Aditya Birla Lifestyle Brands Ltd (NSE: ABLBL) Q3 2026 Earnings Call dated Feb. 03, 2026
Corporate Participants:
Dharmendra Lodha — CFO
Analysts:
Vidisha Seth — Analyst
Archana Menon — Analyst
Gaurav Jogani — Analyst
Ankit Kedia — Analyst
Rajiv Bharti — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the third quarter earnings conference call of Aditya Birla Lifestyle Brands Ltd. The call will begin with a brief discussion by the company’s management on the Q3 FY26 performance followed by a question and answer session. We have with us today Mr. Ashish Dixit, Managing Director, ABLBL Mr. Vishak Kumar, Deputy Managing Director and CEO ABLBL Mr. Dharmendra Lodha, CFO, ABL BLBL I want to thank the management team on behalf of all the participants for taking valuable time to be with us. I must remind you that today’s discussion may include certain forward looking statements and must be viewed therefore in conjunction with the risks that the company faces.
Please restrict your questions to the quarter performance and to strategic questions. Only housekeeping questions can be dealt separately with the IR team. With this, I hand the conference over to Mr. Dharmendra Lodha. Thank you. And over to you, sir.
Dharmendra Lodha — CFO
Thank you. Good afternoon everyone. Thank you for joining us today. I would like to welcome you all to the Quadit CFY 26 earnings call for Aditya Villa Lifestyle Brands Limited as we reflect on demand during the quarter, it began on a strong note with healthy momentum through October and November before moderating in December partially due to a shift in wedding dates. Additionally, a portion of the festive season played out in the previous quarter this year compared to quarter three last year impacting sales growth in the current quarter. Against this backdrop, through a sharply focused and disciplined execution across brands, ABLBL delivered strong double digit growth during the quarter with healthy performance across channels.
This high growth on a disciplined and tightly run cost base delivered strong operating leverage and further margin expansion. Now moving to the financial performance of our business. Overall revenue grew 10% IOI to reach 2,343 crore rupees. LED by strong performance across brands and channels. Lifestyle brands grew at 9% y o wide while emerging businesses grew at 13% versus last year. Overall business delivered 6% like to like growth. Despite the festive shift continuing its strong performance. Other channels also recorded a healthy rebound. With both trade and E commerce growing double digit operating on a solid and profitable base.
We expect growth momentum to remain strong and profitable going forward. Consolidated EBITDA up 21% in this quarter driven by strong operating leverage at the back of double digit sales growth in absolute terms, EBITDA stood at 431 crore rupees compared to 355 crore rupees in the same quarter last year. EBITDA margin expanded by 180 bps from 16.6% in quarter 3 FY25 to 18.4% in quarter 3 FY26. PAT at 100 crore growing 66% versus last year. Reported PAT came at 59 crore versus a PAT of 50 crore in the previous year. This includes a one time exceptional item pertaining to impact of Labor Code.
This quarter our net Debt reduced to 800 crore as of December end from 1000 crore in September end. Moving to the year to date performance, overall Revenue stood at 6222 crore rupees up 6% YoY EBITDA grew at 12% in absolute terms to 1054 crore rupees versus 940 crore rupees in previous year with margin improving by 100bps to 16.9% despite higher advertisement spend versus last year. Reported PAT was at 117 crore versus 21 crore rupees in last year. Our normalized PAT for the nine month YTD stood at 147 crore rupees up 55% versus last year. We continued or expanded our network adding around 90 plus stores during the quarter as expansion momentum gained pace during the quarter.
These stores are larger and feature more impactful facades along with a sharper and more relevant assortment. We expect this momentum to continue with further addition meaningfully contributing to our sales growth. Our Footprint is now 3,300 plus stores spanning over 4.8 million square feet across more than 785 cities and towns. Turning to our lifestyle brands, the business delivered growth of 9% during the quarter supported by healthy like to like growth of 5%. This marks the sixth consecutive quarter of sustained like to like growth. Performance across other channels also improved meaningfully during the quarter while secondary sales continued to remain strong in line with past quarters.
Quarterly revenue for lifestyle brand stood at 2002 crore with an EBITDA margin of 20.6%. This is the highest EBITDA margin excluding any one offs both on pre and post India basis for lifestyle brands in last four years. Growth during the quarter was driven by a combination of targeted product portfolio upgrades particularly in wedding led categories and continued enhancement to the in store experience. Ongoing innovation, the addition of relevant assortment and focus efforts to attract new customers to stores help deepen our customer engagement and further reinforce brand salience. Our emerging business portfolio comprising Reebok, Van Ousen Innerwear and American Eagle now spans over 375 stores with an addition of 20 plus stores in this quarter.
The store network delivered a robust 16% like to like growth during the quarter segment revenue grew at 13% on a comparable basis excluding Forever 21 in the base. Growth was even higher at 19%. Profitability improved by 790 base YoY, reflecting positive operating leverage and continued improvement in Venus and Inner business performance during the quarter was driven by strong product innovation and compelling marketing narratives. Reebok delivered a 20% plus growth in this quarter with strong improvement in profitability. Overall. Reebok’s Network expanded to 200 plus stores, doubling from 100 stores at the time of acquisitions. American Eagle remained on sustained profitable growth trajectory delivering double digit growth in quarter three.
Venus and Innerwear business grew at double digit in this quarter marking a strong recovery after several subdued quarters. Business also saw a sharp decline in losses and is consistently pursuing the path to breakeven. In summary, despite festive and wedding relationships, ABLBL delivered accelerated momentum during the quarter. Performance was supported by focus initiatives including product upgrades across categories, enhanced retail experience, disciplined store expansion and sharper implementation across channels. Looking ahead, a strong score addition pipeline, sustained retail growth and improving performance across other channels provide confidence in the continuity of this growth trajectory. In parallel, emerging brands are expected to begin contributing more meaningfully.
Supported by clearly defined strategy around growth and profitability, this portfolio is expected to be 1/4 of overall ABL bill business in next 4 to 5 years. Together these efforts will deepen our presence across key micro markets both existing and new, while ensuring we are relevant in the lives of our consumer. That indeed is of strategic focus. With disciplined execution to drive this strategy, we believe the business is well positioned to translate this momentum into sustained long term value creation. Over to you. Thank you.
Questions and Answers:
operator
Thank you. Shall we begin with the question and answer session?
Dharmendra Lodha
Yes please.
operator
Thank you very much. We will now begin with a question and answer session. Anyone who wishes to ask questions may press Star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and 1. The first question is from Vidisha Seth from Ambit Capital. Please go ahead.
Vidisha Seth
Yes, hi, my first question was that time and again since the demerger announcement it has been called out that no fundraise would be made in either of the two entities barring for the tomorrow business. But in yesterday’s filing it was mentioned that nearly 500 crores of NCD issuance was approved by the Board. So can you please highlight as to what would be the utilization areas for this fundraiser by when are you looking to. When are you intending to raise it?
Dharmendra Lodha
Thanks Vidisha. You know at the time of demerger the company got the borrowings transferred based on the allocation formula. The 500 crore debentures which we repaid recently in the month of January. We intend to raise it and to refinance the existing the debentures rebate. There’s no best borrowing as such.
Vidisha Seth
Got it. So how should one be looking at the reduction in the net debt amount? Because I think in earlier calls you’d called out that every year the net debt would reduce by. I mean substantially and by to three years it should be net cash. So any, any thoughts over there?
Dharmendra Lodha
So if you see from March beginning of 800 crore the September borrowings were roughly 1000 crore which we reduced to 800 crore. The plan is to reduce it, bring it to by another 75 to 100 crore. But you know Vishak and Ashish can talk on the growth capex after demerger which was the rationale which we conveyed that the company will have the growth capital available to them. Vishak, Ashish. Vishak, do you want to just come in? Okay Vishak, let me answer this question just to give you an overall summary. The business generates through profit which is through EBITDA cash equivalent of close to 900,000 crores.
Part of it goes into working capital funding, the other part goes into Capex. Typically we have been spending close to 150 to 200 in the best years, maybe 225 odd crore kind of capex. One of the primary reasons for Demerger was to create an entity which can reinvest back more aggressively into growth. Some of those signals are visible here. This year our capex will be north of 300 crores, perhaps 320. 330 crores. And that’s really why the debt reduction is not very large this year. We still feel that over next three years, which is what we had indicated, the net debt will be closer to zero in this.
Although that’s not the only goal we are driving at.
Vidisha Seth
Okay, sure. The second question was on net basis what is the store edition of what could the store edition of lifestyle brands look like for FY20? Any number or guidance that you’d like to call out.
Dharmendra Lodha
We’ve added about 50 plus stores in this quarter. My sense is that we should add another 90 plus net stores in the next quarter. So that would make the Overall additions about 150 stores this year. We also have already built a pipeline for next year. Of 120 odd stores and that momentum should continue. Whatever we are able to find right up to November, December would be expansion for next year. So it should be another significant expansion year going forward next year. Also we already have a pipeline of about 100 locations that we’ve identified where our RBD team is looking at properties etc.
Usually we convert half of that. So you should look at another significant expansion here next year. Disha. Sure.
Vidisha Seth
I’ll get back in the queue for further questions.
Dharmendra Lodha
Thanks.
operator
Thank you. The next question is from Archana Menon from Morgan Stanley. Please go ahead.
Archana Menon
Hi. Thank you so much for the opportunity. My first question was mainly on the demand side and the revenue growth that’s been posted. So is there any divergence this quarter between the primary and secondary sales growth and is there any element of channel restocking after the GST related disruption in the second quarter?
Dharmendra Lodha
Hi Aksana, three questions here. So first is the impact of GST has been pretty much digested through the quarter. Okay, so there’s no change in stocking or stockholding with any partner because of gst. So that’s there was first couple of weeks of that but that has been digested through the quarter itself. Okay, to the second question around demand. Like Dharminder had said in his opening statement, October, November were strong demand months. December the wedding calendar was such that the last of weddings was on I think the 5th of December. So the calendar was not the same after the 5th of December.
Q4 Again there are weddings and February. On February, March onwards there are weddings. So that impact of demand is there because of that. In terms of the last question you asked which was on primary versus secondary nothing unusual, usual practices around season launches and build up towards season and end of season is what has broadly happened. They’ve had robust secondary sales across department stores which is what has led to an overall primary sales also being fairly healthy partner to partner. There might be variations, some higher, some lower than secondary depending on their inventory situation. Also some partners would be expanding more etc.
So that would be the ups and downs but no general trend around upstocking or downstocking.
Archana Menon
Understood. And how have trends been in January?
Dharmendra Lodha
You know the calendar is such that most of the weddings began from the the wedding season began post Mukar Sankranti. So we’ve had an encouraging second half of January and my sense is that momentum should continue through the next couple of months.
Archana Menon
Understood, Very clear and just finally. So I think this quarter in terms of your growth itself, its return to double digit growth which is your ambition after many quarters. So do you expect this double digit momentum to sustain in 4Q and 1Q? Thank you.
Dharmendra Lodha
Arpana. You noticed? Yeah, I think, you know we have said this for some time. You know, we want to be a steady double digit growth and EBITDA, you know, 1112 percent steady. Sorry, the pre India margins. So that is something which we should go on momentum. If you see even in the last few quarters our retail has been very strong. We had some course corrections to do on the wholesale side of business and the E commerce side of business. Most of that is done. So you should see a a more steady trajectory hopefully over the next few quarters.
Archana Menon
Understood. Thank you so much. I’ll get back into the queue.
Dharmendra Lodha
Thanks, Asha.
operator
Thank you. The next question is from Gaurav Jogani from JM Financial. Please go ahead.
Gaurav Jogani
Thank you for taking my question. My first question is with regards to the wholesale and the other piece of. The business within the. Gaurav, I’m sorry to interrupt but we can’t hear you very clearly. If you’re on a hands free, request you to use the handset. Gaurav, can you hear us? Gaurav, you can hear us? Maybe there’s a network issue. We request you to go to an area with better network and please rejoin the queue. We’ll move to the next question. The next question is from Sameer Gupta from India Infoline. Please go ahead. Hi, good evening everyone and thanks for taking my question. Congratulations on a good set of numbers. Am I audible?
Dharmendra Lodha
Yes, Sameer.
Gaurav Jogani
So firstly, so there has been a GST card for apparel below 2500 and above 2500 there has been an increase. So just wanted to get a sense on what would be the blended price decrease for a consumer of lifestyle brand plus and minus. Both these aspects increase or decrease. I mean whatever has happened at the consumer. And if you can help me with that number.
Dharmendra Lodha
Okay. The parts of our business where it has a benefit, especially brands like Peter England, brands like reebok in apparel, etc. So there is benefits there. There are some parts of business, especially in wedding parts of business, there’s negative because Those move from 12 to 18. Overall. It’s a small net negative but not a significant one.
Gaurav Jogani
Oh, okay.
Dharmendra Lodha
But in lifestyle brands it would still be a benefit, right? Because overall discounted sales, I mean the full price, sell through, etc. I guess you had indicated sometime that 50, 60% of the portfolio would be above and rest will be below. So 40% of the portfolio has actually benefited. Something like that, yeah. It’s like I said, it’s product to product. So let’s say on T shirts it’s again on suits and blazers it’s not etc. Altogether lended weighted average with current sales ratio it’s a small negative. If some other parts of grow business grow faster, etc. It could be neutral also.
Gaurav Jogani
Got it sir. That’s very helpful. Second question sir on the innerwear and ass leisure segment. Now this quarter seen a double digit growth and this is growth after many, many quarters in this segment. Just wanted to get a sense on what has led to this turnaround after so many quarters of weakness.
Dharmendra Lodha
So I think a lot of initiatives which have been in the business, they are coming into function now. So one of the biggest things which has happened Sameer is the kind of retail likes to likes that we’ve had. We’ve been fine tuning our retail model for innerwear and retail like to like have been north of 30% in this side of business. Even if you look at it, it’s been a very, very strong 25 plus percent luck for like that we’ve had in this business. So that has also improved overall profitability because the retail profitability, retail viability is a lot better with that.
We’ve also done various initiatives around product innovations, other things around methods of replenishing with distributors, various things which are going on which are, you know, intrinsic and hence likely to stay in the business. You recall that we’ve also had some quarters of inventory correction which was a tough phase that we had to go through. Most of that is behind us. And with that what happens is you’re able to infuse a lot of freshness of merchandise into the market that also spurs growth further. So I think it’s maybe a few more quarters of just fine tuning that model and then it should be able to take off on a even stronger growth trajectory.
Gaurav Jogani
Got it. And you would still attribute this as most of the initiatives that you are in industry is still where it was. There is no real change there.
Dharmendra Lodha
I think so. I mean if you’re saying are there significant tailwinds in this category. Not yet. Okay. But again to earlier question that you had. GST helps this side of business also. So some of the impact of that should also start coming here.
Gaurav Jogani
Sorry, I didn’t, I didn’t get that impact of what, Sorry.
Dharmendra Lodha
The GST change again, also a good thing. Yeah. For a lot of athleisure, parts of business, etc. It’s a, it’s a good thing for this, this part of Business.
Gaurav Jogani
Got it. Got it.
Dharmendra Lodha
Yeah. That’s where that. That is something we’ll do. Yeah. And lastly sir, if I may squeeze in, I think Gaurav was also trying to ask this. Since the wholesale under lifestyle brand that has seen a growth of 21% and past two quarters has been subdued. Before that it was good pre that it was a decline. I mean is there a change in strategy here? The segment has been bit of up and down in past few quarters. So two, three things. One is the same question. One is we had the base effect of Centro and the transition that we went through in Centro in the past that is out of the base now. So you will see in that sense a more apples to apples comparison. Beyond that there is also the strong secondary sales growth which we have had in the last few quarters which is helping us. So those are some of the factors which are going in. Likewise on the E commerce side of business, we went through one phase correction. Lot of things that we did to sharpen the model.
Such part of that is also done and that also again is reflecting in the numbers.
Gaurav Jogani
Just for my understanding, sir, on the wholesale piece, this is a mix of consignment as well. Outside sale or now it’s primarily outright sale that we book in this. Sorry, can you repeat that? Sameer, I’m so sorry. So what I mean is that the wholesale channel, the, the sales, the way you record it, is it on a consignment basis you record the end consumer sale and the inventories on your books till that end or do you book the sale to the distributor and to the retailer and with the margin, how does it work?
Dharmendra Lodha
So we recognize revenue when we sell to our customer. Okay. Our entire terms of trade are built around that. That we recognize revenue when we sell to the partner. Sell to the partner, not the end. Consumer, not to the end consumer. In retail, consignment, retail sales, we recognize that when we sell to end consumer in the wholesale side of business, we recognize revenue when we sell to the partners.
Gaurav Jogani
Got it, sir. And there is no change in the accounting over the years. This has always been the case.
Dharmendra Lodha
Always been the case. In fact, we are extremely conservative in the way we recognize revenue, in the way we recognize dormancy, all of that. So no change in the way we recognize revenue.
Gaurav Jogani
Got it, sir. Got it. That’s all for me. I’ll come back in the future for any follow ups.
Dharmendra Lodha
Yeah.
operator
Thank you. The next question is from Devanshu Bansal from MK Global. Please go ahead.
Gaurav Jogani
Hi Vishak. Thanks for taking my questions. So first Question is on retail channel growth. If we compare this growth with some of the other players that have reported so far, it’s it’s a tad weaker. Even the LTL that we’ve reported is running a tad weaker versus the other players. So I just wanted to check within the marketplace. So what is leading to this weakness for our brands?
Dharmendra Lodha
So if you let the trends in the market into brands which have a significant wedding impact versus brands which don’t have impact of wedding calendar in our own portfolio, you will see that okay, whether it’s on Reebok, whether it’s on American Eagle, it’s on innerwear, they would have all had very very high aggressive double digit secondary growth, L2L growth, parts of business which have had a greater dependence on weddings. The calendar evaporated after the 5th of December so you see the impact of that. So it’s more of phasing things. If you look at our retail sales YGD December, it’s still double digit.
It’s at 10% for lifestyle brands itself. So some of it you get the benefits of calendar in some quarter, you don’t in the other. Even if you see it for the overall industry itself, you will see that patterns for brands which have a greater dependence on weddings.
Gaurav Jogani
That’s fair Vishak, but I was thinking from a nine month perspective also. So if we see our retail sales growth has been a tad weaker versus what other players have reported. So even on a night.
Dharmendra Lodha
10% like for like a. 10% like for like in. In three quarters which is YTD. No, that is like for like sir. But from a consumer perspective I guess it’s the retail chann revenue growth which matters. Right? So like for like is okay. But from a market perspective I guess the overall growth is a better metric to track your market share. So that growth has been tad weaker versus what other place has reported and the difference is almost to a tune of 500600 basis points. No, I was just checking it’s our YTD. Retail overall would also be about 8%. Yeah, the other I was referring to.
Gaurav Jogani
If you want from urban fashion perspective we reported almost 13% growth in nine months. Right? So.
Dharmendra Lodha
So possibly and maybe we could look at comparisons etc. But all I want to assure you is that in our brands we are at a like to like of 10%. To the question Archana asked earlier, some of the impact of the retail expansion will start showing now. This quarter itself was a significant impact of net expansion that you will start seeing in the overall growth Q4 will see that even more where there is about a 90 net store addition that you will see if you look at it, we will enter into next financial year with 150 store larger network than last year.
That itself broadly is a 5% extra business in retail that you will have next year. Sure, sure.
Gaurav Jogani
And Vishak, this one bookkeeping understanding. So your rent expense, which is largely franchisee commissions, in my opinion has been on a declining Trend by about 100 to 150 basis points both in Q2 and Q3. Right. So what is driving this change? As in are we shifting from franchisee stores to company stores? Is that leading to this change?
Dharmendra Lodha
Not really. Look, it’s a network of stores. It’s a balance of cocoa stores and stores. So we’ve been driving a lot of initiatives around cost reductions. There is also you must recognize that when you had a retail network which has grown 10% on like for like, whereas your store costs grew at about 5 to 6%. So that also gives you the cost leverage. Right. So that commission. Right.
Gaurav Jogani
This must be percentage of sales.
Dharmendra Lodha
So. So we have talking about a significant number of cocoa stores where we pay the rent directly and an equally strong network of franchisee stores where it’s a percentage commission. Where it’s a percentage commission, the percentage doesn’t change it. It helps the franchisee to make a better roi.
Gaurav Jogani
But this in the PNL rent expense that we report, this is largely the commission paid to the franchisees. If you could confirm that. Right. In the reported pnl, this is the. Franchisee commission largely it is the variable rent. So it has both franchisee commission as well as the variable rent which you pay to malls.
Gaurav Jogani
Yeah, that was my question. So why is that as a percentage of sales reducing?
Dharmendra Lodha
Okay, that question answered. Now I think it’s the leverage, operating leverage of having a higher like. Like sale which is what is bringing that down. Sure.
Gaurav Jogani
I’ll take this offline. Maybe I’ll take this. It will be better. You connect offline. Sharpen shop. Sir.
Dharmendra Lodha
Noitre. Sure. Sir. No issues. Thank you. Thanks for taking us.
operator
Thank you. The next question is from Ankit Kedia from Philip Capital. Please go ahead.
Ankit Kedia
Two questions from my side. In the quarter we saw gross margins decline marginally. Industry trends suggest that the discounting is actually reducing. And you have also done that. We can see that in the channel checks. So what is leading to this gross margin decline?
Dharmendra Lodha
Not sure where you’re seeing gross margin declining, Ankit, which mirror you seeing. Because actually our gross margins are fairly healthy. Dharminda, you want to Respond to that. Which Ankit the COGS for corresponding Q3FY25 was 41.1. This time it is 41.4. It is of the overall business including, you know, lifestyle brands plus various other businesses. So I think this is a composition of various business lines. It’s more than the range bound more in a business mix. Yeah. Than any shift and the change is only. So if you can highlight in lifestyle what is the gross margin expansion we are witnessing due to lower discounting and which business is actually dragging the gross margin down from the mix perspective.
Ankit Kedia
Okay. This is at the published result level lifestyle I have to dig out separately. We can connect separately.
Dharmendra Lodha
Yeah, sure.
Ankit Kedia
My next question is on innerwear. We have seen strong growth in the innerwear category. What is leading to this growth overall? And I what changes are we doing in the innerwear category from a medium term perspective?
Dharmendra Lodha
So I think Sameer asked a similar question. So let me just tell you that two, three things are happening which you should, you know, see the benefits of. That one is of course the sales growth that you’ve seen. And like I was explaining earlier as inventory freshness improves, the health of overall inventory improves, etc. That is giving us a good impact. That is also giving us a significant impact on profitability. In fact our losses in this business this quarter have halved. So that is again something that is reflected in the overall numbers. The other like I was explaining to Sameer, very significant improvement in retail performance.
So retail like for like and likewise in department stores etc. Very strong same store performances that we’ve had which bring which have brought down the fixed cost as a percentage of sales resulting in both overall growth as well as improved profitability. In addition to that Ankit we’re running a lot of initiatives around quality of replenishment mechanisms to distributors, running pilots around lot of new product initiatives, many things which are going into driving overall traction in this category. So a lot of those things are falling in place quite nicely. Ankit. So over two years if I have.
Ankit Kedia
To see, do you think you can have a mid single digit margins by FY28 in this business? And what will be the EBO strength if I have to see from a medium term say two years out even that now unit economics is set for the business. Product is new, everything is changed.
Dharmendra Lodha
Yeah. Yeah. First question, the FY28 I hope is going to be a profitable year. I don’t want to comment on what kind of profitability but I’m hopeful that FY28 will be a profitable Year. I think that’s the kind of trajectory that we’ve built for ourselves right now. Yes, you’re right on the network part, the retail network. We have got a reasonably robust proof of concept. Now we also want to strengthen further the partner driven model here. Here’s a model which can work nicely. Service through distributors, neighborhood catchments, tight shop stores which have a nice sharp assortment which is relevant for that neighborhood.
Some of those also we are working on different sizes and formats to be able to scale that. That can be a pretty significant exponential scale up. So don’t want to put a number on that now. But by and large you should expect to see a significant scaling up of the retail network and what it’s been.
Ankit Kedia
More than a decade now. We are doing this business right and we have had cycles. What gives you confidence now this change, what we are doing is there because, you know, some of the D2C startup brand on Athleisure and Innova side have started to become aggressive while some have also closed shop. But we are seeing new competition also emerge. Right.
Dharmendra Lodha
And the market leader is slowing growth and some of the private labels also started to do well. Now you know, the changes which you. Are, you know, talking of, you know, how confident that these are the right changes to be done in the market. Now I think Ankit first thing is the biggest thing which gives me confidence personally is the consumer acceptance of this brand and this category. The consumer stickiness on those who ever tried the product is very high and that gives us tremendous confidence. So a lot of initiatives by which we’ve been able to generate trials, they’ve all translated into secure business with consumers. So that’s the first thing. I think it’s a fairly well established distribution network with the kind of distribution points that we’ve got with the kind of retail presence that we’ve got, presence in department stores, etc.
I think it’s a fairly strong network which is also getting steadily more well oiled machine kind of thing in terms of replenish this, you know, is ankit, it’s a sticky replenishment business. So you know, as you keep getting better and better at that process and the wheel is nicely balanced and it’s a nice flywheel that works for you. We are fairly close to that in my sense. So I would say that some of the last few years learnings also come in handy in terms of making sure that we do the right thing going ahead.
Ankit Kedia
And between Atlegia Innerwear, would it be 30, 70 or would Atlegia be a higher Percentage for us.
Dharmendra Lodha
Let me take last quarter’s exact numbers. Maybe we just put that together. But broadly you’d be right. But let me not make a mistake on that. So I’ll give you a sharper number.
Ankit Kedia
No worries. You can take the next question and answer in between. Thank you.
operator
Thank you. The next question is from Rajiv Bharti from Nirvama. Please go ahead.
Rajiv Bharti
Good afternoon sir. Thanks for the opportunity. So continuing on the innovate piece, if you can clarify what is the GT channel’s contribution in your entire mix?
Dharmendra Lodha
So when you say GT you mean the trade business. Yeah, yeah. Just one second. I’ll give you an accurate number. It’s around 50 percentage, little less than 50%. Yeah, got it. And the other part is in terms.
Rajiv Bharti
Of the capex number which you’ve highlighted at 330 crore. Can you split between your lifestyle brand and new brand? How does it stack?
Dharmendra Lodha
The lion’s share would be for the lifestyle brands. Probably 80% of that spend would be lifestyle brand, maybe a little more than 80%. We have invested a lot both in terms of expansions and renovations. We’ve also made stores larger, created stronger shop facades, etc. So it’s been a fairly significant impact on the lifestyle side of business.
Rajiv Bharti
And you made one comment and there’s an opening remark in terms of you know, you’re looking for a steady growth. So assuming that you look for let’s say 10% growth on the top line on a conservative basis for the entire piece then on the back of the. And the comment which was made was that you know, the emerging brands will become one fourth of the turnover in five years out. That means you’re projecting for a 20% kind of a growth on the emerging brand side with bulk of the capex routed on the lifestyle brands. I mean how does is this that capital light the emerging brand category?
Dharmendra Lodha
Responses to that Rajiv? So first is that the emerging business is still on the lower pace. So relatively speaking it right now needs lesser capex but we are not averse to adding more for that side of business as well as we as we scale up there. I’m personally between you and me and I’ve said this earlier as well, I’m hoping more for a 12% kind of a steady state growth and we should aim for that. We will have pluses and minuses over quarters but we should be able to drive something closer to that. And definitely inner where Reebok these business have a very large role to play in overall driving because there the base itself is Relatively small and we should be able to scale up much faster in that side of business.
Reebok has had a very good quarter and the momentum looks very good. We’ve already doubled our network from what we bought on Reebok. We should exit this year. We’ve already 200 plus. We should exit this year with 230 plus stores on Reebok. And I think there is still a very large set of markets which are available for putting up stores on Reebok. So I think while a lot of questions have been around innerwear, there are various other parts of business which are also poised for fairly strong growth. Also just to add to that, we have a fairly large distribution of lifestyle brands stores and a significant part of our capex goes in renovations and making upgrading those stores. And therefore in absolute terms, because those number of stores are so much higher and the emerging businesses are relatively newer, they have less renovation needs. That’s also another reason why the current capex that won’t be the case all the time is significantly higher lifestyle.
Rajiv Bharti
Sure. So thanks for this 12% number. So if I reverse load, the number becomes 24% for the rest of the category. So what is the network addition and the SSG assumptions in this?
Dharmendra Lodha
So on a steady state, and we said this earlier this year as well, 6 to 6, 7% of like for like is what we should expect in the, in the lifestyle side of business. And the rest of the growth comes through expansion. Of course every year is not going to be the same. But let’s say in a 3300 store network, if you’re able to add even say 200 stores, that is 5, 6% growth that is coming out of network expansion in that side of business, I think there is headroom for at least 3, 4 years of growth like that.
In terms of network expansion.
Rajiv Bharti
I was asking from let’s say you brands and innerwear sector.
Dharmendra Lodha
Okay, the headroom for growth is even stronger. Rajiv, you know, because let’s, let’s look at it this way. If a brand like Louis Philippe has a network of 500 plus stores, there’s no reason why a brand like Reebok cannot have more than five category like that can have an even larger play in terms of network size. So in that side of business it’s even more aggressive growth possibilities that exist. Likewise in inner web there is also the possibility of many more, the opportunity of many more neighborhood markets as well. So there again the headroom is much larger beyond the part around what you would call GT or general trade.
Sure.
Rajiv Bharti
So Just one last question on Innovate. Has there been any price hunt. Has. There been any price hike on the entire Innovair portfolio?
Dharmendra Lodha
No, actually we passed down the GST benefits to consumers. So you would have seen that a lot of segments which had a 12% which moved to 5%. So we passed that on to consumers. Sure.
Rajiv Bharti
That’s all from myself. Thanks a lot and all you guys.
operator
Thank you. The next question is from Tejas Shah from Avendis Park Institutional Equities. Please go ahead.
Ankit Kedia
Hi, thanks for the opportunity and sorry if I am repeating the question, but I logged in a bit late. Can you provide some regional color on the lifestyle brand performance? Specifically, are we seeing any demand pressure in urban it heavy markets? Let’s say Bangalore, Hyderabad, Pune.
Dharmendra Lodha
Okay. Hi Tejas. Yes, we missed having first question from you just to give you some color. One is that Tejas. This year small towns have had a good run. Okay, so while I can’t give you regional, there haven’t been too many regional biases. But clearly small town India has had a good run. You know that small town India went through few tough quarters this year. It’s been you know, our own same store growth pages in small town it would be about 13, 14%. Okay. So small town India has a much stronger run. Other than that I can’t point out any region specifically which has grown more or less.
Perfect.
Ankit Kedia
Prasad, you spoke about the lifestyle portfolio. Now lifestyle portfolio has a very strong loyal base of customers. But the growth is moderating and it’s actually answers there itself that it’s a very matured portfolio. The size is huge in terms of both distribution and in the absolute number.
Dharmendra Lodha
So what are the biggest or where. Are the bigger white spaces? Is it new formats, locations, geographies that. Can actually help us to go into. Let’S say double digit growth sustainably and not this just one or two low base, high base kind of that triggers. It is simple answer all of these that you’ve said and a few more very very large brands. You know, fashion business doesn’t have a billion dollar brand. Most other categories have very very large brands. So you know, let me put it this way. Take a brand like say Louis Philippe which has 500 plus stores. The opportunity for a brand like Louis Philippe in India should be about 1500 stores. So maybe the methods of opening these stores, the formats will have to be more nuanced, will have to find the right regional assortment, requirements, etc. But we’ve been figuring formats which have worked.
There have been formats which have been more Casual driven formats, which are more wedding driven and so on, which have worked fairly well. We have also created, we just put a bridge to luxury store from Philippe, which we opened in DLF Promenade in Delhi, which has again been off to a very good start. So a lot of new formats, new segments, new usage occasions with consumers as they emerge again are other growth possibilities, other parts of business. Womenswear again is another. In two of our brands, we have a meaningful women’s presence, whether it’s in Venusden or Allen Solly.
So that is again another opportunity for growth. So there are various segments, so there is of course distribution and presence, etc. Many of our partners are also looking at aggressive growth plans. Some of the department stores are looking at growth plans. That adds to that. The E commerce space also, with quick commerce is also driving consumption. There is opportunities for growth there. I would say yes. While it might look like, look, these are large brands, I still think these are very early days in the evolution of these brands.
Ankit Kedia
My next question pertains to Reebok. From day one, since we acquired it looks very promising. And then when we look at the other player numbers also in this space, that’s actually very, very healthy. And then you also called out, there’s. A huge opportunity to expand footprint as well. So what is the limiting point as of now? Is it that the brand product market fit is yet to be established before we scale it up very fast or the route to market itself is not very clear as of now before we scale it up?
Dharmendra Lodha
Okay, Tejas, just to give you some facts here, we’ve more than doubled our business in the last three years in Reebok, we have more than doubled our business in spite of all the market challenges or whatever that might have been. We have more than doubled our business. We’ve more than doubled our network. By the time we exit this year, we’ll be close to triple of the network that we had inherited. So it’s been at a fairly significant pace, but you would argue it was on a small base. And you’re right. So the good news is that we are still relatively on a small number and hence the headroom for growth is quite significant.
Let’s look at what are all the things which are going into the mix which have to make this faster growth happen continuously. First is on product assortment itself. So a lot of very good work has happened in Reebok across categories. Reebok, which was in its early years in India very, very strong across multiple categories, had got limited to largely lifestyle kind of footwear before we took it over as we have gotten into this segment, you know, and we’ve added a very strong line of walking, very strong line of performance footwear, some very, very good running shoes, you know, in the, in the segment.
In fact, we have some very top quality, you know, most of the running shoes in India, carbon plated running shoes are all about 10,000 bucks. We’ve got very nice carbon plated running shoes at 9,000 rupees and so on. So there’s a very strong assortment of footwear that we’ve been able to generate. Also big lever for growth. We’ve been able to leverage our expertise on apparel creation and apparel product designing, etc. Very strongly. When we took on the brand, the apparel contribution was about 25%. Today it’s a little more than 36% already. That is again driven growth.
But I still say that there are many segments which we can do even more of. So that is again driving growth. Then there is network and we’ve still only scratched the surface on network and there’s a very large opportunity which exists on geographical markets that we will scale to. So it’s very, very exciting times in this segment. I also think consumer acceptance more and more health and fitness is becoming even stronger as market trend. So this is an interesting time to be Reebok.
Ankit Kedia
Thanks. That’s all from myself.
Dharmendra Lodha
Thanks Tejas.
operator
Thank you. The next question is from Gaurav Jogani from JM Financial. Please go ahead.
Gaurav Jogani
Hi. Thank you for taking my question again. Hopefully I’m audible this time. One question now from my end is on the. Yeah, just one question on my end from the margin front, you know, the other segments, that is the, the Reebok innerwear etc business together is now shown a very good decent margin this quarter around. So if you can, you know, break it how this improvement was and how much sustainable this is going ahead given that, you know, you have also mentioned that innerwear business losses have half now. So when can we expect this business to, you know, become profitable and where are the other pieces of the business on the profitability?
Dharmendra Lodha
Okay, Gaurav, I think we answered that partly when Ankit asked and Sameer asked that question. But I’ll attempt that again. So one is that I’m hopeful that at least we have one quarter next year which is a profitable quarter on the innerwear business and that should be hopefully the beginning of another era for that kind of business. So that is on the profitability part and a lot of things are happening which, which lead to that biggest thing from a Margin improvement perspective is selling expense improvements. So we’ve managed to significantly streamline selling expenses. Cost of doing business in that sense has improved and that should continue over some time.
As health of inventory improves, that also improves realizations. That is again something which is giving us gains and that is a flywheel which should keep getting better over time overall. Also, as overall scale improves, the leverage of overheads and all other costs also then improves. So we should see this improvements over the next few quarters as well. Gaurav.
Gaurav Jogani
Yeah, just one thing. While we understand the innerwear business, turning from losses to profitable will be a bigger driver for the margins. But how about the scale up of the margins in the American Eagle and the Reebok part of the business as well, how that will shape up and in that context, how can the margin expansion look like in the next few years?
Dharmendra Lodha
I’ll separate American Eagle and Reebok. American Eagle is fairly, how do I say this, It’s a very robust business but doesn’t have the same growth opportunity. Let’s say as Reebok has, it will grow steadily. It will grow steadily, hopefully double digit growth. And it will continue to have a very good space in markets for consumers and it will make decent money. As we do that, Reebok has a much greater room for exponential growth. I think that’s a segment where you should see very, very aggressive growth in times ahead. And like I was explaining to Tejas, right through both product categories as well as channel markets, there is a very large growth opportunity that we should see.
As that happens, lot of leverages also come into play which should also make the business more profitable as we go along.
Dharmendra Lodha
Yes, yes, that does. Thank you.
operator
Thank you. Next question is from Kunal Bhatia. I’m sorry, Kunal Bhatia has dropped off. We’ll move to the next question. The next question is from Jay from hdfc. Please go ahead.
Dharmendra Lodha
Yeah, hi. Thank you so much for the opportunity. Joined late. So some of apologies if some of these questions are, you know, have already been answered. See on the lifestyle bit to begin with, you guys had nearly 100 basic margin expansion. Now this is despite wholesale and, you know, online growing two times the pace at which the core retail grew. I was just wondering how come this happened? What are the levers which helped you get there? So yeah, you’re right, we did discuss this. So basically it’s coming from reduced selling expenses through better leverage. So as your same stores grow better, gives you a better margin expansion.
I think we’ve also been able to drive a lot of Cost reduction initiatives across the business, including product cost, supply chain costs, etc. Through the organization, which have also made us get some benefits in terms of margin expansion. So if the question is, is it a one off? Sure, in terms of this quarter is a good quarter. So sure it’s there and in fact like Darminta said, it’s our best ever quarter in terms of margin improvement in the lifestyle business. But is it sustainable? To a fair extent it is sustainable. Apart from the quarter to quarter seasonality, it’s fairly sustainable.
What we’ve got here. Well, thanks. The other bit is on the emerging businesses, especially the innovay bit now, you know, through our channel checks also, at least that’s what we kind of picked up and maybe we were wrong for the longest time.
Gaurav Jogani
The assortment, at least from a price. Point perspective, were quite divorced from what the chairman really wanted. Now have we fixed this or how close are we in fixing it? Where are we in that journey of. Kind of marrying them together?
Dharmendra Lodha
Okay, so you know, it’s a huge country with a very, very large, you know, we operate with some thousand outlets which are a universe of and the universe is actually larger which is there in the trade side itself. And of course there are different kinds of retailers with different assortment preferences. The most critical thing to do well here is replenishment and predictability. Around replenishment, once you crack a set of winning products, the market wants you to then just keep replenishing extremely. It’s in some way almost a boring business where you just want extremely high predictable replenishments again and again and again.
As you keep getting better and better at that, your appeal with the channel also keeps getting stronger. Sure there are more price sensitive markets and we have assortments which address that. For instance, we have a classic flux line which is a sharper price product. So there are assortments which are unique to different needs of market which are addressed. But I would still say the larger lever is extremely have a solid set of products. We have a damn good product. We have a very high quality product. Fit is great. The repeat consumer behavior is very strong.
Now just making sure that it is well replenished with very high degree of predictability becomes a very critical lever. Jet.
operator
Thank you very much. We’ll take that as the last question. Ladies and gentlemen, on behalf of the management, we thank all the participants for joining us. In case of any further queries, you may please get in touch with Mr. Amit Dwedi. You may now disconnect your lines.