Metro Brands Q4 FY25 earnings call

Where management's figures differ from the filing

• Q4 FY25 EBITDA growth: said +18% YoY (management commentary); filed +24.3% YoY (₹197.21 cr, margin 30.7%, ex-other income). Filed EBITDA is defined as PBT + finance costs + depreciation - other income; management's 18% growth may use a different scope (e.g., standalone) or include other income.

What moved the numbers, as management explained it

• Q4 and FY growth supported by H2 normalization after H1 disruptions from fewer wedding dates, election and unusual weather.
• EBITDA margin of 31% supported by gross margins in the high 50% range, above the ~55% guidance.
• Fila loss reduced ~50% YoY (from ~₹58 cr) as the cleanup phase ended — a one-off normalization that won't repeat. (one-off)
• E-commerce grew 45% in Q4 (vs offline ~9-10%), lifting the channel mix toward higher contribution.
• Q4 ASP grew ~3% overall and 5-6% in footwear, supporting value growth alongside volume.

The numbers management led with

• Q4 FY25 consolidated revenue growth: Over 10% YoY
• Q4 FY25 EBITDA margin: 31% (in line with guidance)
• Fila FY25 EBITDA loss reduction: ~50% reduction YoY
• E-commerce Q4 FY25 growth: +45% YoY
• Treasury / bank FD investments: ~INR775 crore

Guidance on this call

By business

Balance sheet, capex and funding

• FY25 capex was ~₹86 cr, lower YoY on slower store openings; ~₹40 cr warehouse investment pending for H1 FY26.
• Treasury balance ~₹775 cr; annual cash accrual expected to fully fund store expansion plans.
• Other financial assets jumped to ₹179 cr from ₹13 cr YoY due to FD investments under treasury.
• Working capital at 70-75 days, normalizing after BIS-driven inventory front-loading unwinds.
• No new debt raised; balance sheet described as 'solid' with enough dry powder for opportunistic moves.

The industry, as management sees it

Management views the Indian footwear market as still in an aspirational upcycle with rising disposable income, supporting a long runway for premium-priced brands like Crocs and Walkway. However, they caution that consumer sentiment is settling into a steadier 'steady-state' pattern rather than the lumpiness seen post-COVID, and that growth from time to time can be disrupted by macro events (geopolitics, weather, elections) — though these have so far been transient.

Risks management named

• BIS sourcing continues to limit Fila and Foot Locker product width; ~50% manufactured in India today
• Softness in South India / AP-Telangana possibly tied to IT-sector slowdown and public works
• Rental costs remain structurally elevated despite easing from peak
• Aggressive discount environment in the broader market could pressure pricing
• Footwear ASP uplift contingent on mix and limited ability to take price hikes absent input cost pressure

Not answered directly

• FY26 half-year growth split
• Specific FY26 store-opening number

Asked for a number, answered without one

• FY26 store opening number: Nissan said 'it's not a target fixation of the number, it's a target fixation on continuing to operationally and financially deliver'; rentals coming off peak but no count given.
• H1 vs H2 FY26 growth split: Nissan acknowledged the 'polite way of asking for guidance that we don't do' and pointed to 15% CAGR over the long term without giving a half-year split.
• Walkway store-level variables: Nissan said there were no obstacles; the brand is 'closer to cracking' but gave no specific test variables or store targets.
• AP/Telangana softness drivers: Nissan acknowledged 'slight softness' but only hypothesised causes (IT slowdown, public works in Hyderabad) without quantifying impact.

Every question, with its answer

1. 1. Fila profitability

   Gaurav Jogani, JM Financial

   Question. On Fila — last year there were losses as we were consolidating. Did we breakeven on Fila in FY25?

   Answer, Nissan Joseph, Chief Executive Officer. The first two years of the Fila acquisition were meant to be a cleanup phase and that's behind us. This year and next year are about repositioning the brand. Fila won't play a significant role in moving the needle for the overall company, but it won't be dilutive either.

   Follow-up. Last time we estimated there was an INR38 crore EBITDA loss on Fila. Has that now become flat YoY or is there still some loss?

   Answer. Kaushal Parekh: Last year the overall loss we had posted for Fila was around INR58 crores. This year we have been able to reduce this amount significantly, somewhere closer to about 50-odd percent. We expect to see further improvement in December, as Nissan mentioned, and much better performance from next year onwards once we start opening our EBO stores.

2. 2. Demand trajectory & store opening guidance

   Gaurav Jogani, JM Financial

   Question. Are you confident of reverting to the historical 15–18% revenue CAGR from FY26? And what is the guidance for store openings over the next 2 years?

   Answer, Nissan Joseph, Chief Executive Officer. We've had two quarters of double-digit gains which shows the trend. We're seeing consumer sentiment settle into a steady-state pattern. We remain committed to our guidance of 15% CAGR — but it's CAGR, so we won't jump right back to 15%. On stores, it's not about the number we open but about opening stores that are meaningful and profitable — no target fixation on the count.

   Not answered directly.

3. 3. Fila store openings & repositioning

   Sameer Gupta, IIFL Capital

   Question. On Fila — you had mentioned 5–6 Fila stores by August. Where are we on those? And with cleanup done and BIS sorted via local manufacturing, what is still stopping us?

   Answer, Nissan Joseph, Chief Executive Officer. We're not confused about how to reposition Fila — we're very clear. But repositioning a brand and establishing salience is not an overnight job. It takes time and some trial and error. While we've been able to duplicate a lot of production to India, it's not everything; that is still a challenge for Foot Locker and Fila. But we see opportunity if we reset the brand correctly.

   Follow-up. Are we still on track for 5–6 stores by August, or are more hiccups expected?

   Answer. We definitely intend to open more stores in H2 of this year (fiscal H2). That's staying on track — we're not deviating.

4. 4. Rental environment & store expansion

   Sameer Gupta, IIFL Capital

   Question. On store expansion — rentals were a constraint in FY25. Are rentals now becoming viable so we can return to a desirable retail area growth this year?

   Answer, Nissan Joseph, Chief Executive Officer. Rentals never come down — like taxes, they always go up. The good news is they're coming off the peak we saw earlier in the year. We're seeing the peak flatten down a bit. It's not going back to old levels, but it's getting more favourable for opening stores.

5. 5. Revenue per square foot

   Saurabh Kundan, Goldman Sachs

   Question. You mentioned rev per sqft is always impacted by store addition and banner mix. Can we assume this number remains flattish in the near to medium term at current addition pace?

   Answer, Nissan Joseph, Chief Executive Officer. Yes, flattish with some inflation at some point. If we open more Metro and Crocs stores that will grow; if we open other banners it won't grow as fast. So it's really a mix issue than anything else, but there is constant inflation too. Don't factor much rev/sqft growth — growth will come from SSGs which will translate to square foot growth.

6. 6. Walkway format progress

   Saurabh Kundan, Goldman Sachs

   Question. Where are we on the Walkway format right now, and what exact store-level variables are you still testing that are holding back expansion?

   Answer, Nissan Joseph, Chief Executive Officer. The TAM for Walkway is significant and we're acutely aware. Nothing is holding us back per se — like Fila, positioning and getting the retail concept right is an ongoing work in progress. At some point we'll feel good about it and press the accelerator. The opportunity is intense; we feel we're closer to cracking it.

   Partly answered.

7. 7. Footwear ASP / realisations

   Sagar Jethwani, Phillip Capital PMS

   Question. How do you expect footwear realisations to move in FY26 given the addition of Fila, Foot Locker, New Era and Metro Mochi stores?

   Answer, Kaushal Parekh, Chief Financial Officer. Historically our ASP growth has been around 3–5%. With all these formats coming in, we'll see growth across categories. We broadly expect ASP growth to remain in the historical 3–5% range for next year. Once these formats start contributing significantly, we'll see changes in average ASP over time.

   Follow-up. Could you comment on the footwear realisations split between Tier-2+ towns vs Metro + Tier-1 cities?

   Answer. We don't see significant difference. Certain malls in metros tend to be higher than the country average, but broadly wherever we go, we find customers willing to pay our prices.

8. 8. Footwear ASP Q4 FY25

   Sagar Jethwani, Phillip Capital PMS

   Question. What were the footwear realisations this quarter?

   Answer, Kaushal Parekh, Chief Financial Officer. Overall ASP grew around 3%. If I specifically talk about footwear, it is somewhere in the range of 5% to 6%.

9. 9. E-commerce growth & FY26 contribution

   Shraddha Kapadia, SMIFS Limited

   Question. On e-commerce, which grew 45% in the quarter — what is driving this growth: channel mix, higher ASP, or new customer acquisition? And what is the expected FY26 contribution?

   Answer, Kaushal Parekh, Chief Financial Officer. Our 5-year CAGR for e-comm has been around 53%. For the quarter we grew 45%; for the year around 20%. We're growing across all channels. Our focus is on the omnichannel business — predominantly full-price product delivered from stores. Men's and handbags will be focus areas. We don't want to grow this by offering significant discounts. If forced to put a number for FY26, the contribution will increase by 1% or 2%.

   Follow-up. Can you give the ASP for footwear excluding accessories?

   Answer. ASP for footwear, broadly, is somewhere around 2,400-odd.

10. 10. Price hikes FY26

    Shraddha Kapadia, SMIFS Limited

    Question. Are we planning any price hikes for FY26?

    Answer, Kaushal Parekh, Chief Financial Officer. Not specifically — we're not seeing a significant increase in input costs. What we'll see is a mix of some cost increase and predominantly mix change. We expect ASPs to be in the historical 3–5% range.

11. 11. Crocs expansion outlook

    Prerna Jhunjhunwala, Elara Capital

    Question. On Crocs — we opened only 10–11 stores in the year. How do we see this brand shaping up over the next 2–3 years?

    Answer, Nissan Joseph, Chief Executive Officer. There's still opportunity to grow Crocs. It's a slightly higher-priced item so it's not easy to go into lower-tier markets immediately. As India becomes more aspirational with more disposable income, we see a long runway for Crocs.

    Follow-up. Should Crocs grow at a higher rate than the company average?

    Answer. We don't have a plan to grow any faster, nor to grow slowly. We're focused on moving growth across all banners.

12. 12. Fila / Foot Locker scale-up

    Prerna Jhunjhunwala, Elara Capital

    Question. How do we see the scale-up for Fila and Foot Locker going forward — in terms of stores and online presence?

    Answer, Nissan Joseph, Chief Executive Officer. Fila is in our offline Foot Locker store, on the online Foot Locker store, online via its own dotcom in India, and starting to go into Metro Mochi doors as we reposition. It's performing to our expectations. It's not an overnight journey to build a brand.

13. 13. Margin guidance & non-BIS inventory

    Prerna Jhunjhunwala, Elara Capital

    Question. How do we see profitability going forward with respect to non-BIS inventory? Will we have to take discount measures to clear that inventory?

    Answer, Kaushal Parekh, Chief Financial Officer. Nissan: We don't see BIS having any impact on our margins. Kaushal: Broad guidance remains gross margin in the range of 55–57%, EBITDA around 30%, and PAT around 15% — what we would continue to endeavour to achieve.

14. 14. Store opening strategy

    Umang Mehta, Kotak Securities

    Question. On store openings — demand is steady and rentals improving. What changed versus last quarter? Is there any change in the underlying model?

    Answer, Nissan Joseph, Chief Executive Officer. What has changed is rental peaks coming down — that's encouraging. What hasn't changed is our commitment to growth, the capital availability for store capex, and multiple banners we can expand with. We're optimistic on store growth. It's a number you and I think about — we're going to be very aggressive on store growth and open as many as are meaningful and profitable.

    Follow-up. On Fila — you said 50% of Fila and Foot Locker is now manufactured in India. Is there any capacity constraint at supplier end, given you are still ramping up?

    Answer. When you build a brand you need width of assortment more than depth. It's a question of capabilities available in different models and parts of the assortment in India. If anything will be a challenge as the ecosystem evolves, it's getting the kind of products we'd like. We are also pursuing BIS-certified factories abroad — but it would be a lot easier if we didn't have to deal with it.

15. 15. Own-brand sales channels

    Soumya S., Insightful Investments

    Question. Mochi, Metro and Walkway are the stores through which you sell own-brand shoes, correct?

    Answer, Nissan Joseph, Chief Executive Officer. Correct.

    Follow-up. As you expand Fila and Foot Locker, will we see a reduction in own-brand sales — or will growth in Mochi and Metro stores make up for it?

    Answer. The numbers we share are own-brand sales in Metro, Mochi and Walkway. We've been running those numbers for quite a few years. We don't see that changing — on an overall basis, immediately, we don't see any shift in that overall math either.

16. 16. H1 vs H2 growth in FY26

    Devanshu Bansal, Emkay Global Financial Services

    Question. H1 had a weak base due to weddings, elections, heatwaves. If you segregate FY26 growth across two halves, how would it look? Could H1 see better trends vs H2?

    Answer, Nissan Joseph, Chief Executive Officer. I like your polite way of asking for guidance that we don't give. But it's sensible retail logic that a lower base has higher propensity for better performance than a higher base. There's also momentum in retail. Long-term, we're confident of getting back to 15% CAGR. This year wasn't there — that gives you an indication of how we're looking at it.

    Follow-up. How has the initial traction been in the Foot Locker store opened? Is it uplifting confidence for further expansion of this format?

    Answer. With the product we've got, we're actually quite excited about Foot Locker. Unfortunately we haven't been able to get all the product due to BIS limitations. Commitment and excitement on Foot Locker's runway remain untouched. We fully expect brands to step up and close the loop on manufacturing within 6–9 months, after which we'll accelerate growth. We have more Foot Lockers planned to open later this year — not a total pause, but slowed.

    Not answered directly.

17. 17. Other financial assets / balance sheet

    Devanshu Bansal, Emkay Global Financial Services

    Question. There's an increase in other financial assets to INR179 cr vs INR13 cr last year. Can you help us understand what this is?

    Answer, Kaushal Parekh, Chief Financial Officer. It's our investment in FDs — depending on the FD tenure, the accounting classification puts it into other financial assets. The increase you see is basically our treasury investment in bank FDs.

    Follow-up. From a capital sufficiency perspective — dividend was relatively high this year. Does the balance sheet remain solid?

    Answer. Yes, it remains solid. Treasury is around INR775 crores. Our annual cash accrual should be enough to fund all store openings and plans. We have enough dry powder in case something comes up.

18. 18. Working capital

    Devanshu Bansal, Emkay Global Financial Services

    Question. On working capital — it's been a decent year. Can we expect further moderation, or have efficiencies largely been taken?

    Answer, Kaushal Parekh, Chief Financial Officer. Long-term working capital has been around 70–75 days. It was inflated over the last 3 years on account of BIS-related front-loading of inventory — that's now tapering off. We expect working capital to remain around that range. We don't want to become too efficient and lose out on sales.

19. 19. Capex & warehouse investment

    Sameer Gupta, IIFL Capital

    Question. Capex in FY25 was around INR86 cr — quite low vs last year. Was the ~INR40 cr warehouse investment done, or will it stretch into future years?

    Answer, Kaushal Parekh, Chief Financial Officer. That cash outflow should happen in the current year. Most probably, most of it will happen in H1 of this current financial year.

    Follow-up. South India — particularly AP and Telangana — has been called out as weak by retailers. Have you witnessed similar softness? Any reason you can pinpoint?

    Answer. We are seeing slight softness there. It's hard to pinpoint, but other retailers have shared similar sentiment. Could be IT-sector slowdown; could be public works in Hyderabad. No macro reason that region should lag significantly — these things usually rebound or lap themselves. Not significant enough for us to be concerned.

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In their words