Metro Brands Q4 FY26 earnings call

Where management's figures differ from the filing

• Net profit growth YoY: said PAT of 18%; filed +23.1% YoY (consolidated). Management cited standalone PAT growth; filed is consolidated, gap above 3%.

What moved the numbers, as management explained it

• Net 42 new stores plus positive SSG combined to drive the quarter; square foot productivity held flat at ~4,500.
• Digital commerce grew 53%, lifting its share to 12% of revenues and adding to overall revenue mix.
• Inputs up ~10% on Gulf-related concerns; forward buys, six-month inventory and price-protected orders expected to cushion the impact.
• Some inventory was front-loaded in anticipation of further price rises, which lifts reported inventory temporarily. (one-off)

The numbers management led with

• Total store count: 1,032 stores at end of Q4 FY26 (net addition of 42 stores in the quarter)
• E-commerce revenue share: 12% of total Q4 FY26 revenues
• E-commerce growth: 53% YoY growth in Q4 FY26
• FY27 new-banner store pipeline: ~50 stores across FILA, Foot Locker, Clarks, MetroActiv targeted in FY27

Guidance on this call

By business

Balance sheet, capex and funding

• New DC opened in March 2026, adding 200,000 sq ft of storage capacity for growth.
• Tech capex in flight: new POS rollout from June 2026, SAP upgrade later in FY27.
• Inventory built up via front-loading to buffer raw material price rises.
• Management states capital is not a constraint for store expansion; cash to fund growth is available.

The industry, as management sees it

Metro Brands sees the overall footwear market as ~70% unorganised, with the organised segment gaining share. In Tier-3/Tier-4 markets, the unorganised share is even higher (~85%), creating a structural shift opportunity toward organised retail. Premium consumer demand is relatively inelastic to inflation given footwear's non-frequent, non-high-ticket nature. The competitive retail rental market has stabilised from peak intensity but remains competitive for prime locations.

Risks management named

• Gulf crisis / geopolitical disruptions could inflate raw-material and input costs beyond the ~10% already experienced
• BIS licensing uncertainty continues to constrain Foot Locker and MetroActiv supply; unpredictable renewal patterns
• Competitive retail rental market has stabilised but not normalised; BD team must continue to source quality locations
• Discretionary demand for footwear could face elasticity risk if inflation disproportionately impacts middle-class consumers

Not answered directly

• Foot Locker BIS normalisation timeline — management acknowledged uncertainty and could not commit to a specific date

Asked for a number, answered without one

• Quantified input cost inflation and pricing plan: Said overall input cost inflation ~10% with category variation; mitigated via forward buying, six months of inventory and price-protected orders; no near-term pricing move beyond normal inflation.
• Growth split between core and acquired brands: Said quantum (absolute) opportunity is comparable across banners over the next couple of years; percentage growth will differ sharply by base (e.g., Clarks is starting from zero).
• BIS resolution timing for Foot Locker: Said BIS comfort is unpredictable and outside management's control; no firm timeline given.
• Store expansion pipeline for FILA, Foot Locker, Clarks, MetroActiv in FY27: Said an aggregate opportunity to open ~50 stores exists across these brands, but realisation depends on locations, rentals, timing and BIS mitigation.

Every question, with its answer

1. 1. Input cost inflation and pricing strategy

   Sameer Gupta, IFL Capital

   Question. Input cost basket has risen sharply, particularly crude. Can you quantify the input cost inflation and your mitigation strategy? Are you looking at price hikes? Does the procurement for the next season reflect higher locked-in prices?

   Answer, Nissan Joseph / Kaushal Parekh, CEO / CFO, Metro Brands Limited. Input cost inflation is ~10% overall with certain categories higher. Mitigation via forward-buying of raw materials in bulk. Six months of inventory on hand plus order space beyond that period provides price protection. No immediate knee-jerk pricing reaction planned beyond normal inflation adjustments. CFO added that some front-loading of inventory was done in anticipation of price rises.

   Follow-up. Given inflation affects discretionary products more, what is your historical experience with demand elasticity during high-inflation periods?

   Answer. Footwear is neither a frequent purchase nor a high-ticket item, so inflation does not hit the wallet significantly. The premium target consumer is insulated. Inflation affects the middle class harder, not the higher-income customer Metro serves. Demand for footwear tends not to be lumpy during inflation unlike basic-basket goods.

2. 2. Same-store sales growth and footfall trends

   Rahul Agarwal, Ikigai Asset Managers

   Question. In-store sales show single-digit growth over three years. Is the top-line growth largely driven by new store additions rather than SSGs? How do you see walk-ins and footfalls? Specifically on Metro Mochi core network, what are the SSG trends?

   Answer, Nissan Joseph, CEO, Metro Brands Limited. Footfall growth is being seen in Metro Mochi stores, as evidenced by increasing bill counts. Square footage per store has been maintained at ~4,500, indicating growth is not solely from new stores (new stores typically take time to reach full productivity). SSGs are satisfactory and market-share gains are being observed. A portion of growth comes from new stores and annualisation of prior-year openings, but SSG is a meaningful driver alongside new store additions.

   Follow-up. Can you elaborate on the in-store footfall trends specifically?

   Answer. In-store footfalls are growing. CRM database shows new customers entering stores in H2 FY26 — customers not previously in the system. Sequential improvement tracked from Q1 through Q4, driven by new customer acquisition and win-back/repurchase initiatives.

3. 3. Gender segment mix and regional performance

   Gaurav Jogani, JM Financial

   Question. Men's contribution has increased significantly while unisex has declined. Is there something to read into this shift given Walkway and Clarks additions? Also, the East region declined 10% YoY per store — any specific reason?

   Answer, Nissan Joseph / Kaushal Parekh, CEO / CFO, Metro Brands Limited. Men's and unisex should be viewed together — reclassification from third-party brands causes apparent shifts. East region share has been between 13–15% consistently; for the year it was 14%, in line with historical range. The apparent decline is rounding artefact (showing whole percentages, not decimals). No unusual movement in the East.

   Follow-up. Given your medium-term 15–18% growth guidance with multiple brands, how do you segregate growth between core brands and new-age brands? Can the quantum of percentage growth differ?

   Answer. Each banner has significant opportunity to grow at equal numerical pace over the next few years. Clarks has zero stores today so its percentage growth will be infinite mathematically, while Metro Mochi has many stores so percentage growth may appear smaller. But in absolute store-count quantum, all banners have comparable growth opportunity. Capital is not a constraint — only the right location, rental, and market fit for each banner.

4. 4. SSS momentum and demand drivers

   Umang Mehta, Kotak Securities

   Question. Are you confident that the stable SSS (revenue per square foot) of the last three quarters will remain stable or grow with the current expansion pace? Was there anything specific — festive/wedding calendar or GST tailwinds — driving sequential improvement in Q4?

   Answer, Nissan Joseph, CEO, Metro Brands Limited. No single significant driver identified for Q4 improvement — marketing initiatives are driving new footfall. Long-term confidence is high for sustained ~15% YoY growth, demonstrated over multiple periods. Quarter-to-quarter variations in wedding dates and festive timing will always occur. Cannot commit to every quarter being at 15%, but confident in sustained growth over time.

   Follow-up. What is the current pipeline for FILA, Foot Locker, Clarks, and MetroActiv stores in FY27?

   Answer. Opportunity exists to open ~50 stores across the new brands in FY27. However, BIS comfort (especially for Foot Locker and MetroActiv which are heavily import-dependent), right locations, right rentals, and timing must all align. Will not open stores rapidly just to hit numbers. Clarks has lower BIS risk as production has moved to India. BIS issues ebb and flow unpredictably — cannot commit to a specific timeline.

   Partly answered.

5. 5. Pre-IndAS profitability metrics

   Umang Mehta, Kotak Securities

   Question. Can you share pre-IndAS EBITDA and PAT for the full year FY26?

   Answer, Kaushal Parekh, CFO, Metro Brands Limited. Pre-IndAS EBITDA for the full year FY26 is ~21%. Pre-IndAS PAT for the full year FY26 is ~15.5%.

6. 6. E-commerce growth trajectory

   Shraddha Kapadia, SMFS Limited

   Question. E-commerce and omnichannel sales increased significantly in Q4. How should we look at e-commerce growth for the upcoming year?

   Answer, Nissan Joseph, CEO, Metro Brands Limited. E-commerce should be viewed as a percentage of total business — the business is growing and so is e-commerce. In the near term, e-commerce will represent 12–15% of total revenues. There is some lumpiness quarter to quarter based on festive seasons and brand online sales events. Back-calculate absolute e-commerce growth from the 12–15% target applied to the overall growth rate.

   Follow-up. Foot Locker expansion remains cautious due to BIS issues. When do you expect supply chain challenges to normalise? And when will FILA meaningfully contribute to growth and profitability?

   Answer. Foot Locker: BIS comfort is still not fully resolved across brands. This ebbs and flows unpredictably — sometimes brands don't get licences renewed, sometimes they do. Cannot predict a timeline. FILA: Two stores opened; old inventory cleaned up; repositioning aimed at building sustainably for the long term rather than chasing quick sales. Believes FILA becomes a meaningful contributor within 18 months.

   Partly answered.

7. 7. Consumer sentiment and sustainability of growth

   Tejas Shah, Avendus Spark

   Question. Is the strong performance largely attributable to your own expansion, branding, and service efforts, or is there a real uptick in consumer sentiment? Given white-collar jobs appear under stress — is your customer base insulated, or is the momentum sustainable?

   Answer, Nissan Joseph, CEO, Metro Brands Limited. Growth is a combination. Consumer sentiment matters but is not the sole driver. The premium customer is insulated from immediate inflation impact. Walkway's value consumer is in a market 85% dominated by unorganised players — the shift to organised retail is a structural opportunity. Multiple self-generated drivers are also in play: product launches, marketing investments, technology, and CRM initiatives. Confidence in sustained growth comes from the ability to execute on multiple levers, not just from consumer sentiment.

   Follow-up. Is the hyper-competitive retail rental market cycle behind us? How should we think about store expansion run rate going forward?

   Answer. The rental market has stabilised from peak competitive intensity but has not returned to pre-crisis levels. The BD team is working hard to find the right locations. Store expansion will proceed as many good opportunities as can be found — no specific numerical guidance given.

8. 8. Leadership and technology investments

   Devanshu Bansal, Emkay Global Financial Services

   Question. You have been investing in leadership, operations, and technology for the last couple of years. Can you highlight the major changes over the last 12–18 months that help us appreciate the improved growth profile?

   Answer, Nissan Joseph, CEO, Metro Brands Limited. Technology: new POS system selected (rollout from June 2026, full deployment by year-end); in-house AI agent development for agentic workflows; SAP upgrade later in FY27; AI site access provided to employees. People: three significant hires in last 12 months — Chief Technology Officer, Chief Marketing Officer, Chief Product Officer. Chief Digital Insights Officer hired in prior fiscal year. All hires bring domain, scale, and complexity experience. Leadership team is substantially in place; gaps will arise from growth and attrition but core team is strong.

   Follow-up. Is the leadership investment largely complete, or are there more gaps to fill? Are these new roles or replacements?

   Answer. Some are new roles (Chief Product Officer in current avatar is new; Chief Marketing Officer is new — role had been vacant for a couple of years), some are replacements (CTO is a slightly differentiated replacement). As the company grows, gaps will always arise from growth and attrition. For where the business is today, the team in place is terrific.

9. 9. Walkway format expansion and penetration potential

   Devanshu Bansal, Emkay Global Financial Services

   Question. Walkway expansion has been elevated in FY26. Has the format crossed the pilot phase? Should expansion accelerate? You mentioned deep penetration potential — can you elaborate?

   Answer, Nissan Joseph, CEO, Metro Brands Limited. Walkway plays in Tier-3 and Tier-4 towns — there are more such towns than Tier-1. In those markets, unorganised sector dominates (~85% vs ~70% in overall footwear market), presenting a large share-shift opportunity. The operating model is still being refined: how Walkway performs on a Tier-2 high street vs a Tier-4 small shopping centre requires different mechanics — not a cookie-cutter approach. The pilot is never fully done in any store concept. However, Walkway's profitability and ROCE are starting to make a lot more sense, which is encouraging.

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