Metro Brands Q1 FY26 earnings call

What moved the numbers, as management explained it

• Eid fell into Q4 FY25 (vs Q1 FY26 last year), removing a ~2-3% sales uplift in Q1 FY26 — main near-term headwind. (one-off)
• Early onset of monsoon in Gujarat and Maharashtra — major Metro markets — dampened footfall though helped Crocs sales.
• Annualisation of ~100 stores opened in last 12-15 months (>10% of the base) diluted sales per square foot.
• Step-up in marketing spend (target 3.5-4% of sales, slightly above last year) kept EBITDA margin at 31% vs 31%+ prior.
• Less Fila liquidation at low price points vs last year pushed blended ASP up; ~30 bps gross margin compression from e-commerce mix.
• Walkway price points reintroduced below Rs 500 dragged down Walkway-level ASP and overall mix.

The numbers management led with

• Standalone and consolidated revenue growth: 9% YoY in Q1 FY26
• EBITDA growth: 8% YoY, margin at 31%
• PAT growth: 7% YoY, margin at 16%
• E-commerce growth: 45% YoY; Q1 FY26 e-commerce revenue ~Rs 84 cr vs Rs 58 cr Q1 FY25

Guidance on this call

By business

Balance sheet, capex and funding

• Net cash position with capital ready to deploy across Fila, Foot Locker, Walkway and Clarks.
• Capex is driven by store openings (23 added in Q1 FY26) plus brand investments; no explicit annual capex figure quoted on the call.
• No specific debt, working capital or funding figures were discussed on this call.

The industry, as management sees it

Management views the Indian footwear market as structurally intact — 80% of footwear sold in India is below Rs 1,000 — with consumer spending being dispersed across more discretionary categories rather than impaired. They see no fundamental cracks in demand, only cyclical lumpiness post-COVID, and view early-onset monsoon and the tech-sector slowdown in South India as transient. Quick commerce is seen as a meaningful but currently metro-only channel.

Risks management named

• Lumpy post-COVID demand patterns making quarter-to-quarter comps noisy
• Early monsoon in Gujarat and Maharashtra dampened store traffic in significant catchments
• Sluggishness in South India linked to tech-sector and real estate weakness
• Sales per square foot pressure from ~100 stores added in last 12-15 months
• BIS regulatory overhang still partially unresolved for Foot Locker/Fila sourcing

Not answered directly

• Clarks detailed rollout and unit economics — deferred to next earnings call
• Specific Walkway store-additions number for FY26
• Sales per square foot like-for-like (Eid-adjusted) number — only gave an indicative 2-3% uplift range
• Quarterly same-store sales growth disclosure
• Fila EBO opening timing — held to 'latter half of calendar 2025' guidance

Asked for a number, answered without one

• Same-store sales growth for Metro Mochi and Crocs: Declined to break it out; said a good portion of the 15% CAGR comes from SSG, the rest from unit growth and new-store annualisation; over 10 years formats delivered mid- to high single-digit SSG.
• Annual Walkway store addition target: Said they do not guide; will open as many as make logical sense for the business while keeping profitability and guided metrics intact.
• Total FY26 store addition number: Declined to give a number; will capitalise on rental deals that make sense rather than hit a target.
• Quantum of Fila FY26 losses: Said losses will further go down this year and break-even is targeted next year; did not give a specific FY26 loss figure.

Every question, with its answer

1. 1. Walkway repositioning

   Videesha Sheth, Ambit Capital

   Question. Could you elaborate on the repositioning of Walkway — what are the moving parts and outcomes you're expecting?

   Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Corrected the framing — not repositioning Walkway, repositioning Fila. Walkway is being prepared to scale in the value footwear chain. They have re-looked at store presentation, product, cost structure, and design to set it up for profitable growth. 80% of footwear sold in India is below Rs 1,000, which is the Walkway play, and management sees clear inroads and traction from the initiatives taken.

   Follow-up. Is there more work to do on the supply chain for the value segment to balance price and design?

   Answer. Nissan acknowledged supply chain, design and consumer pricing acceptance is an ongoing battle, not a one-shot formula. Confident in traction but will keep iterating.

2. 2. Store addition guidance

   Videesha Sheth, Ambit Capital

   Question. On store addition — would FY26 store adds be in the 80-90 range or could we cross 100?

   Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Said the company is seeing traction in deal flow and rental spikes are now moderating — they will continue the growth trajectory in stores. They are not targeting a number; they will open whatever makes sense in terms of rental economics.

   Partly answered.

3. 3. Growth drivers and long-term CAGR

   Saurabh Kundan, Goldman Sachs

   Question. Is the muted Q1 growth driven by one-off factors (early monsoon etc.) or specific to Metro? And are new initiatives like Walkway/Clarks essential to hitting mid-teens growth, or are the existing brands enough?

   Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Nissan anchored the answer with a 12% revenue CAGR since FY20 Q1 (calendar 2019) including the COVID year, with PAT CAGR of 15% and PAT margin moving from 13% to 16%. Said the company has guided to 15% CAGR, mid-teens PAT and 30%+ EBITDA since IPO and never strayed. New banners are one of three growth levers (SSG, new store expansion, new banners) but are not added for the sake of growth — must be meaningful to consumer.

   Follow-up. Can you quantify what the Q1 Rs 43-50 per square foot would have been ex the Eid calendar shift?

   Answer. CFO Kaushal Parekh said Q1 sales would have been 2-3% higher if Eid had been in Q1; same percentage uplift applies to sales per square foot. Nissan added that the bigger effect is annualisation of ~100 stores opened in the last 12-15 months (over 10% of the chain), and that EBITDA/margin remain unaffected — it's healthy growth, not growth at the cost of profitability.

4. 4. Consumer preference shift

   Devanshu Bansal, Emkay Global

   Question. Is the shift in consumer preference toward casual/athletic and online channels a hindrance to growth?

   Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Said it is not necessarily a casual shift — comfort, personalisation etc. are all part of changing consumer landscape. Versus industry, Metro continues to lead in growth and profitability. Casual and athletic already over 50% of business, so Metro is not absent in those segments; stores are geared to pivot.

   Follow-up. With festive early in Q2 this time, can we expect better Q2 traction vs historical trends?

   Answer. Yes — some sales will shift into Q2 with offset in Q3; just a normal cyclical pattern, foundation of business unchanged.

5. 5. Walkway unit economics

   Devanshu Bansal, Emkay Global

   Question. Annual guidance on Walkway store adds and how Walkway unit economics (revenue, margin) differ from Metro Mochi?

   Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Nissan declined to give a Walkway store-add number — opens whatever makes sense. Walkway is not as profitable from a PAT percentage standpoint as Metro/Mochi but is a great use of capital from an ROCE standpoint; standalone profitable; dilutive in mix but not negative in itself. CFO added long-term Walkway store-level ROCE target is 30%+ vs Metro Mochi 40-45%+.

   Partly answered.

6. 6. Same-store sales growth

   Rahul Agarwal, Ikigai Asset

   Question. Can you talk about same-store sales growth for Metro Mochi and Crocs over the last 12-18 months?

   Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Nissan declined to break out SSG. Said 15% CAGR has come partly from SSG, partly ASP/unit growth, partly new-store annualisation. Mature stores flatten out, newer stores show higher % growth. CFO added that FY23 was a revenge-buying peak, FY24 looks muted against that — over a 10-year view, blended SSG across formats has been mid-to-high single digits, which is the long-term minimum target.

   Follow-up. If SSG is actually lower than it should be, would margins have upside from here, or are current margins a peak?

   Answer. Nissan said the goal is a sustainable model, not maximising a single number. They have always stayed within or better than guidance on PAT and EBITDA since IPO — that is more important than a singular metric.

   Partly answered.

7. 7. India-UK FTA impact

   Rahul Agarwal, Ikigai Asset

   Question. Any benefit from the India-UK FTA for Metro?

   Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. No. 100% India — sources ~95% of goods in India, sells 100% in India. The FTA does not impact them either way.

8. 8. Marketing spend

   Gaurav Jogani, JM Financial

   Question. Was Q1 marketing spend front-ended, or will annual marketing spend be higher this year?

   Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Target is 3.5-4% of sales; last year they under-spent in the quarter, so Q1 stepped up. They will continue to invest in brand building — spend will not level off. On a comparative basis, FY26 marketing spend will be slightly higher than last year.

   Follow-up. On sales per square foot, is the drag from new stores or Tier-2/3 expansion, or demand slowdown?

   Answer. CFO said FY23 was the highest sales/sq ft year on revenge buying, so best to compare to FY20 (~Rs 17,000) — current trending higher. With 8 formats now, blended number is hard to read. Nissan said don't read too much into sales/sq ft — growth covers cost and goes beyond; effect would show up in other metrics quickly.

9. 9. Fila losses and break-even

   Gaurav Jogani, JM Financial

   Question. On Fila — where are the losses now, and when do you break even?

   Answer, Kaushal Parekh, Chief Financial Officer, Metro Brands. FY24 Fila losses were around Rs 58 cr; reduced ~40% in FY25; will go down further this year; break-even expected next year.

10. 10. ASP details

    Shraddha Kapadia, SMIFS

    Question. Can you give footwear-only ASP (ex-accessories) and the current ASP for Clarks?

    Answer, Kaushal Parekh, Chief Financial Officer, Metro Brands. Footwear-only ASP at stores is ~Rs 2,700, growing 3.5-4%. Overall ASP growing ~3%. Clarks ASP would be north of Rs 3,500-4,000.

    Follow-up. Do you have a target to take the premium mix from 56% to 60-70%?

    Answer. No formal target. Premium mix (sales above Rs 1,500) has been 86-87% in FY24, 88% in FY25, 89% in Q1 FY26 — very stable. Foot Locker and Clarks will push it up, but Walkway expansion will balance it out. Each banner must stay in its lane.

11. 11. Consumer sentiment

    Prerna Jhunjhunwala, Elara Securities

    Question. How would you compare consumer sentiment this year vs last year given the weaker wedding season last year and Eid moving into Q4?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Quite consistent with expectations. Wedding shopping for this quarter was largely done earlier. Consumer sentiment is best read longer term — Metro has moved from flat sales to two straight quarters of near-double-digit growth. No consistent trend of consumer shying away.

    Follow-up. Any color on urban vs Tier-2/3 demand and regional specifics?

    Answer. Early monsoons hit Gujarat and Maharashtra store performance. South showing some slowness from time to time; Punjab also erratic. No single consistent regional offender.

    Partly answered.

12. 12. Premiumization drivers

    Prerna Jhunjhunwala, Elara Securities

    Question. Which brands are contributing to premiumization? And is it real premiumization or price hikes?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. CFO: ASP growth across all banners except Walkway (where sub-Rs 500 price points were reintroduced). Normal ASP growth 2-5% across banners. Nissan added it's mostly mix of goods (Fila at higher ASP, less low-end Fila liquidation) plus steady price increases, not driven by supply-cost spikes.

    Follow-up. On Clarks — earlier media said the brand was Rs 250-300 cr with the previous licensee. How do you see it scaling?

    Answer. Nissan said more colour will come next call, but Metro has a track record of scaling brands in India (Crocs, Fitflop). CFO added Metro only takes on synergistic brands that fit MBO formats like Metro Mochi. Nissan noted Metro was one of the largest sellers of Clarks when it was with the previous partner, so they know the brand well.

    Not answered directly.

13. 13. Crocs growth

    Umang Mehta, Kotak Securities

    Question. Has Crocs grown meaningfully faster than other channels, given the early monsoon and the higher outside-brand contribution?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. No significant Crocs outperformance. Early monsoon normally helps Crocs but in Q1 it fell entirely in the previous quarter. Other factors also contributing — Foot Locker coming on, no longer liquidating Fila at low price points.

    Follow-up. What was wrong at Clarks under the previous partner and what changes now?

    Answer. Nissan said it's hard to know what was wrong inside other organisations; their filter is whether the brand is meaningful to customers (yes, they sold a lot of Clarks via Metro Mochi) and whether they can do a better job with it (they have a track record of doing so).

    Partly answered.

14. 14. Banner expansion runway

    Umang Mehta, Kotak Securities

    Question. Do you have enough banners, or is there potential to add more for the footwear business?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Will add more if customers want them. Also have strong in-house brands (Metro, Mochi, DaVinchi, J Fontin). It's a balance between what they can do well vs what they cannot, not a hunt for banners at any cost.

15. 15. Store economics post-COVID

    Tejash Shah, Avendus Park

    Question. Are some of the store economics budgeted during the post-COVID surge not holding up, forcing relocations?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. It's a constant cycle — some stores overperform, some underperform. Failure percentage is very low, so most stores are hitting target profits. Consumers have more options for disposable income now, but spending is just being dispersed. Input costs have been well controlled to keep EBITDA margins in guided range.

    Follow-up. How do you prioritise managerial and financial resources across established banners (left of balance sheet) and WIP brands (right of balance sheet)?

    Answer. Each brand has a different need like a different child — can't categorise them all the same. They have capital ready to deploy and invest heavily in people, marketing and design for each. CFO added BIS implementation delayed Foot Locker and Fila, but those brands will grow meaningfully this year and next.

    Partly answered.

16. 16. Banner portfolio expansion

    Tejash Shah, Avendus Park

    Question. Do we have enough 'children' (banners) or is there space to add more?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Will continue to explore brands as customer needs evolve. Brands come and go. Customer preferences are changing and will continue to change — they will add when they see unmet need.

17. 17. Walkway repositioning details

    Sameer Gupta, India Infoline

    Question. On Walkway — what exactly is the change and the earlier problem? Is this a trial or full-fledged expansion now?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. No real repositioning, more a 'tweaking and refinement' before scaling. 80% of Indian footwear is under Rs 1,000, a space Metro wasn't playing in. Post-COVID they opened ~400 stores (80% of pre-COVID base), so management bandwidth went there first. Now Walkway is ready for growth — not as profitable on a PAT % basis but excellent capital deployment from an ROCE standpoint.

    Follow-up. Is the tweaking done — can Walkway now grow like the other brands?

    Answer. Nissan said 'that's a safe comment'.

18. 18. Foot Locker reopening

    Sameer Gupta, India Infoline

    Question. On Foot Locker — is the cautious approach over and is BIS behind us?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. It was only BIS that caused hesitation. Foot Locker is multi-brand and dependent on global brands mitigating BIS; they paused ~7 months. Now at a comfort level — opened two stores, will open more before year-end. BIS mitigation is not fully through but at a level they are comfortable with.

    Follow-up. On Fila EBO — what is still pending? Why still a buffer if supply chain is replicated?

    Answer. Nissan said they are still iterating products/strategy without an evolved Indian supply chain. Will keep testing in Metro Mochi stores first and have always guided to Fila EBO openings in latter half of calendar 2025 — no change to that.

    Partly answered.

19. 19. E-commerce growth sustainability

    Devanshu Bansal, Emkay Global

    Question. On online — is the strong Q1 growth sustainable, or was there an EOSS one-off?

    Answer, Kaushal Parekh, Chief Financial Officer, Metro Brands. E-commerce Q1 FY26 was Rs 84 cr vs Rs 58 cr in Q1 FY25 (45% growth) and Rs 61 cr in Q1 FY24. Strong growth partly off a weak Q1 FY25 base. Q2/Q3 are typically better quarters online, both this year and last year, so same pattern holds.

    Follow-up. On regional trends — West slower, South muted, North/East better. Any specific reasons and steps to improve?

    Answer. Nissan said they would be reaching to fully explain. South affected by tech sector weakness and depressed real estate in some states. Demand goes up and down but does not disappear — shoes are a necessity. Has seen some resurgence in AP/Telangana but also seen it fade — cyclical, not getting hammered.

    Partly answered.

20. 20. E-commerce channel strategy

    Aditya Bansal, Motilal Oswal

    Question. On e-commerce share — has the channel strategy changed, and is the 8-10% target being revised?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Two drivers: successfully enabling omnichannel by lighting up store inventory across e-commerce, and pushing DTC. Will not grow via discounts to avoid brand erosion.

    Follow-up. Gross margin dipped vs last year — is it from e-commerce mix, Fila liquidation base effect, or other?

    Answer. CFO: combination of e-commerce discount quantum and other factors; gross margin moved only 30 bps, nothing material. Nissan: Q1 was second-highest gross margin in the last 5 quarters; last quarter was the highest. Mid-to-high 50% gross margin range is the guide and it was achieved.

21. 21. South region underperformance

    Aditya Bansal, Motilal Oswal

    Question. On South — revenue broadly flat over last 2 years despite ~20% store addition. Is there a structural issue?

    Answer, Kaushal Parekh, Chief Financial Officer, Metro Brands. No structural issue beyond what Nissan described. South remains a key growth region for them.

22. 22. Walkway playbook status

    Saurabh Kundan, Goldman Sachs

    Question. On Walkway — is the playbook now fully set and it's just a matter of replicating stores, or is there still work to be done?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. Playbook is never set in retail — constant evolution. But they feel good about the guardrails and levers identified for Walkway and are broadly confident in the position.

    Follow-up. Any constraints other than locations — would you like higher throughput per sq ft?

    Answer. Always want more sales per sq ft and better throughput. Need right real estate at right rentals; rentals are coming in line. Not stopping work on it.

23. 23. Walkway merchandising strategy

    Saurabh Kundan, Goldman Sachs

    Question. For Walkway, will merchandise be regionalized like Metro Mochi MBOs or uniform across the country?

    Answer, Nissan Joseph, Chief Executive Officer, Metro Brands. India needs regionalisation because preferences vary region to region. Within the price/value range, lots of homogenous product; biggest regional variable is weather (North vs South stores differ). Otherwise largely homogenous.

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