify. Sorry, you asked about our new format, Tejas? No, Walkway margins. Walkway. We clearly mentioned, right. That our incoming gross margins in Walkway would be lower than that of Metro Mochi, the overall gross margins that we sort of report. Obviously that will flow through EBITDA and PAT. Profit as a percentage in Walkway would always be lower than Metro Mochi. However, our endeavor is that, say, in medium to long-term timeframe, say in three to five years, if we can consistently deliver ROCs somewhere in the range of 20%-30% from Walkway format, I think that would be a good utilization of our treasury funds, which is fetching 7% odd returns. Perfect. Thanks for the clarification. All the best. Thank you. Thank you. The next question is from the line of Rahul Agarwal from Ikigai Asset. Please go ahead. Hi. A very good evening to both of you. Just three questions quickly on the new store additions. Incrementally, assuming that the band, largely what we understand is about 80-110 stores a year, that's the band we are working with, because 20 stores a quarter and then maybe some quarters see very high growth. Between Metro Mochi and Crocs and the newer brands, will the newer additions will be materially different than what we see over the last three years? That's the first question. No, Rahul, I think as you saw this quarter, we expect a robust store addition across all the formats that we have. You will see all the formats, be it Metro, Mochi, Crocs, Walkway, all of them growing. Obviously, Walkway, we opened 11 new stores last quarter and closed one. 10 new stores for Walkway. This was highest for us for Walkway till now. Okay. Secondly, a similar question tied up to the first question. Like last five years, tier 2 towns, share of stores for Metro Brands as a whole has increased. Even newer brands, Fila, Clarks, Foot Locker, most of them will find customers more so in Metro than tier 1. Will that mix change going into next three years? No, I think you answered the question yourself, because for newer brands, our expansion would be obviously, first we will try to cover metro cities and then tier 1 and then tier 2. Because we have eight banners in our portfolio now, you will see us on the new formats would come in metro cities, tier 1. Even for our slightly mature formats like, say, Metro, Mochi, Crocs, we see lots of potential still in metro cities and tier 1 for expansion. I don't see that ratio change significantly over the next three to five years. Right. Which basically means that tier 2 share of stores would go down, right? No. What you're going to see is Metro and tier 1 grow disproportionately with our new formats, and you're going to see tier 2 and tier 3 grow disproportionately with Walkway specifically, but also you would see more growth coming out of Metro and Mochi in tier 2. Overall, the mix should not change considerably for the next few quarters. Okay, great. Lastly, last three years, overall, if I look at EBITDA and net profits for Metro Brands, it's been mid-single digit CAGR, obviously a lot of things have gone up and down across the industry as well as for the company specifically. Can we say next three years growth should now significantly pick up given what I can see is your store additions right now looks pretty much sorted. Walkway looks pretty much sorted for growth. Fila looks like 12-18 months of repositioning, and then that is also on growth path. Then of course, lot of all these macro things which are helping out in terms of GST cuts, tax cuts, consumption pick up, stuff like that. Would you say that this is an inflection point for the company right now? Well, I just want to put that in perspective a little bit. If you compare our sales back to H1 of FY 2020, I'm comparing first half to first half FY 2020, and I'm comparing to FY 2026, we're up 116% over that number. While I know the last few years have been a little bit muted, as you pointed out, let's not forget a lot of that had to do with the lumpiness of the COVID effect and things that happened after that, right? That on a CAGR is 14%. We all know that consumption was a little bit impacted last year. Today, I think a lot of those erratic events, a lot of those one-off events that caused some lumpiness in our sales, we don't foresee any as we look to the next few quarters. Like you rightly pointed out, there are some macro factors helping us through there. Overall, I think we continue to feel confident in our guidance that we will grow at a 15%+ rate and also produce a profit after tax of 15% and an EBITDA in the 30% range. Perfect. Thank you so much for answering my questions, wish you both a very happy Diwali. Thank you. Thank you. Thank you. Ladies and gentlemen, please restrict your question to two questions per participant. Thank you. The next question is from the line of Rajiv Bharati from Nuvama. Please go ahead. Yeah. Thanks for the opportunity. Just wanted to check on Crocs expansion. Usually, and you've been saying that monsoon is Diwali for Crocs, and we had some extended weather-related things in Q2 as well. What is the contribution of, let's say, Crocs as of now, and what is the expansion plan here? We don't break out those granular numbers, but what I can tell you is we're not going to open stores in the middle of Christmas, and in the middle of Diwali for Crocs, right? We did most of our openings for Crocs prior to that, and we're going to continue to grow Crocs as we go forward. We feel good about where the brand is and where it's going, and it's performing well for us, so I don't see any reason to, in any way, see a disadvantage for Crocs' runway for growth. The question is, can we get back to, let's say, 20, 25 store additions like we used to see before? Rajiv, we know 10% network addition even for Crocs for the next three to five years is easily possible. Sure. Thanks a lot. That's all from my side. Thank you. Thank you. Our next question is from the line of Akhil Parekh from BNK Securities. Please go ahead. Hi. Thanks for the opportunity. Just continuing on the growth part, right, as, Nissan, you highlighted that you have grown at 14% CAGR over the last five, six years from FY 2020. If I look at the last two and a half years, the growth rate has been kind of subdued at 11, 6, and 10% for first half. Is there any case of market share loss to some of the D2C players or online-only players? It's difficult to comprehend that the growth rate has been quite subdued for two and a half years. That's my first question. Akhil, I'll take that one. If you see last years, comparing it with FY 2023, we all know, right, FY 2023 was one of the bumper years for retail industry, wherein we saw after COVID, the reopening pent-up buying demand. Right? Hence, that is one of the reasons why we see slightly muted growth in the last two years. In fact, that's why Nissan mentioned. Can you go on mute, please, for a second? Sure. Thank you. Go ahead. That is the precise reason why Nissan mentioned that it would be better if we compare this growth over a slightly longer period, taking COVID out of the equation. That's where we see a healthy growth runway. From SSG perspective, I know we don't provide the SSG number, but what will be a sustainable range of SSG growth one should expect in our business at the scale what we are at right now, basically? If we take a slightly longer period, say, six years or, say, 10 years, all our formats have generated for given SSGs of somewhere between mid to high single digits. If you don't grow that much over a period of time, your profits will start showing it, right? You have seen our profits have, in fact, grown over the years. That clearly shows that we have been able to achieve SSGs at a percentage which is higher than the normal inflation that you otherwise see in the economy. I think that is a sustainable SSGs that we would target going forward. Also, with respect to us, you need to understand the perspective in which we should see SSGs, right? Our growth strategy is I'll give an example here. We generally go into a new town, we start with Metro. Okay? As soon as, say, a Metro store starts doing INR 30 lakhs, INR 35 lakhs revenue, we top it up with Mochi. When we do that, what happens is in that particular year, Metro store will see a degrowth. As a company, our overall revenue from that particular catchment will almost get doubled. That is one of the reasons why we feel 5% mid to high single-digit SSGs are very healthy in our case. A lot of it is, we talk about the self-cannibalization effect internally, and we think it's healthy because we are tapping, taking oxygen out of the market for our competitors. Crocs is a good example. One of the ways we opened Crocs was just to see what the Metro or Mochi were doing in Crocs, and we put down a Crocs store right next to it. Of course, that would hurt my SSGs in the Metro or the Mochi store because they would have been doing a reasonable number in sales from Crocs. A lot of times, what you also see as the SSGs only coming in the mid to high single digits is caused by us, but that's how we want to grow. We want to grow by backfilling markets. We want to grow by clustering markets. That often has that cannibalization effect. The risk is always mitigated when you do that, as opposed to when you go to greenfield markets. Sure. This is very helpful and very detailed. My second and last question is on the Walkway brand. Usually what we have seen in footwear, right, the value format, if you have your own manufacturing setup, that's when it becomes highly profitable. Would that be a challenge for us in Walkway, given that we are completely outsourced model? That's my last question. No, it hasn't been, to be quite honest with you. I think we're confident that we can extract the margins we need to keep that business profitable and return a healthy return on capital for us. We haven't seen that being a distinct advantage, even in the value segment, for a manufacturer. Everybody plays the game a little bit differently. I think our deep operational rigor is able to keep costs down in that sector much better than a manufacturer would be able to keep costs down on the retail side. It's a trade-off. We're good at retailing, and we want to stay focused on retailing and building the brand of retail. Walkway is building its own reputation as a great brand. Sure. From ROC perspective, it will be broadly similar. Is that understanding correct? You are focusing on the brands. No, I just answered that question. Our endeavor is that over medium to long term, which is say 3 to 5 years from now, we want to make sure that Walkway, as a format on a standalone basis, generates ROCs somewhere in that range of 20%-30%. Okay. Thanks a lot and best wishes and happy Diwali. Thank you. Thank you. The next question is from the line of Ankit Kedia from PhillipCapital. Please go ahead. Just one question. In Clarks we have a buy and sell model. We would have paid higher GST out there. With the GST coming down now, at least for sub INR 2,500, for other products as well, there would be a mismatch in working capital. With this now coming in, how much is the working capital increase you see because of input credit not getting fully utilized? No, we don't see that problem in our case, Ankit. With us, all the inputs, in fact, closing input GST balance at each month-end is just for the inputs that we have with respect to goods that we have purchased in the last month, and that gets utilized when we make our GST payment on 20th of the next month. Even with the GST reductions, our input GST themselves will also come down. Considering that, we don't see any inverted duty-related issues creep for us. Sure. That's helpful, yeah. Kaushal, thank you. Thank you. Thank you. Our next question is from the line of Shraddha Kapadia from SMIFS Limited. Thank you. Hello. Yeah, am I audible? Yes, you are, Shraddha. Yeah. My main question is with regards to the e-commerce. If you could help break down the growth between own website versus the marketplaces. In terms of growth, Shraddha, in H1, both our own website and marketplaces have shown similar growth. In terms of overall contribution, obviously marketplace, they have a dominant share. Around 20% of sales comes from our own website and 80% comes from marketplaces as of today. Sure. Thank you so much. If you could give store additions plan for the second half and FY 2027. We typically don't get fixated on a number, Shraddha. What I can assure you is that we're absolutely fixated on opening as many profitable stores that make sense for all of our banners. I think last quarter we've shown that we will continue growing, and we'll only grow when it's right for us and in the right way possible. We tend not to get fixated on a number. Sure. Thank you so much for answering the questions, and Happy Diwali to all of you. Thank you. Thank you. The last question is from the line of Resha Mehta from GreenEdge Wealth. Please go ahead. Thank you. Just two questions. One is the online channel. Would the EBITDA margin there be similar to other channels? Asking this as the cadence there is expected to increase. The second one is on the volume growth. How essentially Of course, we are a premium player, so is volume growth also an important KPI for us in footwear? And what are the volume growths that we typically would like to see? First question was on the online segment. Our EBITDA margin there currently is slightly lower than what we see in the offline channel. We can proudly say that maybe we are among those handful players who treat this business in a different way and for whom the business is actually profitable. For many of the players, e-com business may not be profitable as of today. In the second question on volume, obviously, when we talk about SSG growth, we would want to increase both volume and gain through value increase. If you see historically, broadly, it has been in that range of around 50 odd percent. ASP growth has been around 2%-3%, balance has come from volume. That is what we would target for us going forward, too. Basically a 10%-12% kind of a volume growth and 3%-4% kind of a value growth, right? Yeah. Very true. If we target a 15% overall growth. Got it. All right. Thank you, and Diwali wishes to the team. Thank you. Thank you. That was the last question. I now hand the conference over to the management for the closing comments. On behalf of everybody here at Metro Brands, we'd just like to wish you all a happy Diwali. Thank you. On behalf of Metro Brands and Ambit Capital Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.