METRO BRANDS LTD (NSE: METROBRAND) Q1 2026 Earnings Call dated Aug. 08, 2025
Corporate Participants:
Unidentified Speaker
Manoj Menon — Moderator
Nissan Joseph — Chief Executive Officer
Nishant Pahuja — Head of Accessories
Analysts:
Unidentified Participant
Videesha Sheth — Analyst
Saurabh Kundan — Analyst
Devanshu Bansal — Analyst
Gaurav Jogani — Analyst
Shraddha Kapadia — Analyst
Prerna Jhunjhunwala — Analyst
Umang Mehta — Analyst
Tejas Shah — Analyst
Sameer Gutpa — Analyst
Aditya Bansal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Metro Brands Q1 FY26 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 and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon from ICICI Securities Ltd. Thank you and over to you sir.
Manoj Menon — Moderator
Hi everyone representing Icetech. It’s our absolute pleasure to, you know to the to get you to the metro brand’s 1QFY26 conference call. The management is today represented by Mr. Rathik Malik, Chairman Ms. Farah Malik Banji Managing Director Mr. Nisan Joseph, Chief Executive Officer Mr. Kaushal Parek, Chief Financial Officer Mr. Bohit Daniel, Chief Operating Officer. Over to Nisan for the opening remarks and post which will open the floor for seven days. Over to you sir.
Nissan Joseph — Chief Executive Officer
Thank you Manoj. Good afternoon everyone and thank you for joining and welcome to our Q1 FY26 earnings call. As you all are probably aware, we posted a 9% growth in both our standalone and consolidated numbers in the quarter. We had an offset eid a strong season for us that fell into the previous quarter and the early onset of monsoon which though is key for our Crocs business, does dampen shopping in the markets. The two major markets with early monsoon were Gujarat and Maharashtra where we have a significant dispersion of stores. Nonetheless, we were able to have an almost double digit increase in top line sales.
Our EBITDA grew 8% coming in at 31% slightly behind last year due to increased spends in marketing to enhance our brand positioning for our various business units. Our PAT grew 7% to maintain our mid teen performance of 16% gross margin remained consistent and healthy running in the high 50% range. As we achieved almost 60% margin for the quarter, our E commerce business stayed its course and delivered another 45% growth. Fortunately, monsoons don’t dampen online shopping. We’re seeing traction in the quick commerce space though it is very limited to a handful of Metro cities today. For the quarter we opened 23 stores and closed three stores.
We’ve been working on repositioning Walkway and are now beginning to open stores for that banner. We opened 4 walkway stores just in the last quarter compared to 4 for the whole year. Last year we had delayed the opening of Footlocker and Fit Flop to allow for stabilization of sourcing. Given the BIS regulations that impeded imports for most of last year, we’re starting to see that supply chain gain stability and have started opening Foot Locker stores in this quarter. We still plan on opening Fila stores later in the year as we continue to reposition the brand.
As we announced mid quarter, we are excited about the new partnership with Clark Shoes. This premium brand of dress and casual footwear fits very well within our Metro Mochi business and also has a brand recognition to have its own mono branded stores. We now have a long term exclusive agreement for India and surrounding countries like Bangladesh, Nepal, Maldives, Sri Lanka, et cetera. This agreement makes us the exclusive supplier and seller of Clarks in India in all channels, online and offline. We will have more updates on the plans for Clarks in our next earnings call. One item I mentioned in our last call that’s worth repeating is on the ESG initiative of Metro Brands, we may be the only footwear retailer in India or in the world for that matter, that recycles a pair of shoes for everyone that we sell.
Let that sink in for a minute. I’m really proud of the ESG team that has worked so hard to build this ecosystem for us and we hope to continue to increase our recycling efforts to consistently exceed the pairs that we sell. With that, I’d like to turn the call back to the operator and open it up for Q and A.
Questions and Answers:
operator
Thank you very much. We’ll now begin 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’ll wait for a moment while the question queue assembles. The first question is from the line of Videsha Sheth from I Ambit Capital. Please go ahead.
Videesha Sheth
Yeah, hi, good afternoon team. So Nisan, you touched upon this repositioning of walkway. Can you please elaborate on that? What are the moving parts involved in the outcome that you’re expecting over here?
Nissan Joseph
Well, it’s not we’re repositioning Sila Vidisha, but we are actually repositioning. We’re not repositioning walkway. We’re kind of getting into, we’re getting into that whole value footwear chain piece. We’ve been working on it, looking at it from a store presentation standpoint, how we come to life with our product, what the cost structure is for that business and to ensure that it starts to get set up for profitable growth. As you know, we have not grown a lot of Walkway stores in the last few years and I believe we’re at a point now that we can start adding walkway to the list of banners that we can continue to expand.
Videesha Sheth
Okay, so just follow up to this. If you want to own the lower price point range in the entire pricing ladder, do you believe there’s still some more work involved or to be done around the supply chain? Part of it. Because, I mean because to those consumers you have to offer a combination of both pricing and design and front end is something that you guys are anywhere on the top of. So just wanted your thoughts over there.
Nissan Joseph
In the business, you know, the supply chain, the design, all the way down to the consumer accepting your designs and pricing is an ongoing battle. It’s an ongoing thing. It’s not a magic formula that you can apply and just sit back at it. You know, we’re very confident that, you know, we see inroads and traction in the initiatives that we have taken that we will now be looking at it much more closely. As you know, over 80, almost 80% of the footwear sold in India is below 1000 rupees and that’s the space Walkway plays in.
And I think it has an opportunity to really, you know, take us and continue its growth.
Videesha Sheth
Got it. And the second question would be around Store Edition. Considering that consumption has not yet picked up full fledgedly, would you expect Store Edition to remain relatively lower at 80, 90 or would you be crossing hundred this year?
Nissan Joseph
You know where I’d leave that is? You know we’re seeing traction in the deals we’re getting, which is a good sign I think. If you remember a few calls ago, we talked about rentals starting to split spike. Rentals are never coming down but we’ve definitely seen them come off the spike that they have been on. So we feel pretty optimistic that we can continue. Now our trajectory of growth in stores, how many stores we open is really a matter of what the right opportunities are there. With Eisha, we’re not here to hit a number. We’re here to capitalize on as many rental deals that make sense for Metro come our way.
Videesha Sheth
Got it. Super helpful. I’ll join back with you. Thank you.
Nissan Joseph
Thank you.
operator
Thank you. The next question is from the line of Sourabh Kundan from Goldman Sach. Please go ahead.
Saurabh Kundan
Thank you very much for the opportunity. Nisan, my first question is to you. While we understand that the retail environment has been weak, a lot of companies have spoken about early monsoon and a few other factors as well. But the growth that we are seeing in your case, would you say that it is only the result of these or is there anything specific to metro brands as well? Also I wanted you to share with us, do you feel that these initiatives, let’s say walkway or even addition of Clarks mono brand stores, etc. Now become important or they really need to fire for you to hit, let’s say a mid teens growth? Or do you think the existing scaled up brands are enough for that? Mid teens.
Nissan Joseph
All right. Well Saurabh, thanks for your question, but let me anchor what you’re saying to some numbers that might put it in a little bit more perspective. Right? If you go back, we talk about, you know, there being a muted demand and whatever else you have. If you go back to FY20Q1, which is calendar, you know, 19, which is the last quarter we had before COVID we’re up 101% over that quarter even after last quarter of muted demand as you call. So just to give you perspective, if I were to CAGR that it would still come to a 12% and I’m including the COVID year in that.
I’m not pulling that out. I’m including that year we would still have a 12% growth. Right? So what you’re really seeing is us coming off some of the lumpiness caused by Covid for our business. We’re not seeing any fundamental cracks or gaps in the business that alarm us. On the contrary, as I mentioned earlier, we are starting to see rentals start to make more sense. So we don’t see that being a core issue. Internally. There is a certain lumpiness. You always have dates going back and forth. The previous quarter, for example, didn’t have a leap year.
You’re always going to have these kind of things in retail. And despite all of those things, I do want to double down and say that it’s a 12% CAGR including the COVID year. If you look at our pattern, you know, it has a CAGR of 15% over that same period of time. And you know, our PAT margins back in 2019 were 13% and last quarter, as you know, we almost breached 16%. And these are the things we’re guiding to. What’s really important to look at here is, you know, we’ve guided to 15% CAGR growth. We’ve guided to about mid teens in PAT, we’ve guided to 30% plus in EBITDA and we’ve never strayed from those numbers, not through the highs and not through the lows of the lumpiness of COVID So we see really a constancy of business.
It’s really things settling down for us. And as far as the new banners go, you know there’s going to be one of the three levers of growth we have. You know we have same store sales growth, we have new store expansion and of course we have new banners that will come in. You know and we don’t add brands for the sake of growth alone. They have to have a significance to our consumer. We look backwards from our consumer if they’re significant and meaningful to our consumer as we quest to try and take more of the footwear wardrobe of a consumer they have to make sense in there.
Unidentified Speaker
Saurabh Just adding to what Nishan said to your second question. We expect close to about 15 to 18% CAGR. I’m talking long term, I’m not talking short term here, not only through our new formats but ideally for each of the formats that we have. So individually each of the formats we would expect that kind of growth to come in. Metro, which is our biggest format is just 350 stores. So there’s a huge room for growth and we feel each of our formats can grow 15% and upwards over a long period of time.
Saurabh Kundan
Very, very clear. Thank you both. Just one follow up. This is to you Kaushal. This 4350 rupees per square feet that you’ve reported this quarter is obviously impacted by calendar shift, etc. Have you done an exercise where you can give us a number purely because of this calendar shift? What would this number have been if it was a normal quarter without these Eid festival shift? This 4350 would have been what. You. Know broadly if we see our sales we would easily be would have been higher by about 2 to 3% if Eid was to be in Q1. So you know, approximately around a similar percentage would get added to the sales per square feet. Also the number that you see.
Nissan Joseph
But Sourabh, the other thing you have to consider is the analyzation effect of almost 100 stores that were opened in the last 12 to 15 months. Right. New stores never have the same productivity as your existing stores. They’re not supposed to. Right. They did. Then there’s something wrong with the existing stores. So as you see those annualization numbers come so that’s number one. Depending on the mix of formats that we open, all our different formats contribute differently to the sales per square foot. We don’t break it out but some are definitely more accretive to it, some are diluted to it.
That is probably a bigger effect than just 1/4 of whether it’s an ease off. Not that it doesn’t affect it but the bigger effect is the analyzation of 100 stores which is over 10% of our chain that happened in the last 12 to 15 months.
Saurabh Kundan
Thank you Nishan, thanks for sharing with you.
Nissan Joseph
Yeah but Sourabh, you can rest assured that it doesn’t in any way detract from our profitability, our margins, our ebitda. So that’s a number that doesn’t change showing that it’s healthy growth and not growth coming at the cost of those things.
Nissan Joseph
Thank you.
operator
Thank you. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Nisan thanks for the opportunity. Just building up on the demand thing. So we are clearly noticing that preference of consumers is moving towards casual products as well as channels like online. Right? So where our presence is currently lower, albeit it is building up. So wanted to check is this changing consumer preference also coming as a hindrance to our growth? What’s your sense on this?
Nissan Joseph
I don’t believe it’s necessarily just casual. There’s a lot of consumer preference changes, right? There’s personalization, there’s comfort. These are all changing landscape of a consumer. That is not the big driver of what’s going on. What I believe is it’s just a normal change. The lumpiness of post Covid I must remind you our growth has not if you look over a period of time like we always guide to, we’re always going to have a quarter here and a quarter there. That doesn’t seem to totally be in line with what we’d all like. However, when you look at our performance compared to the industry, compared to our space that we operate in, we continue to lead the way in growth in maintaining profitability.
So I would say it’s not so much the consumer preference is changing, albeit we know that consumers are adopting more into athletic footwear and casual footwear as you mentioned. But our stores are geared to be able to pivot to take care of those consumers. It’s not like we don’t sell, you know, casual shoes. Casual shoes and casual and aesthetic are over 50% of our business today. So it’s not like we’ve been absent in that market at all. DevanShot.
Devanshu Bansal
So Q2 typically is a slower quarter relative to the first quarter but this time around festive is relatively early which is in Q2 itself. So versus historical trends can we expect a better traction this time around. Or what’s your view here?
Nissan Joseph
Yeah, I think you’ll see some dispersion of Those sales into Q2 and then you know, you’d have to come back and maybe offset some of that in Q3. It’s just a normal cyclical nature of the business. Everything is getting earlier and earlier. Right. So is Eve gets earlier every year. It’s just what’s important to know is that the foundation of the business, the growth levers that we have in place are all working and going in the right direction.
Devanshu Bansal
Thank you sir. Lastly, on walkway there is an uptick in expansion annually. If you could just provide some guidance on store editions here. And the related question is how do unit metrics of walkway stores sort of differ from Metro Mochi stores in terms of revenue and margin front?
Nissan Joseph
So you know, we don’t guide simply because we want to open as many stores as makes logical sense for our business. As far as the revenue numbers go, you know, obviously it’s not as profitable from a percentage standpoint as a Metro and Mochi business. However, it is an amazingly good deployment of our capital that we have. From a roce standpoint, it definitely standalone will make a profit. So that’s not an issue. While it might be dilutive, it’s not in any way negative by itself. So you know, without diverging too much, the sales per square foot are not as much as the Metro mochi for example.
So you know, you will see some dilution but you will. What we aim to do is have top line growth without compromising on any of the key numbers that we’ve guided.
Unidentified Speaker
To devanshu our long term target for walkways. Like take for example for our core formats like Metro Mochi, our rocs at store levels are upward of 40, 45% for walkway for a long period. If you think from a long term perspective, ideally we would like them to deliver somewhere around 30% and up to.
Devanshu Bansal
Understood. Got it, Got it. Question. Thanks.
operator
Thank you. The next question is from the line of Rahul Agarwal from Ikigai Asset. Please go ahead.
Unidentified Participant
Hi, thank you so much for the opportunity. Sir, could you talk about a little bit on same store sales growth for Metro Mochi and Croxt.
Nissan Joseph
We don’t break out same store sales growth but you know, in the 15% CAGR that we guide to, a good portion of that will come from and has come from ssg. The other portion will come from ASP growth and the other person will come, I mean unit growth and the other percent will come from new store annualization and new store growth. Right. So we don’t break it out. We expect all the stores to hit good SSGs depending on their aging. The newer stores tend to have a higher percentage of growth on an SSG basis, whereas more mature stores tend to have a little bit of a flattening out but still will show growth.
Unidentified Participant
Yeah, I understand that. I was actually more talking about let’s say past 12 to 18 months trends. Looks like most of the revenue growth is now essentially coming from new store editions. Hence I was just a bit concerned on what’s really happening on the same store sales growth. So just from that perspective, anything qualitative also is helpful.
Unidentified Speaker
Yes Rahul, as Nisan earlier mentioned, at times in retail we see slightly lumpy cycle, right? FY23 was one of the best years with obviously pent up etc. Revenge buying, whatever you call all clubbed into that year. So in light of that, when you see FY24 you will see as if FY24 was muted. If we see versus Q1 of FY20 Nissan mentioned, we see a 16% growth which would come to a CAGR of around 3%. If we see slightly longer period, say 10 years. We have generally seen overall SSGs for all our formats ranging in that mid to high single digit.
So that is our long term target for any retailer to ensure that profitability doesn’t get impacted. That’s the minimum SSG that you would want to target over a long period of time.
Nissan Joseph
And Rahul, while it’s an important metric and we continue to gun for it, don’t forget sometimes we open our own stores on top of our own stores. Right? So we have a very successful Metro store. We will backfill it which is part of our growth strategy. We will backfill it with another Metro or we will backfill it with another Mochi store. If we see a very good Metro or Mochi selling a lot of Crocs, we will backfill it with a Croc standalone store. So some of the mutedness, the reason we wouldn’t hit high double digit SSG growth by itself is because we cannibalize ourselves to some degree.
But it’s good because in overall we gain market share without losing profitability. And that’s, that’s the ultimate goal is to keep gaining market share as much as we can. And if you look at the numbers over the last few quarters as you alluded to, if you compare how we perform versus our peers, we’ve definitely gained market Share. And if you look at our profitability, we have not compromised on our profitability at all.
Unidentified Participant
Perfect. Get it. A related question also was that the margins, which are anyway, I think best, best in class, I would imagine, purely from a SSD perspective, looks like the contribution, assuming that’s a bit lower than what it should be, the margins would actually have some upside from here. Right. If you have better SSDs across your metro, Mochi and Crocs, is that understanding correct or you think these margins are at a peak here and we should actually sustain here and we’re not looking for incremental margins.
Nissan Joseph
Yes. What we’re really looking for here is to have a business model that sustains over many years. Right. It’s not about increasing in number because at some point it will come back to pay itself. It will not be a profitable way to grow. So what we want to do is to continue to grow along the way we’ve guided and you know, we’ve been guiding this since we went public and I think you should be pretty pleased that especially when it comes to comes to profit. Pat and Ebitda, we’ve always been in our guidance, if not better, that’s more important to us than talking about just one singular number.
Unidentified Participant
Got it. And lastly, one smaller question on UK fta, I think is there any benefit do we expect on the business purely from India? UK FTA signed up?
Nissan Joseph
No, we’re 100% India. We source almost 95% of our goods in India. We, we sell 100% of our goods in India. So we don’t see that impacting us benefit or otherwise in any way.
Unidentified Participant
Thank you so much for answering my questions. All the best for the rest of the year.
Nissan Joseph
Thank you.
operator
Thank you. The next question is from the line of Gaurav Jogani from GM Financial. Please go ahead.
Gaurav Jogani
Thank you Nissan and Kaushu for taking my question. My first question is with regards to the, the marketing spends that you alluded to in your PPT in Q1. So would you say that it is kind of front ended and whatever we spend on the annual basis that would remain or this year we could see a higher marketing spends for the year.
Nissan Joseph
We target around 3.5 to 4% in that category. And last year if you looked at it, we did not spend that much in the quarter. So. So we really want to continue to invest in our brand building efforts and making sure that Metro continues, all our brands continue to be top of mind. So we’re not going to see that level off. However, you will definitely See that we are going to invest in marketing.
Gaurav Jogani
Sure. So if I understand it right, Nishant, it would be in the 3.5 to 4% range.
Unidentified Speaker
Right?
Gaurav Jogani
Yeah. Which if you were to do a comparative basis, it would probably be slightly higher than last year there.
Unidentified Speaker
Okay.
Gaurav Jogani
Okay, sure. And n the next question again, you know, is with regards to the same store sales growth only now I’m not taking a one year, two year view but even if we look at from F23 onwards, I mean still, you know, we are lagging on the the revenue per square feet number. Now there could be two parts to this. One is because of the store editions has been higher. And second could be that we are also opening stores in tier 2, tier 3 towns which kind of would be impacting the the revenue per square feet.
So which one would you allude to? A larger portion the demand slowdown or the other bit?
Nissan Joseph
Gaurav, you know, if you see FY23, that was our highest sales per square feet. Right. Because we all know that year had quantum of pent up buying, etc. Ideal number to compare would be FY20. If my memory serves me right, it was somewhere around 17,000 rupees and we are trending higher than that. And also this is a blended number and it depends on since we have eight formats now it becomes slightly difficult because you know, based on if we increase walkway significantly, obviously we’ll see some impact on these numbers. Certain formats would have upward impact.
So, you know, best way to see is compare sales growth and see how the profitability of the company is moving rather than just being fixated with this particular number.
Nishant Pahuja
Yeah. And Gaurav, we are very keen on. Wow. We’re very keen on continuing to grow, keeping in mind that our costs grow as well. And you know, that’s what we focus on to make sure that we our growth covers our cost and gets beyond it as well. And that comes in many different ways. Right. And again, I think we might read too much into the sales per square foot if indeed it was affecting our business. Like a lot of people would think you would see that in the other numbers come through very quickly.
Gaurav Jogani
Sure. Appreciate that. And the last question is with regards to the Sila format, I mean there were certain losses that we had incurred when we had acquired the brand. So if you can help us out, where are on that journey? Are we breakeven in that format? How much losses are there Anything here.
Nissan Joseph
Would be helpful, Gaurav. In the first year FY24 losses in fila format was around were around 58 crores last year. Year we reduced it by around 40 odd percent. And this year it will further go down. Go down. Sometime next year is when we feel we should break even with respect to Fila.
Gaurav Jogani
Okay, sure. Thank you. That’s all for me.
operator
Thank you. The next question is from the line of Shraddha Kaparia from smifs. Please go ahead.
Shraddha Kapadia
Thank you so much for the opportunity. So my first question is majorly regarding the asp. Would it be possible to give the ASP excluding the accessories majorly for the footwear? Would that be possible? And also if you could help with the current ASP for clerks.
Nissan Joseph
So asp, if you take ASP only a footwear at our stores it is somewhere around 2700 and we have seen growth of around 3.54%. In that overall ASP also we have seen growth of around 3%. And if you look at our premium business, it represents almost 56% of our business today. Shraddha. And to give you just a, you know, while we try not to give too many forward looking statements or give too much information on our business for competitive reasons, you know, Clark’s would definitely be north of 3500-4000 rupees as an ASP.
Shraddha Kapadia
Okay, sir. Okay. So that was quite helpful. Also just continuing with the statement which you said. So currently if we take a look then our premium mix which is there is 56%. Do we have any target or do we have a target so as to reach say 60%, 70% of our total which would be there?
Nissan Joseph
No, we don’t have any target. If you even see our last three years trend, right, this number has gone up by 1% year on year. So FY24, if I remember correctly, our contribution of sales upward of 1500 was around 86%, 87%. Last year it was around 88%. And this year it is for first quarter it is around 89. So it’s been very stable. We are already at a very high number. Obviously with addition of formats like footlocker, Clarks, etc. We will see upward movement. But we are also planning to increase walkways. So it will sort of balance it out.
So we fully understand that certain banners of ours play to a premium segment, Shraddha. And certain banners play to value segment. Right? So each of those segments, each of those banners needs to stay in their lane and perform in their lane. And that’s what’s important to us.
Shraddha Kapadia
Sure, sir. Thank you so much. Thank you for taking my question.
operator
Thank you. The Next question is from the line of Prerna Junjunwala from Elara Securities. Please go ahead.
Prerna Jhunjhunwala
Thank you for the opportunity. Last year wedding season was weak and that had impacted our sales in Q1 and this year Eid moved in Q4. How would you see consumer sentiments between both the periods?
Nissan Joseph
I think it was quite consistent with what we would have expected. You know, I think though there were wedding dates in this quarter quarter, most of that shopping was done previously. But we also had to offset some other things in there consumer sentiment. For us, what I can look at is a slightly longer term. You’ve seen us go from flat sales to now being at almost double digit growth for two straight quarters. Now obviously we’re leveling off again and getting back on our growth trajectory, which is really the consumer telling us what they’re doing. We’re not seeing anything that causes grave concern.
You know, when we sell out of products, we expect to sell out of it. And we sell out of some that we didn’t expect to sell out of. And there’s some others that don’t do well, which is just par for the course. We’re not seeing a consistent trend that points that the consumer is shying away from this or that.
Prerna Jhunjhunwala
Okay, any color on urban versus I mean tier 1 versus tier 2, tier 3, where the demand is really showing up. Any region specific comments that you would have for consumer sentiments?
Nissan Joseph
Yeah, so from time to time we do see certain regions perform. Not perform rather I should say so. For example, we had early monsoons as I mentioned in Gujarat and Maharashtra that impacted our sales in those stores there. We’re seeing some slowness in the south from time to time. We see some erraticness from even states like Punjab. But you know, it goes up, it comes down. And for me to categorically say that there’s one continuous offender, so to speak, would not be a fair statement.
Prerna Jhunjhunwala
Okay, so my second question is on premiumization. We’re seeing ASP growth coming in now every quarter. Would you please share which brands are contributing to this premiumization?
Nissan Joseph
So we are seeing ASP growth across our banners. Only exception would be walkway where obviously we have reintroduced price points below 500 rupees. So there we will see slight downtick in terms of overall ASPs. But otherwise all the banners we are seeing normal ASP growth of anywhere between 2 to 5%.
Prerna Jhunjhunwala
Okay. And any price hikes that you have taken which could help us understand whether it is premiumization or it is price.
Nissan Joseph
Hikes, nothing out of the ordinary. You know, it’s really. Sometimes it’s more of a mix of goods, Berna, because you know we all tap the block and now we have other brands that are now kicking in feelers also at a much higher ASP than the average that most of the other businesses run. It’s really a mix of goods more than it is anything. Of course we do take price increases in a steady way, but we’ve not had to because of any spikes in supply or input costs.
Prerna Jhunjhunwala
Okay, so one more question on Clark’s where do you see this brand coming in? As per media article, this brand was about 250 to 300 crores with erstwhile license holder. How do you see this brand shaping up in your umbrella?
Nissan Joseph
I think we’ll give more color on that on our next call. But you know, as you know Metro always is able to leverage the power of brands and bring it to life in this country as we’ve proven with Crocs and Fitzlop and other brands. So I think we’ll give you a little bit more color on that in the coming quarters.
Nishant Pahuja
And Prerna, as we have mentioned earlier, we generally don’t get into strategic relationship unless and until we see potential in that particular brand. That brand being synergistic to our existing offerings, especially our MBR formats like Metro Mochi and others. So we see see good potential for Clarks over a long period. I must add though, we were one of the largest sellers of Clarks in India when they were with the other partners. So you know we have a good understanding of the brand. We know what the brand is. We were one of the best sellers of it. So I think there’s a lot of synergies there that we plan on capitalizing on.
Prerna Jhunjhunwala
Sure. Thank you so much and all the best. Thank you. The next question is from the line of Umang Mehta from Kotak Securities. Please go ahead.
Umang Mehta
Yeah. Hi. Thank you for the opportunity. The first question was again linked to the ASP question of previous participants. We’ve seen this growth after some quarters. Would you say that Crocs has grown faster given that you’ve seen contribution of outside brands go up a bit? And you also alluded to early monsoon was Crocs meaningfully faster than the other banners this quarter.
Nissan Joseph
Nothing of a significant nature but you know the early monsoons helps Crocs more than any other brand. Right. As I mentioned in my opening comments that it’s Crocs Diwali when it rains and they got lucky that they caught it early and it felt all of it and fell into last quarter. Whereas in Normal years, most of it would trickle into this quarter, actually. So that’s not the biggest driver. And don’t forget we also have other brands coming on. Right. Like Foot Flocker and the newair is not exactly a low end brand. We were liquidating a lot of Fila at low price points last year.
This year we’re not liquidating as much at those price points. We’re selling more at a higher price point. So there are various factors that are causing it amongst.
Umang Mehta
So then it’s more sustainable than going forward. The second question was on clouds. Now what we have seen is that, you know, they struggled for several years, you know, with even scale and profitability. While you said that you might share more on your plans in the next kind of call. But any assessment on what was wrong back then and what could potentially change, I mean, some color you can share.
Nissan Joseph
Well, you know, it’s hard for us to know what’s wrong behind the covers of different organizations. Right. So we try not to focus on that. What we’re focusing on, as Kaushal said, is, you know, when we evaluate a brand, you know, there’s a couple of filters we put it through first. Is it meaningful to our customers? And of course we know it was because we sold a lot of Clarks when we sold it through our Metro Emoji stores. So that’s number one. Number two, do we think we can play stronger and do a better job with it? I think we’ve proven ourselves that we are able to do that.
That’s what we look at more than about what went wrong and things like that. It’s about what we can do with the brand and what our customers want from us with that brand.
Umang Mehta
Sure. Makes sense. Just one last one. Do you think for now you have. Enough banners or do you think that. The potential to add more if it makes sense, is still there for the foreseeable?
Nissan Joseph
Yeah, I think you should ask our customers that. Right. If our customers show us they want us to carry more banners, we’re happy to. At the same time, we also have some amazing brands in our own portfolio, such as Metro, Mochi, Da Vinci, Jay Fontini, that we’re able to cater to a lot of the demand out there. So it’s really a matter of balancing between something we can do versus something we cannot do. So it’s not just a matter of getting banners at all. It’s a matter of making sure that we’re getting banners that mean something to our customers in a space that we’re not able to do the same.
Thing.
Umang Mehta
Okay, sure. Perfect. Thank you so much.
Nissan Joseph
Thanks.
operator
Thank you. The next question is from the line of Tejas Shah from Avender Spark. Please go ahead.
Tejas Shah
Hi, thanks for the opportunity. A couple of questions. So first we keep on referring to that revenge buying or search demand that we saw post Covid and if I remember correctly, we also responded in that time by opening many stores to cater to that demand. So now when the demand is normalizing, are we seeing that some of the store economics that we would have budgeted then are not holding up and there’s a pressure to kind of revisit the stores or perhaps relocate the stores?
Nissan Joseph
It’s a constant circle there. You know, it’s not about just that demand opening. Every time we open stores, you know, we’ll have a group of stores that don’t perform, we’ll have some of them that over perform. A good way to gauge that is if you look at our failure percentage Tejas, it’s very low. So it means that most of our stores are hitting the profits that we want them to. So it’s not about just that. And don’t forget we talk about consumer demand. The amount of shopping that was done post Covid and for the couple of years that followed it was quite intense.
And now consumers are having much more options for their disposable income as well. So I think they’re still spending. It’s just a question of the dispersion of spending is changing a little bit. But that’s why we look at a little bit more of a long term perspective. And I think you’d be happy to see that we’ve been able to control our input cost very well to keep our profits there and EBITDA margins in that range that we guided to.
Tejas Shah
Clear. Second, we have now the Crocs has been a very successful story in our portfolio. But now when I see our portfolio we have let’s say two or three established projects on the left hand side of balance sheet and on the right hand side as a use or application of funds. We have many projects which are in wip. So how do you allocate or how do you prioritize managerial and financial resources or bandwidth? How are you planning to prioritize the same now?
Nissan Joseph
Well, I think from what we put together as a plan that we see for that banner, we realize that a lot of these banners need significant investments to grow and that’s why we look at see what is the potential for every brand that we acquire. It has to be significant and meaningful to us. Each one of them is like children, each one of your children have a different need and they’re at a different stage of growth. So I can’t categorize just all of them on the right side of the balance sheet as a certain amount.
But, but the good news, as you know, we have capital ready to deploy. We’ve deployed it well. And then, you know, we also invest a lot in people in putting teams in place to take care of those businesses. And I’d say between the people investments and the promotional marketing investments that we make in these brands, the design investments, that’s what would take up a lot of the capital. But it is worth it for us and it’s not going to significantly move, move the numbers crazily on any given point in time.
Nishant Pahuja
Tejas just adding to what Nisan said, BIS implementation also led to some delay, especially in Footlocker and Fila. But now, in this year and coming year, you will see those brands also growing meaningfully.
Tejas Shah
Perfect. And just to extend that point, do we have enough children now? Are we, we have space to accommodate more children?
Nissan Joseph
You got to ask the wife who is known as the consumer that question. We serve the customer. And if the customer is telling us that we’re not meeting their needs, we’re happy to continue to explore brands. And brands come and go too. Today we may or may not see a brand, tomorrow we will see a brand. We understand there’s an evolving landscape. I think somebody alluded to that customer preference is changing and they’re going to. Not only have they changed so far, they’re going to continue to change, that’s for sure.
Tejas Shah
Perfect. Thanks. And all the best for coming quarters.
Nissan Joseph
Thanks, Ajis.
operator
Thank you. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Sameer Gutpa
Hi sir. And thanks for taking my question. Firstly, on the walkway, repositioning. I’m not sure if I understood what exactly is the change here and what was the problem earlier which you’re trying to fix and having done this, will it still be a trial and error kind of a pilot or now with all this done, you are targeting full fledged expansion here.
Nissan Joseph
Okay, let’s start off with the basic concept of the size of the market. Right. As I mentioned earlier on, 80% of the footwear sold in India is under 1000 rupees. And that’s not a space we were playing in. So then the question becomes, why weren’t we playing it in the past? We had a lot to do to get positioned for the growth that we’ve had. Listen, since COVID We’ve opened almost 400 stores which is 80% of what we had pre Covid. That’s a significant growth. That takes a lot of bandwidth, that takes a lot of planning, it takes a lot of head space out of management.
Right. So we have to prioritize our growth levers. We’ve prioritized, prioritize those growth levers. We’ve now come to Walkway to say how do we grow that? And you know, honestly, Walkway, as I mentioned earlier on, is not as profitable from a pat percentage standpoint. But I must reiterate that it’s a wonderful use of our capital. As you know, we do have a lot of cash at hand and it’s probably a very effective use of our capital and that’s what we’re gearing towards.
Sameer Gutpa
Okay, so there’s no real repositioning here. It’s just that now you’ll focus on it.
Nissan Joseph
There’s no repositioning. But this, of course there’s a lot of tweaking and refinement that requires before you grow any chain of stores. Listen, when you open, if you have 60, 70 stores, it’s easy to say this is what they do. But to get it ready for growth in line with the rest of your company, that requires a whole different approach to whether it’s your supply chain, whether it’s your talent availability, whether it’s how you’re going to manage this business as it grows back to your real estate and BD team. It’s a significant amount of things that need to move to raise a child.
Sameer Gutpa
Got it. And with this we are saying that the tweaking and refinement is now done. Now we can grow it as we grow the other brands.
Nissan Joseph
I think that’s a safe comment.
Sameer Gutpa
Okay. And on Footlocker, so the earlier communication was that we are still, you know, having a cautious approach here. Wait and watch. As to things the way they are developing, are we still in that mode or now things are clearer. And I, I see that we have opening another store in Mumbai now. So is that now behind and now things are sorted?
Nissan Joseph
Yes. So it was only BIS that made us hesitate, Sameer, it was nothing else. It’s not that we’re not sure about the chain or the concept. It was the BIS uncertainty from the brands. As you know, Footlok is primarily a multi brand store that is serviced by all the major brands in global brands essentially. And all of them were at various stages of the journey in mitigating the BIS risk until we had clarity that they were past a certain point. I would still say they’re not through that entire mitigation, but it’s to a level where we’re comfortable enough.
And as you mentioned, you know, we subsequently opened two stores. We plan to open more stores before the end of the year and we’ll continue that growth. But we had taken a pause there for a good seven months while we wanted to see how the BIS laid out.
Sameer Gutpa
Okay. So suffice to say that BIS situation now is not sorted completely, but still is at a situation where you can go ahead with your store opening at.
Nissan Joseph
Correct.
Sameer Gutpa
Got it. Lastly, if I can squeeze one more on Fila now, I still see that ebos and you’ve been consistent in this not. Not saying anything over here. But if the reviews are to be opened from second half, what is it waiting for? I mean, is it still, you know, the marketing that needs to come out before you open stores? Is it still a buffer that you are keeping, you know, for some more uncertainty that can come in? Just your thoughts here.
Nissan Joseph
Well, it’s a combination of things. Right. One of them, obviously, is bis. Right. So it would have been easiest for us to launch it because we would get the assortment, we would get all the product we needed from our global partner, Ophelia. Right. That would have made it a lot easier. We didn’t have that luxury. We had to go create an entire supply chain for it. Right. From raw materials onwards. Right. Because we had to do it in India. And so that has taken a little bit of time. It also takes a lot of thought and planning before you get into that.
We’ve also been busy testing those products. Some of the products that we think would make Sense in the EBOs in our key metro mochi stores. So the journey was not just to say, let’s open stores. The journey was let’s test and see how we start repositioning the brand in our metro mochi stores. When we have learnings from that, by then we’ll be ready to execute at a certain period of time. We’ve always guided that it would be in the latter half of this year or this calendar year that we would open stores for Fila, and we’ve not strayed from that.
Sameer Gutpa
So, sir, my question is that now if the BIS thing, we have already replicated most of the supply chain in India, this six months of buffer, we are still keeping only for the testing portion or is there anything else?
Nissan Joseph
Yeah. But even when we open stores, it’s not like, oh, you got the magic formula now run with it. Right. It’s an ongoing trial and test. Trial and test. So it’s not like you get a formula together and say, okay, now we’re ready and let’s open up 100 stores. And each of those iterations of product, each of those iterations of strategy make it much harder when you don’t have access to an evolved supply chain in India. So there are challenges there. But as you know, we’re taking it cautious. But in no way does that detract us from what we believe the brand can be.
When you look at it over the next three to five years.
Sameer Gutpa
Maybe. I’ll take this offline, sir. Thanks. No problem. I’ll come back in the queue for.
Nissan Joseph
Any follow up, sir.
operator
Thank you. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Yes, hi. Just one follow up. From online perspective, we have seen very strong growth Trends here. Typically Q1 and Q4 are relatively weaker in terms of online sales and Q2, Q3 are relatively better. So I wanted to check is this a sustainable trend or there is any one of two call out which has happened in Q1. Maybe there was early EOSS that happened across online platforms. So I just wanted to check your thoughts here Devanshu.
Nissan Joseph
If you check our E commerce numbers for last year first quarter, they were slightly weak. So on base of that, obviously it’s a very strong growth. FY24 Q1 was around 61 crores. Last year Q1 was around 58 crores and this year is 84. So growth obviously 45% over last year’s is 45. But if you take that into consideration, you know, that would, I think answer your question.
Devanshu Bansal
Q2 is a better quarter. Q2, sorry, yeah, Q2, Q3 are better quarters from online perspective. Is that a right takeaway?
Nissan Joseph
They’re better both for this year and for last year. So if you’re looking at comparative number, it should be the thing. Right, but.
Devanshu Bansal
Understood. And lastly from a region perspective, you mentioned that west has seen relatively slower trends, but the south as a region is also sort of seeing muted trends while north and east are doing relatively better. So any specific reasons that is sort of impacting the growth there and what are the steps that we are taking to sort of improve the growth trends?
Nissan Joseph
I mean listen, we’d be reaching if we knew what was happening. But you know, we all read the news about what’s happening in the tech sector, you know, which would affect two big cities in the south. So there’s a lot of things happening that could be affecting it. We’ve heard that in some of those states there’s a depression of real estate. Prices are quite compressed and depressed. So all these things affect the overall demand situation. But the good news is, you know it’s while we see it go up and down, it actually doesn’t disappear. It actually starts to come back at some point.
Because at some point shoes become a necessity too.
Devanshu Bansal
Yes sir. Why I’m checking was that there are few players that have indicated that few markets like AP Telangana have started to show some green shoots. So are we also sort of witnessing those green shoots in those particular regions?
Nissan Joseph
Like I said, they seem to come back too. So it doesn’t go away. We are seeing a resurgence in some of the. In fact we’ve seen it but we’ve also seen it go back down. Now we’re seeing it come back again. So it’s a little cyclical. Right. But I don’t think we’re immune to it. But at the same time I wouldn’t say that we’re getting hammered over there.
Devanshu Bansal
Got it, Nitan. Thanks.
operator
Thank you. The next question is from the line of Aditya Bansal from Motilal Oswal. Please go ahead.
Aditya Bansal
Hi. Thanks for taking my question. So my first question is on E Commerce. So the share of E Commerce and our overall pie has been going up. So is there any change in the channel strategy for us like earlier the mentor was it will be around 8 to 10%. So any changes there?
Nissan Joseph
Yeah. So one of the things we’ve been able to successfully do at the TIA is to take part in the Omni Channel initiatives where we light up the inventory in our stores across the E commerce channel and that we’ve been able to turn on more and more stores in there. The other initiatives that we do is we’ve been focusing on driving our D2C business also. So there are initiatives that we are taking that leads to that number. It’s not just something that magically happens. But what I must maintain is we continue to ensure that we don’t grow because or through discounts.
Because that I believe is brand erosive.
Aditya Bansal
Sure. A follow up on this. So you said you are averse from giving discounts but there has been some impact on the gross margins versus last year. And then last year we had Pila liquidation impact. So would it be fair it is because of E Commerce going faster or are there some other moving parts?
Nissan Joseph
So it’s a combination. Aditya, obviously E Commerce has some quantum of discount and hence the gross margins are slightly lower. That is one of the impact. But there are Multiple other points that have led to the numbers gross margins are. If you see the change, it’s 0.3 bips. So nothing much to read into that.
Aditya Bansal
Yeah, just because Fila was in the base, that’s why I was checking.
Nissan Joseph
A lot of that also has to do with the mix of outside brands, retail inside brands. It has a mix of E Commerce and omnichannel. It has a lot of variabilities. But bottom line though, this quarter was our second highest quarter compared to last five quarters and the last quarter is the one you’re comparing it to was the highest quarter we’ve had in five quarters. So we guide to the mid to higher 50% gross margin range and we’ve achieved it.
Aditya Bansal
Sure. Another question was again on South. So if I look at like last two years, revenue has broadly been flattish despite around 20% store additions. So it cannot be the near term impact. Is there any structural that is wrong with the south, especially for us?
Nissan Joseph
Aditya? We don’t think there are any structural changes. Apart from what Nisan mentioned, South remains one of the key regions for growth for us going forward.
Aditya Bansal
Sure. Thanks a lot for answering my question.
operator
Thank you. The next question is from the line of Saurabh Kundan from Goldman Sachs. Please go ahead.
Saurabh Kundan
Thank you for this opportunity. Again, I wanted to confirm on I think Sameer’s earlier question, Nisan, did you say or did you say that walkway, if I can use the word, that the Playbook is now all set and it’s only a question of replicating stores now but there’s still work to be done.
Nissan Joseph
Yeah. The Playbook is never set in retail. Right. It’s a constant evolution, it’s a constant tweaking and you know, that’s why I think Metro Brands does such a great job because of our operational rigor that watches what, what’s happening every single day. Having said that though, I think broadly we feel good about the guardrails and the lanes that we’ve identified and the levers for walkway growth. And I’d say broadly we feel confident that we’re in a good place with walkway.
Saurabh Kundan
Okay. Any constraints you would like to mention that are there even now other than locations? I mean any other constraints?
Nissan Joseph
Well, I would like it to do more per square foot, I would like it to do more sales, you know and the rentals obviously, you know, as you mentioned needs to be coming in line so finding the right real estate at the right rental. But I always want to do more per square foot. I always want to get better throughput in that value chain. But that doesn’t mean it’s not where we’d like, where it should be in the right place. However, we’re not going to stop working on it.
Saurabh Kundan
Okay, one last one, please. I recall that most of your other MBOs, like Metro and Mochi MBOs, when you enter new geographies, from what I recall, you do have a component of localization, having local designs. Is that the case or plan to be the case for walkway as well or will walk maybe slightly more uniform in terms of the merchandise it has across the country?
Nissan Joseph
No, I think in India it’s important to be regionalized because our preferences are so varied from one region to the other. Having said that, though, in that range of product, the price range, that value range, there’s a lot of homogenous products that go across the country. But the biggest thing that changes is weather. So if you were to do stores in the north versus south, you would see some significant differences. Otherwise, it’s largely homogenous.
Saurabh Kundan
Okay, thank you very much.
operator
Thank you. A reminder to the participants. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. A reminder to the participant, as there are no further questions, on behalf of ICICI securities limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.