Metro Brands Q1 FY26 earnings call

What moved the numbers, as management explained it

• First half FY25 muted by fewer wedding dates and erratic weather; second-half recovery led by festive demand.
• PAT declined YoY due to one-time tax adjustments related to historical reconciliations in the FILA business — a distortion not to be extrapolated. (one-off)
• Gross margin stood at 57.7%, ahead of guidance, with in-house brands at MBOs contributing 74% of revenue.
• Revenue +6.4% on disciplined net addition of 70 stores, each selected on revenue and profitability benchmarks.
• FILA completed a multi-year inventory liquidation, clearing the path for next-phase growth and reconnection with sport-inspired consumers. (one-off)

The numbers management led with

• Total store count: 908 stores as of March 31, 2025; 70 net additions in FY25
• E-commerce share and growth: Online sales grew ~20% in FY25; e-commerce now 10.6% of total revenue
• Indian footwear market size and MBL share: Total market ~₹1,50,000 Crores; MBL market share 2-3%
• Annual capex guidance: ~₹100 Crores per year for next 2-3 years

Guidance on this call

What changed since the Fri 8 Aug 2025 call

Balance sheet, capex and funding

• Annual capex expected at ~₹100 cr for the next 2-3 years to fund store openings and renovations.
• Cash on books of ~₹700-800 cr; CFO said the company is more than capitalised to fund capex internally.

The industry, as management sees it

Management views the Indian footwear industry as on a resilient growth path, powered by rising incomes, digital adoption, and evolving lifestyles across both metros and smaller towns. Supportive government measures — GST rate reduction, revised income-tax slabs for individuals, and lower interest rates — are expected to further boost demand and underpin a 15-18% medium-to-long-term revenue growth trajectory for the company.

Risks management named

• Revenue per square foot declined from ₹19,800 in FY23 to ₹18,200 in FY25, partly due to tier-2/3/4 mix
• PAT of ₹354 Cr was lower YoY due to one-time tax adjustments related to historical FILA business reconciliations

Not answered directly

• Gross margin trajectory vs competition
• Stock underperformance vs Bata and Relaxo
• GenAI impact on operations
• Mochi community CSR specifics
• Rights issue plans
• Legal cases disclosure
• Profit-sharing ratio

Asked for a number, answered without one

• Clarks EBO rollout beyond first store: Management avoided giving detailed guidance; said first Clarks EBO planned in H1 FY27 but declined to give a multi-year rollout number.
• FY26 net store addition target: Management gave no specific number; cited eased rental expectations and intent to continue growing the store network as in the past.
• Online share-of-revenue target: Management gave no forward target; only stated online sales grew ~20% in FY25 to 10.6% of total revenue without a stated goal.

Every question, with its answer

1. 1. Market share and growth outlook

   Himanshu Anilbhai Trivedi, Shareholder (Vadodara)

   Question. What is the market share in domestic and international markets? What would be the profit-sharing ratio in the coming financial year? How much new products are coming in the current financial year?

   Answer, Kaushal Parekh, Chief Financial Officer. On market share: the overall Indian footwear market is approximately ₹1,50,000 Crores in size; Metro Brands' overall market share is in the 2-3% range as of FY 2024-25, indicating significant headroom for future growth. (Other questions on profit-sharing and new product launches were not addressed in the consolidated response.)

   Not answered directly.

2. 2. Franchise model and store mix

   Ram Chandra Singh, Shareholder (Delhi)

   Question. How many stores are in franchise model? How many legal cases are there and how are they handled?

   Answer, Kaushal Parekh, Chief Financial Officer. Out of 908 total stores, only 5 are under the franchisee model; the balance (903) are Company-owned and Company-operated (COCO). Legal cases question was not addressed in the consolidated response.

   Not answered directly.

3. 3. Store count and shareholder engagement

   Yusuf Rangwala, Shareholder

   Question. How many total stores are there, including international locations? Could the company host a shareholder get-together for the 50th anniversary?

   Answer, Kaushal Parekh, Chief Financial Officer. Total stores of 908 confirmed (per CFO response in subsequent Q&A). International store count and shareholder event questions were not addressed; dividend of ₹2.50 acknowledged implicitly.

   Not answered directly.

4. 4. Tax expense variation, EPS, Clarks status, investor complaints, DIN

   Manjit Singh, Shareholder

   Question. Total expenses jumped to ₹146 Cr from ₹48 Cr and previously ₹125 Cr - what explains this? Why did basic EPS decline to ₹12.50 from ₹15.37? Status of Clarks agreement and any plans for a rights issue? Why have investor complaints increased? What is the status of MD's DIN number and citizenship? What is the Mochi community CSR initiative and CSR fund allocation?

   Answer, Kaushal Parekh, Chief Financial Officer. On tax expense variation: the FY 2023-24 tax expense variation was predominantly on account of consolidation of the FILA business and benefits from utilization of carry-forward FILA losses over the last few years. On investor complaints: all complaints are addressed promptly by the secretarial team, predominantly relating to non-payment of dividends, and there are no outstanding complaints pending. On MD's citizenship/DIN: all legal procedures have been thoroughly followed, and the DIN number has been obtained as per applicable process. (Questions on Clarks status, rights issue, EPS variation, Mochi CSR, and related-party office details were not directly addressed in the consolidated response.)

   Not answered directly.

5. 5. SSSG, margin pressure, peer comparison, digital lag

   Ankur Chanda, Shareholder

   Question. Same-store sales growth has been sluggish despite store expansion - is the disconnect a quantity vs quality issue? Gross margin has remained flat/declined marginally - what steps are being taken amid rising competition? Stock has underperformed peers Bata and Relaxo - what tangible steps to unlock shareholder value? Why has the company lagged in digital innovation and online sales integration? Can a non-Indian citizen hold DIN and serve as Director?

   Answer, Kaushal Parekh, Chief Financial Officer. On SSSG/sluggishness and revenue per square foot: FY 2022-23 saw pent-up buying and complete wardrobe refresh post-COVID restrictions, so direct comparison is inappropriate. Comparing FY 2018-19 revenue per square foot of ~₹17,500 to current ~₹18,200 shows growth, despite the dilutive effect of tier-2/3/4 city store expansion. (Questions on gross margin, stock underperformance vs Bata/Relaxo, digital innovation lag, and MD's DIN/citizenship were not substantively addressed in the consolidated response.)

   Not answered directly.

6. 6. Capex plan, GenAI, CSR, investor confidence

   Gaurav Kumar Singh, Shareholder (New Delhi)

   Question. What is the capex plan for the next two to three years? What is the impact of GenAI on business operations? What is the target CSR spend for the current financial year? What steps have been taken to improve investor confidence?

   Answer, Kaushal Parekh, Chief Financial Officer. On capex: annual capex spend should be in the range of ₹100 Crores for the next 2-3 years, sufficient for store openings and renovations; with ₹700-800 Crores of cash on the balance sheet, the company is more than adequately capitalised to fund this efficiently. On CSR: company is compliant with the statutory requirement of spending 2% of profits on CSR and has been doing so on a year-on-year basis. (Questions on GenAI impact and specific investor confidence measures were not addressed in the consolidated response.)

   Not answered directly.

7. 7. Revenue per sq ft, growth outlook, ASP, store plans, Clarks

   Samrat Sarkar, Shareholder

   Question. Why is revenue per square foot declining from ₹19,800 (FY23) to ₹18,200? How do you perceive revenue growth over the next few years? What was the average price increase in FY 2024-25? How many net stores in the current financial year? How many Clarks stores planned in the next 2-3 years and what is the Clarks price range?

   Answer, Kaushal Parekh, Chief Financial Officer. On revenue per square foot decline: FY 2022-23 benefitted from pent-up post-COVID demand and is not an appropriate baseline; comparing FY 2018-19 (~₹17,500) to current (~₹18,200) shows growth despite tier-2/3/4 dilution. On revenue growth: confident of achieving 15-18% revenue growth over the medium to long term. On ASP: overall ASP grew ~3% in FY 2024-25; for footwear specifically, ~5%. On store openings: rental expectations have eased post-COVID highs, giving confidence to continue store network expansion as in the past. On Clarks: deal signed in June 2025; Clarks merchandise already launched within Metro Mochi stores; first Clarks CBO planned for H1 of next financial year; price range ₹3,000-₹8,000.

8. 8. Future plans and shareholder perks

   Susheel Arora, Shareholder

   Question. What are the company's future plans? Can shareholders receive product samples or discount coupons?

   Answer, Farah Malik Bhanji, Managing Director. The MD's closing remarks thanked shareholders for their faith and confidence and affirmed the company's commitment to building on a strong foundation and achieving more milestones; specific future plans were not detailed beyond the earlier CEO address.

   Not answered directly.

9. 9. Future plans and AGM format

   Prakashini G. Shenoy, Shareholder (Mumbai)

   Question. What is the future plan of the company? Request to continue with VC for future AGMs.

   Answer, Farah Malik Bhanji, Managing Director. The MD's closing address acknowledged the future-plan question and expressed confidence in the company's trajectory, but did not provide new specifics beyond the CEO's earlier address covering 15-18% medium-to-long-term revenue growth and the new Clarks, Foot Locker, and New Era initiatives.

   Not answered directly.

Topic by topic, in the order it was spoken

In their words