Metro Brands Ltd (METROBRAND) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (ICICI Securities Limited): Ladies and gentlemen, good day, and welcome to Metro Brands Limited Q2 FY '27 Earnings Conference Call, hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and 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 zero on your touch-tone phone. I now hand the conference over to Mr. Ashutosh Joytir Aditya by ICICI Securities Limited. Thank you, and over to you, sir.
Ashutosh Joytir Aditya (ICICI Securities Limited): Yeah. Thank you, Solia. Hello and good afternoon, everyone present on the call. I on behalf of ICICI Securities welcome you on Metro Brands Limited's Q2 FY '27 earnings call. I would like to thank the management to give this opportunity of hosting the call. From the management, we have Mr. Rafique Malik, Chairman; Ms. Farah Malik, Managing Director; Mr. Nissan Joseph, Chief Executive Officer; Mr. Kaushal Parekh, Chief Financial Officer
Ashutosh Joytir Aditya (ICICI Securities Limited): Mr. Mohit Dhanjal, Chief Operating Officer and Ms. Alisha Malik, President Sports Division, E-com and CRM. I now hand the call over to Nissan Sir for the opening remarks. Thank you.
Nissan Joseph (Metro Brands Ltd): Thank you, Ashutosh. Good afternoon, everyone and thank you for joining our earnings call. On a standalone basis, second quarter net sales grew by 12% year-on-year to 712 crores while profit after tax increased by 14% to 73 crores and EBITDA grew 15%. On a consolidated, consolidated basis for the second quarter, revenue grew by 12.2% to 730 crores. EBITDA increased by 15.9% to 198 crores with EBITDA margin improving to 27.1% compared to 26.2% a year ago. Profit after tax grew by 11% almost 12% to 77 crores. With the PAT margin and change at 10.6. E-commerce including omnichannel sales grew by 12% in the second quarter and contributed 14.2% of revenue. For the first half, it grew by 11% and contributed to 13.6%. We continue to connect our stores with our online platforms, giving customers more ways to discover and purchase our products. As search behavior evolves, we are also working to maintain our brand's visibility across marketplaces and emerging AI-driven discovery platforms. When assessing this performance, it is important to recognize that a large share of festive demand shifted into the third quarter compared with last year as sales demand moved from September to October. Gross margin improved to 58.4% for the first half compared with 57.3% a year ago. However, several costs offset that improvement further down the income statement. These included continued investment in talent and brand building, higher frontline staff costs following minimum wage revisions and a modest increase in occupancy costs associated with incubating new formats. Lower treasury income also against a prior stronger year also affected PAT growth. We recognize the difference between our revenue growth and bottom line growth. Our focus remains on developing the embryonic businesses of athleisure and investing in marketing and talent while maintaining discipline around that cost of growth. During the second quarter, we opened 21 stores and closed nine stores, adding 12 stores on a net basis. For the first half, we opened 34 stores and closed 13, taking our network to 1,053 stores at the end of September. Our expansion approach remains selective. We want each format to have the right locations and product assortment to support sustainable, profitable stores. These investments position us to pursue the next phase of growth across our established portfolios and newer formats. Let me now address our newer businesses, where the opportunity remains significant, but the pace of expansion depends on product availability and operational readiness. For Clarks, we now offer the women's range in more than 400 multi-brand outlets with a limited men's range in more than 100. We expect the complete exclusive store range to become available during the third quarter, with the full assortment available on our D2C site. Subject to stabilization of the supply chain and assortment, we expect to launch Clark's exclusive stores in the second half of fiscal 2027. For Foot Locker and Metro Active, BIS implementation challenges affecting selected external brands have constrained supply readiness and the pace of expansion. We are seeing early signs of normalization, but we will continue to calibrate store openings to product availability. For FILA, we have begun local manufacturing of footwear in India in response to BIS related concerns
Nissan Joseph (Metro Brands Ltd): lowering discounts and strengthen the connection between online discovery and store fulfillment. Sports and athleisure remain important opportunities though Fila, Foot Locker, New Era and Metro Active. Though these verticals demand continued investment on our part, we believe in the potential for each of these to grow. Looking ahead, we expect a moderate increase in frontline staff cost as we revise the remuneration structure for our store teams. This will keep our compensation competitive and well above minimum wage levels in most states. We believe this investment will help us attract and retain strong talent, raise service standards and support sales growth over time. To conclude, we had a strong second quarter performance in sales, given the festive shift. Our PAT margin and EBIT margins outpaced our growth, and as we enter the third quarter, we are focused on capitalizing on the festive demand. With that, I will hand it back to Ashutosh for the Q&A.
Ashutosh Joytir Aditya (ICICI Securities Limited): Yeah, Shaurya, we can open the Q&A session.
Moderator (ICICI Securities Limited): Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vidisha Sheth from Ambit Capital Limited. Kindly go ahead.
Vidisha Sheth (Ambit Capital Limited): Hi, I hope I'm audible. My first question was on the store addition momentum. Looking at the store closures, I understand it's only 2, 3% of on a trailing 12-month basis it's just 2-3% of the overall store network. But can you help understand which format is the closure pertaining to, what are the bubbles that you'd be seeing in those stores?
Kaushal Parekh (Metro Brands Ltd): So Vidisha, broadly it is not linked to any particular format. We constantly review stores. Any store which doesn't hit profitability mark max in 2 years, we go ahead and close the store. So it is not coming from any specific format. We have seen we constantly do clean up across all the format. And
Nissan Joseph (Metro Brands Ltd): we've also seeing that you know, there are malls that have been around for 7-8 years, but now that new malls come around them, they tend to be quite erosive to the existing malls. So that happens as well. It's not just the first 2 years. Sometimes these stores have been around for 5-7 years, Vidisha. But other shopping precincts have come up in nearby vicinities, putting pressure on this, and we believe that the right place to be is in the new vicinity, and that's why you see some of this.
Kaushal Parekh (Metro Brands Ltd): And typically, even for this year we expect it to be in that range of around 3% 2 to 3% as we have seen historically.
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