Purple Style Labs Ltd (PERNIASPOP) Q1FY27 Concall Transcript - Jun-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to the Q1 FY27 earnings conference call, hosted by Purple Style Labs Limited. As a reminder, all participant lines will be in the listen
Moderator: 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 over the conference to Mr. Abhishek Agarwal, whole-time director and chief executive officer from Purple Style Labs Limited. Thank you, and over to you, sir.
Abhishek Agarwal (Purple Style Labs Limited): Hi. Good afternoon, everyone, and welcome to Purple Style Labs, Pernia's Pop-Up Shop, Q1 FY '27 earnings conference call. Along with me, we have the SGA team, our investor relations advisors. It is a pleasure for us to address analysts and our investors as a listed company for the first time. I hope all of you have gone through the investor presentation that we have uploaded on the exchanges and also on our company website. Let me Before I take you through our financial performance, I would like to spend some time explaining our business and how we have evolved it over the last few years as we believe that understanding the underlying business model is important to interpret our financial performance better. So our core business Pernia's Pop-Up Shop is one of the largest and fastest growing multi-brand luxury omni-channel fashion platforms in India, serving customers across India and international markets. We offer a carefully curated selection of luxury fashion sourced from more than 1,100 active designer brands and 2 lakh plus SKUs designer products on our website. Our product portfolio spans women's wear, men's wear, jewelry, accessories, and kid's wear with a strong focus on the occasion wear segment. We combine online discovery with large format experience centers, allowing customers to explore a wide range of designers on our website while providing personalized styling and an immersive shopping experience at our stores. Therefore, we see online and offline not as competing channels, but as complementary in our customer journey. Another important aspect of our business model is our inventory strategy. We follow a breadth-over-depth approach, offering a wide range of designs while maintaining mostly singular quantity of individual products at our stores. Depending on the product category, we use a combination of outright purchase, back-order, and consignment models with different commercial terms and varying markdowns across designer brands. This unique aspect, the unique aspect of our business model is the back-order model in which the customer places the order first with upfront payment, following which we procure the product from designer with a delivery window of 7 to 90 days depending on the product. This approach allows us to maintain a very wide curation with efficient inventory management while limiting the need to carry large quantities of individual designer products at our stores. PSL had acquired Pernia's Pop-Up Shop in February 2018, prior to which it was primarily an e-commerce platform. Post the acquisition, our journey can broadly be understood through three distinct generations. You can refer to the slide seven on our presentation for the same. Post the acquisition, our journey can broadly be understood through these three generations. The first generation from FY '19 to '21 was all about laying the foundation. During this period, we transformed Pernia's Pop-Up Shop into an omni-channel platform, opened eight experience centers across five cities including London, and built the designer brand supply across categories and price points. This foundation helped us grow the platform's GMV from 23 crores in FY '19 to 66 crores in FY '21. Now the second generation from FY '22 to '24 was about scaling the footprint. We scaled our experience center's presence to 13 locations across eight cities and started the transition towards large-format experience centers, which typically range between 20 to 60,000 square foot, and deepened our designer supply, particularly in women's wear of 1 lakh plus and men's wear segment. During this period, the GMV increased almost 10 times from 6- to 622 crores in FY '24 versus FY '21 while AOV almost doubled from 22,000 in FY '21 to 46k in FY '24. Now FY '24, we then consciously trimmed the long tail of both designers and customers and sharpened our focus on luxury. This marked the beginning of what we call as the third generation of growth. Starting in FY '25, with a focus on optimizing the platform first, then after March '25, we have actively changed growth gears and opened four large experience centers during FY '26. The iconic Fort Mumbai and South Ext Delhi locations have been fully operational since Q2 of FY '26. Then another important project, our Linking Road, Bandra, Mumbai store opened towards the end of March '26 alongside opened one of the most important milestones of our recent journey, a flagship store on Madison Avenue, Manhattan, New York. During this time, the average order value increased from 46k in FY '24 to INR 76k in FY '26, and in the first quarter of '27 has jumped to a further INR 86k. FY '27 is therefore the first full year with which we have started realizing the growth trajectory
Abhishek Agarwal (Purple Style Labs Limited): of the investment that we had made in the last financial year. Now please refer to the slide nine on our presentation to understand our geographical expansion strategy. This evolution across three generation reflects in how we have scaled our presence in the relevant markets of our industry. In the first generation we focused on establishing our initial footprint across key cities through eight small stores laying the base for future growth. We also established our first international presence in London in the same window. Now in the second generation we scaled this footprint and began moving from bigger stores starting in our largest market, Delhi, which has a strong concentration of affluent customers and luxury fashion demand, thereby increasing the Delhi GMV contribution sharply to 127 crores in FY24. In our second largest market, Mumbai, we added footprint in the same existing locations of Juhu, Bandra, and Kala Ghoda which again led to a steep GMV increase to 127 crores in FY24. During this period, our international business also grew significantly, all online, led by US, which contributed the highest GMV in FY24. By March 24, we had grown to 13 locations spread in eight cities. All of the above combined led to a 10x growth within a short span of three years between March 21 to March 24 financial year, crossing another important milestone of 500 crore-plus revenue in FY24. Now since FY26, we have shifted focus on relevant luxury shopping destinations and markets where we see a stronger spending potential by adding four large experience centers in Mumbai, Delhi, New York in FY26. Now our FY26 GMV of 722 crores was led by Mumbai at 205 crores and Delhi at 166 crores, which together contributing more than 50% of our total GMV while international markets also remained key contributor to our platform. Just to summarize the geographical growth strategy, in the first generation, our focus was establishing physical touch points and building the initial omnichannel ecosystem. As we move to the second generation, we developed a deeper understanding of the luxury customer base and the importance of physical shopping environment. This led us to transition towards large-format experience centers typically ranging from 20 to 60,000 square feet, opening our first large-format store in Mehrauli, Delhi. In the third generation, these large-format stores have become integral part of our platform strategy and with the focus shifting from simply expanding our physical footprint to improving the customer economics. These large stores act as a discovery and ordering platform where customers can explore a much broader assortment with back-order capabilities, receive personalized styling, and wherever required, also access our wider digital catalogue as well while their presence at the store. This is reflected in the steady increase of our average order value from 27k in FY19 to 46k in FY24 to 76k in FY26 and eventually 86k in the last Q1 FY27 while our annual GMV increased from 23 crores in FY19 to 722 crores in FY26. Now let's post March 24, we entered the third generation of our growth with strategy of trimming the long tail. During FY25, we actively reduced the number of designers on the website and scaled down the marketing spends to trim away the low-ticket size transactions of our platform. So, if you move to slide 12 to understand the trimming of the long tail of customers. So, historically the focus was always on acquiring more customers and building the scale. Since the implementation, the value contribution of our customer base had increased significantly. Average GMV per customer grew sharply to 67k in FY24, which increased to 108k in FY26. We're also seeing increasing wallet share from our high value customers. Please refer to the slide 13 for this. In FY21, our top 10k customers contributed 59 crores of GMV which increased to 406 crores in FY26. Similarly, in FY22, our top 50k customers contributed Rs. 236 234 crores which increased to 702 crores in FY26. This trajectory is an important part of our third-generation strategy where the focus is increasingly on deepening the wallet share of our customers. This improvement in customer metrics is also visible in our AOV and reflects the transition across generations. During the first gen, the base AOV was 22k in FY21. As we move to the second generation, the expansion into higher value women's wear and men's wear along with the first pair of Mehrauli stores in Delhi, this resulted in steady increase of AOV to 46k by FY24. And in the third generation, as we built the focus on luxury positioning and higher value customers, this further increased to 76k in FY26. Now, let's try to understand our supply side. The designer brand ecosystem which has also gone through a significant
Abhishek Agarwal (Purple Style Labs Limited): as part of the trimming the long tail strategy. In the first and second generation, our priority was to build a very large universe of brands on our platform across price point and categories. However, as the platform scaled, we realized that the very long tail a very long tail increases the complexity across merchandising, inventory management, designer relationships, and execution. In FY '24, the top 100 designers were contributing 67% of the sales from the platform. Therefore, since FY '25, we have consciously moved to a more curated designer universe, focusing our resources on brands and with stronger customer recognition, established product-market fit, and the potential to scale. As a result, we have reduced our active designer base from 1,910 brands in FY '24 to 1,109 brands in FY '26. While, the AOV increased from 46k to 76k in the same period. Importantly, we continue to maintain a significant breadth of products on our website, while reducing the operational intensities that comes associated with the long tail. Now, on slide 14 and 15, the evolution across the three generations is also reflected in our category mix. In the first generation, the objective was to establish a wide supply of products from all designer categories. In the second generation, we began building greater depth in luxury women's wear, which is 1 lakh-plus price point, and men's wear. Because of this change in strategy, the 1 lakh-plus women's wear increased from 7 crores in FY '21 to 187 crores in FY '24. While, men's wear grew from just 2 crores in FY '21 to 96 crores in FY '24. Now, in the third generation, we are sharpening the focus towards higher value categories, which has led the 1 lakh-plus women's wear generating 312 crore GMV in FY '26 compared to 187 crores in FY '24. Men's wear has also grown meaningfully to 132 crores in FY '26. At the same time, the lower value below 35k women's wear has declined from 162 crores to 86 crores in FY '26, reflecting the deliberate shift from long tail supply towards more relevant luxury products, which translates to higher value transactions. Now, let's discuss FY '27. We see this as an important year in our journey because the investments made in FY '26 are now entering the first full year of operations. We opened four large-format experience centers during FY '26 in Fort and Linking Road and South Ex, Delhi and Madison Avenue in New York. In Q1 FY '27, the GMV increased to 193 crores from 133 crores in Q1 of FY '26, while AOV increased from 66k to 86k. At the same time, inventory reduced from 174 crores in Q1 of FY '26 to 159 crores, as well as the net working capital reduced from 105 crores in Q1 of FY '26 to 66 crores in Q1 of FY '27. These operating metrics reflect the continued focus on customer economics, higher value transactions, and working capital efficiency. Now, let's analyze our 3M FY '27 performance from slide 18 onwards. So, the growth momentum has continued in 3M of FY '27 versus 3M of FY '26, with Mumbai's contribution increasing from 28 crores to 50 crores, Delhi from 29 to 39 crores, Hyderabad from 10 to 16 crores, and USA from 20 to 29 crores. Our growth strategy is to focus in geographies by deepening our presence in markets where we see strong customer demand. This is achieved by shifting to large-format experience centers with generational gear changes, rather than simply just increasing the number of locations in a given city or country. On slide 19, from financial perspective, revenue from operations increased from 106 crores in Q1 of FY '26 to 119 crores in Q1 of FY '27. While while assessing but while assessing the performance, the revenue should be adjusted for increase in the advance received from customer, which has gone up from 37 crores in quarter 1 of FY '26 to 49 crores in Q1 of FY '27. Gross profit also increased to 43 crores, while retaining the gross margin at 36% as compared to Q1 last year. EBITDA stood at negative 11 crores compared to 4 crores in Q1 of FY '26. This is due to the increased cost structure attributed to four large experience centers which have opened versus last Q1. PAT stood at loss of 88 crores as opposed to 100 crores in last year of Q1 of FY '26. Our numbers continue to reflect the investments and operating costs associated with the platform as we're working towards delivering operating leverage. It's important to look at the business from a cash flow statement perspective as well. So, if we refer to the financial summary highlights slide 19 on the last rows, you can see that the net cash used in operating activities improved from 55 crores in Q1 of FY '26 to 19 crores in Q1 of FY '27. While, free cash flow improved from negative 71 crores last year to negative 24 crores in Q1 of FY
Abhishek Agarwal (Purple Style Labs Limited): To conclude, Purple Style Labs has moved from building the platform to optimizing and scaling the platform in the ongoing third generation. We have built a robust market leader omnichannel global distribution platform for Indian designer brands with a curated designer ecosystem, a growing high-value customer base, and a global network of stores. Going forward, our focus will be on deepening our presence in key markets, improving customer experience and store productivity, strengthening inventory management and working capital efficiency. All of these for driving greater operating leverage and overall capital efficiency. With this, I would like to open the floor for questions. Thank you.
Moderator: Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask questions, may please press star and one on their touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and one to ask questions. The first question is from the line of Ankit Kanodia from Zen Wealth Advisors Private Limited. Please go ahead.
Ankit Kanodia (Zen Wealth Advisors Private Limited): Yeah. Thank you for taking my question, and congratulations on the IPO and your first earnings call. My first question is, in your line of business, I think inventory becomes a very, very, very important part of the whole puzzle. So, and based on the DRHP, what I could understand, there are three ways you manage inventory. One is outright purchase, second is consignment, and the third is backorder. If you can just give more color onto which
Moderator: I'm sorry, sir. The line for that, yes, it's disconnected, the line for the person who was talking. We'll take the next question from the line of Shantanu Basu from Smiths Limited. Please go ahead.
Shantanu Basu (Smiths Limited): Hello, thanks for the opportunity and congratulations on the IPO. I have two questions. So, the first question is with regard to the fact that your inventory declined from 174 crore in Q1 FY '26 to 159 crore in Q1 FY '27, and the reported net working capital fell from 105 crore to 66 crore. Yet, I see that the operating cash flow remained negative at 19 crore, while borrowings increased from 371 crore at FY '26 end to 436 crore at June 2026. So, what is driving the continued funding requirements? And at what point does the business becomes self-funded? And what is the targeted sustainable short-term debt level? That is question one. And shall I call out my question two as well or will you answer and then I'll ask?
Abhishek Agarwal (Purple Style Labs Limited): I think let me, let me answer the first question for you. So, as we explain that the inventory in our business model is operating in a slightly unique model where we focus more on breadth rather than the depth. So, post-2022 when we started building the inventory, it was built across brands and across price points to understand which category would work best for us. And the typical cycle to you know, liquidate the inventory is relatively larger in our industry. So, once we cross 3 years of inventory accumulation. So, if you refer to the slide in the appendix on the consolidated financial statements and go to the balance sheet, you will see that the inventory increase across years was there from 80-odd crores in FY '23 to 114 in FY '24 to 160 crores in FY '25. Now, in FY '26, despite opening four large stores, we were able to manage the inventory at a similar level. Now, given our efficiency on the inventory management has been established, therefore, you are seeing a reduction on the inventory from Q1 last year to this year. The net working capital has reduced primarily due to inventory and the second aspect on that is the increased advance from the customer. So, as I explained the backorder model to you in my call that a portion of the business comes from the backorder model where the customer pays upfront. So, given that we have four more large stores operating this year, the advance from the customer in Q1 was at a higher number, which also contributed to the reduction on the working capital. Now, in our business, the quarter
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