METRO BRANDS LTD (NSE: METROBRAND) Q3 FY23 earnings concall dated Jan. 18, 2023
Corporate Participants:
Nissan Joseph — Chief Executive Officer
Kaushal Parekh — Chief Financial Officer
Analysts:
Gaurav Jogani — Axis Capital Limited — Analyst
Tejas Shah — Spark Capital Advisors — Analyst
Vicky Punjabi — UTI Mutual Fund — Analyst
Bhargav Buddhadev — Kotak Mutual Fund — Analyst
Nikunj Gala — Sundaram AMC — Analyst
Madhu — Canara HSBC — Analyst
Manish Poddar — Motilal Oswal AMC — Analyst
Ankit Kedia — Phillip Capital — Analyst
Jignesh Kamani — GMO & Co. — Analyst
Vivek Joshi — Three Tones Research — Analyst
Aliasgar Shakir — Motilal Oswal Financial Services — Analyst
Akhil Parekh — Centrum Broking — Analyst
Umang Mehta — Kotak Securities — Analyst
Sabyasachi Mukerji — Centrum PMS — Analyst
Mansi Desai — Dalal & Broacha Portfolio Managers — Analyst
Rishi Mody — Marcellus Investment Managers — Analyst
Gaurang Kakkad — Haitong Securities — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’23 Earnings Conference Call of Metro Brands Limited, hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Gaurav Jogani from Axis Capital Limited. Thank you and over to you, Mr. Jogani.
Gaurav Jogani — Axis Capital Limited — Analyst
Thank you, Michelle. Good afternoon, everyone. On behalf of Axis Capital, it’s my utmost pleasure to welcome you all to Metro Brands’ Q3 FY ’23 earnings conference call. From the management today we have with us Mr. Rafique Malik, Chairman; Mrs. Farah Malik Bhanji, Managing Director; Mr. Nissan Joseph, Chief Executive Officer; and Mr. Kaushal Parekh, Chief Financial Officer.
I will now hand over the call to Mr. Nissan for his opening comments. Thank you and over to you, Nissan.
Nissan Joseph — Chief Executive Officer
Thanks, Gaurav. And good afternoon everybody and thank you for joining our Q3 earnings call. We have closed another exciting quarter for Metro Brands, and once again have attained an all-time high in our performance. Q3 has been the first quarter since the post COVID era where we were not up against any quarantine from the year before and the demand we have seen for premium products has been strong. These results have been fueled by the strong wedding season, the growth of the middle-class segment, the continued shift from unorganized to organized retail, the easing of inflationary pressures on raw material and a stabilized supply chain.
This has also been our largest new store opening quarter as we opened 54 new stores, closed six stores and relocated three stores, giving us 48 net new stores, bringing our total stores to 720 stores, not including any of the Cravatex stores. These new additions of stores were across all our portfolio of brands and we only grew our city count by six cities indicating that these were mostly existing markets that we backfilled into. In our ASPs, we saw the highest growth in our price points, over INR3,000, consistent with the other quarters.
The Q3 numbers are very impressive, but more importantly, they reaffirm the comprehensiveness of our strategic initiatives: namely premiumization is working, the efficacy of our new store opening processes, the ability to continue to grow without sacrificing gross margins, and deliver, overall, the numbers very much in line with our guidance for gross margins, EBITDA and PAT.
Before I turn it over to Kaushal to give more details about [Technical Issues].
Operator
I’m sorry, sir, we couldn’t hear you. Can you please repeat your last line?
Nissan Joseph — Chief Executive Officer
Before I turn it over to Kaushal to give more details of our numbers, I do want to confirm that we have closed on the Cravatex acquisition, which now gives us exclusive license and distribution rights for Fila, and full ownership of the Proline brand. Our current focus is to rationalize the distribution point, clean up the inventory, and reset the products to align with where we want to position the brand for the future. The team has been working on the integration of the company and is confident that we will be able to set the plans in motion to unlock the potential of Fila and Proline in India.
In closing, we’re very excited by our performance in a normalized quarter, one that we’ve all waited for since the start of COVID. The strength of our operational rigor, the financial discipline, the success of our strategic initiatives and the continued tailwinds in the Indian economy for our sector keep us optimistic for the future.
With that, I will turn it over to Kaushal to give you more color on the quarter.
Kaushal Parekh — Chief Financial Officer
Thank you, Nissan. Good afternoon, everyone, and welcome to Q3 earnings call of Metro Brands Limited. We entered the quarter on a very positive note, backed by start of festive season in the month of October. The positive trend continued throughout the quarter and we witnessed business growth across all our formats, across zones, tiers and all our product categories.
Before beginning with the financial highlights, I would like to mention that we successfully completed acquisition of Cravatex Brands Limited on 1 December, 2022. Accordingly, the consolidated results for Q3 FY ’23 includes one month performance of Cravatex Brands Limited. Slide 13 of our investor presentation provides all the breakup which is considered for the consolidated numbers.
Let me now start with a quick snapshot of our financial performance of MBL, starting with revenues. On a year-on-year basis, Q3 FY ’23 revenue was up by 24%. For nine months ended December, our revenue was up by 68% over last year. If we were to compare this with pre-COVID period, that is with nine months ended December ’19 for FY ’20 as a financial year, our revenue was up by 66% on a standalone basis. I would like to highlight again strong growth momentum that we were witnessing in e-commerce sales is continuing. We achieved our highest quarterly e-commerce sales of INR50 crores which was up by 57% on a Y-on-Y basis.
Now moving on to gross margins. At a consolidated level, for Q3 FY ’23, we delivered strong gross margins of 59.2%, which is in line with the margin that we saw in Q3 of last year. For nine months ended December, our the gross margin reading is at 58.8%. Lastly, moving on to EBITDA and PAT, in Q3 FY ’23, we delivered EBITDA of 34.3%, and PAT of 18.9%. Similarly, for nine months ended December ’22, we delivered best ever EBITDA and PAT of 33.9% and 18.7%, respectively.
I would like to clarify here that slight higher reading of depreciation and finance cost that is visible in Q3 and nine months ended December is primarily on account of lease accounting under Ind AS 116, which is primarily due to higher store openings that we have witnessed over last nine months. As we all would be aware, under Ind AS 116, impact is slightly higher during the first half of the lease tenure and furthermore profound in the first year of the lease due to rent free period accounting. Otherwise, the numbers are in line and in track with the new store openings that we’ve seen during the period.
With this, I’ll close and hand it over back to Gaurav to commence our Q&A session.
Gaurav Jogani — Axis Capital Limited — Analyst
Yeah. I think, Michelle, you can open up for the Q&A.
Questions and Answers:
Operator
Thank you very much, sir. [Operator Instructions] We have the first question from the line of Tejas Shah from Spark Capital. Please go ahead.
Tejas Shah — Spark Capital Advisors — Analyst
Hi. Thanks for the opportunity and congrats on good set of numbers. Just three questions from my side. First, can you share SSG number overall or if possible sub-format wise, A, and what would be the pricing growth Y-o-Y basis versus last year in terms of inflation that we were passed on in the quarter? So that’s the first question.
Kaushal Parekh — Chief Financial Officer
Thank you. Tejas, for asking your question. Unfortunately we are not disclosing SSGs, so I will not be able to share these numbers. But let me share comparison with, say, pre-COVID sales that we recorded. And as I said in my opening remarks, if we compare our sales for the current nine months with the nine months ended December ’19, we have seen growth of around 66%. Okay? Between — if you see store growth between December ’19 to December ’22, the store growth percentage is around 34%, 35%. So broadly you can sort of calculate 66% as the overall growth. Even if you consider complete store opening numbers, the growth is — the store numbers growth is around 35%, so balance broadly is on account of the stores that were existing at that point in time.
As regards to your second question on ASPs, if you see ASPs including accessories, we have seen growth of about 3% to 4% over last year. However, if you see ASP comparison for purely footwear, we have seen growth of around 6% to 7%.
Nissan Joseph — Chief Executive Officer
Having said that, that’s not always all inflation-driven. Some of it is a mix of goods that we sell. So if you sell more premium products, you are going to raise the ASPs without that being a reflection on inflation.
Tejas Shah — Spark Capital Advisors — Analyst
Fair enough, sir. Yeah, got it. So second, how should one read about the demand scenario? And in this quarter also, would you like to share some trend as of December? Was there a considerable weakness because that’s what we picked up in our interaction or engagement with other retailers? And then that perhaps preponed end-of-season sale for large part of the retail community. So just, if you can give us some even qualitative comment on how you saw the demand panning out during the quarter and how do you see coming quarters as well on the demand side?
Nissan Joseph — Chief Executive Officer
We did not see any erosion of business in December, Tejas. I think, if anything, there was a little bit of an erosion of business specifically in some geographical areas in November. A large part of that was attributed to the wedding season shift as opposed to anything of a macroeconomic condition. So that’s number one. As we look forward, what we base our strategy on is the fact that the growth of the middle-class in India and that continues to happen. There is much more disposable income in the group that we cater to. We are strongly aware that inflation is running at an all-time high globally. However, for India, that is not necessarily unusual for us. So we remain quite optimistic about the demand and the opportunities that we have to increase our efficiencies, our sales per square foot, and taking care of more customers in our stores. Also, Tejas, I just want to add one point here. Although we saw few of the retailers starting their EOSS early, we then start our EOSS in the month of December, its core festive season. We started our EOSS in the second week of January. So the sales that you see is without any EOSS push in Q3.
Tejas Shah — Spark Capital Advisors — Analyst
Perfect. And then last one on inventory. So based on our calculation, our inventory per store is somewhere around 8.5 million versus 6.3 million last year same time. So first of all, is that correct? And you also mentioned that some loading of inventory has happened in anticipation of EOSS and perhaps aggressive opening. So if you can elaborate usually how much early we have to stock up for at least on the store opening side?
Kaushal Parekh — Chief Financial Officer
So Tejas, I don’t have ready numbers, the numbers that you mentioned of 63 versus 85, but as you rightly said, when we start a store, we have to obviously start with complete inventory and sales would start coming once the store sort of comes up. We also need to make sure that we have complete set of whatever we want to send to our stores to be present in our warehouse. So we start the store on a right note with perfect inventory that we would want to represent to our customers.
So, last quarter, we opened about 54 new stores, 48 net stores on a net basis and hence we even guided this in our last quarter that because of this and the upcoming festive season and then now the EOSS sales, inventory would be slightly higher, but we see this all normalizing. These are normal trends that we see every year and this year our inventory normalizing around March. We are not sitting on a heavy base. It is aligned with the reduction in inventory that will see post-EOSS, and also aligned with the new store opening target that we are working with.
Tejas Shah — Spark Capital Advisors — Analyst
Very clear. Thanks and all the best.
Kaushal Parekh — Chief Financial Officer
Thank you.
Operator
We have the next question from the line of Vicky Punjabi from UTI Mutual Fund. Please go ahead.
Vicky Punjabi — UTI Mutual Fund — Analyst
Hi, thanks for taking my questions. And so just one thing on this unisex, which I believe is more of a representative of Crocs. We saw a kind of a dip in the contribution, right? For the first half, it was at 13%; for 9 months, it’s at 11%. Can you help me understand, is this because of seasonality? And if that is the case, on a Y-o-Y growth basis, does it continue to perform as per expectations?
Nissan Joseph — Chief Executive Officer
Right. So first of all, when you have overall growth, somebody has to get muted at some point, doesn’t mean those category did poorly, it’s just didn’t keep pace with the rest of it. That’s number one. Number two, last year, we were still coming out of the lockdown, as I mentioned, but the demand for casual [Phonetic] product was very high. We think that’ll taper us to [Indecipherable], not to the extent where we have any concerns about it, but we have seen that other categories have started coming to life, thanks to no restrictions and [Technical Issues] and travel increasing. So, I think that answers your question as to why you may have seen a little bit of a dip in our unisex.
Vicky Punjabi — UTI Mutual Fund — Analyst
Okay, sure, sure. And just on the previous question, when we talked about the growth in revenues versus pre-COVID being 66%, 34% coming — 35% approximately coming from store growth, I believe 8% to 9% must have come from the online channel and then there is 7&, 8% price mix, but there’s still 10%, 12% growth, which is — I mean which is — which seems to be footfall-driven. What’s helping the company attract more footfall? Is it that competition has gone weaker or category changes? What’s led to this kind of growth, if I am actually at the right — I mean, if I’m pointing in the right direction?
Nissan Joseph — Chief Executive Officer
So, I think there’s two drivers to it. The first driver being, Vicky, that the overall market continues to grow at a good pace, right, both in terms of the existing market consuming more and more people moving from unorganized retail to organized retail. So that’s number one. So the second thing is, we do feel that there’s plenty of competition out there, but we are very rigorous on how we analyze and allocate space to our categories and watch that very closely. I mentioned a lot about operational rigor. If we see categories underperforming, we’re quick to act to change it.
If we see something doing well, we’re quick to double down on it and go after it. So it’s really driven by two things, one is the market being very strong, which makes us very optimistic about the future of the Indian footwear space. But secondly, also the operational rigor that we have to ensure that we aren’t missing opportunities because we don’t have enough of the right product and/or we have some wrong product that’s not doing well that we need to minimize quickly.
Vicky Punjabi — UTI Mutual Fund — Analyst
Sure, sure. Thanks. Just lastly, I mean the store opening growth seems to be quite strong this quarter. Is this kind of indicative of the pace that we’re going to grow at going forward or there were some phasing effect out here?
Nissan Joseph — Chief Executive Officer
So, I think there’s two vectors that we use on our new store growth. One is, we guided to 260 stores in our RHP. So we want to ensure that we meet that target without any questions, so that guides us. But the second guide is really finding the right real estate opportunities, and that’s what truly is our guide. We believe that if we make sure that we get the right locations, both in terms of traffic location and also rentals, that that’s the right strategy to grow the business as opposed to be fixated on a particular number. And as you know, the inventory of real estate has been [Phonetic] closed. So while we can’t always predict the availability of real estate in a given quarter, we’re pretty confident that, as I mentioned, we’ve only grown by six cities taking us about to 160 cities in India, there are well over 300 cities that Metro Brands has identified that we could be in. So the opportunity exists.
We will continue to be very, very disciplined in how we choose locations and if the locations are right for us, we will be — we have no issue with capital allocation for it. We have no issue with operational expertise to do it. There’s no area geographically where we are challenged to do it. So, we’re ready to do it, but we’d rather go because we have the right opportunity as opposed to go after a certain number, but we will ensure that we absolutely meet our commitment on the RHP.
Vicky Punjabi — UTI Mutual Fund — Analyst
Sure, sure. Thanks a lot, Nissan, and congrats for the good performance.
Nissan Joseph — Chief Executive Officer
Thanks, Vicky.
Operator
Thank you. We have the next question from the line of Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead.
Bhargav Buddhadev — Kotak Mutual Fund — Analyst
Yeah. Good afternoon team and thank you for the opportunity. Sir, my first question is on store openings. So we mentioned that we’ve increased our city presence by six cities and the potential is 300, but presence is in 160 cities. So why would we still continue to add stores in our existing cities where we are present and not expand the breadth? What is the rationale?
Nissan Joseph — Chief Executive Officer
Again I go back, the first filter we use is making sure that we have the right real estate. And if that right real estate appears sooner in existing cities, then we’d rather do that. So that’s first and foremost. The second one is, when you expand, there are two strategies you use. One is the cluster strategy, where you’re able to leverage your marketing, your brand knowledge, your brand penetration in the town. So that’s the cluster strategy. Operationally also it makes for a very efficient way to grow. And the second thing is — the second way you expand is to go into new geographies, right? So there’s not many new geographies that we think are out there that we’re not aware of, but this is the advantage also of having five concepts and now seven which account Fila and Proline in our armor, that we can grow into cities.
So, I think where most companies would struggle to do what we have done, because they only have one or two concepts under the umbrella, the fact that we have multiple umbrellas and consequently when we open a store and we get a read on how well that store is performing in what categories, we also know what of our other concepts would do well. So that’s why you see us growing as always with a lot of discipline and rigor to it and just what you’re seeing is a reflection of how we go and grow stores. We opened 48 stores — net stores. We’re very pleased with how they’re performing and I think the fact that we’re able to leverage off our knowledge of these cities from some of our other concepts is what drives that part of our success strategy.
Kaushal Parekh — Chief Financial Officer
Bhargav, I just wanted to add one more point to what Nissan said. If you see, our biggest brand is Metro, we are at about 269-odd stores and we are present in 144 cities. And if you take out Metro — Top 8 Metro cities, effectively, our average store per city would be like one, one and a half or maybe, max, two. What this shows is this huge opportunity in terms of penetration, penetrating the existing cities and obviously as we get more knowledge based on our existing store locations, which are doing well, it gives us more comfort and confidence to, obviously, grow there along with new cities that obviously is happening.
Bhargav Buddhadev — Kotak Mutual Fund — Analyst
Sure, sir. Sure. And in terms of mix, how comfortable are we in terms of more than INR3,000 MRP rising in terms of our overall portfolio mix? What numbers — how will it be comfortable at, at the higher side?
Nissan Joseph — Chief Executive Officer
You’re talking of what’s the ceiling for it?
Bhargav Buddhadev — Kotak Mutual Fund — Analyst
Yeah, yeah, because obviously, India is — the customer segment at that price point will be finite number, right? It won’t be an exponentially higher number.
Nissan Joseph — Chief Executive Officer
Well, I think they’re two different statements, finite and a large number, right? I think it is finite, I agree with you, but I think it’s still a large untapped market. So that’s number one. Number two, I think there’s new entrants coming into that market that aren’t existing in it today, there’ll been more new entrants coming into that space in the next five years, Bhargav, which is where we see the upside to it. And we’re not here to say we’re going to target a certain number about INR3,000. Everything we do is customer backwards. We want to ensure that we’re there to take care of what the consumer is looking for, right?
Today, our consumer happens to be looking for a significantly large number of over INR3,000 premium product, and we’re catering to that. But I don’t think there’s a ceiling number we’re looking for. I don’t think there is a ceiling number we’re going to set and by the time we get there, don’t forget inflation is going to take us and INR3,000 should not be that significant a number to go beyond.
Bhargav Buddhadev — Kotak Mutual Fund — Analyst
Sure. And my last question is on the consumer loyalty program, very few footwear companies have actually worked on this. So is Metro leading the way in terms of setting a benchmark for you?
Nissan Joseph — Chief Executive Officer
Yeah, so I’m happy to let you know that, over the last two years from pre COVID to now, we have grown our membership by about 50%. That’s a significant growth in numbers, especially given the fact that we were closed for a period of time without able to draw new customers in. It is part of our strategy. It is part of a very key part of our strategy. To say we are leading in it, I would love to think we are leading in it. Having said that, though, I also think there’s so much technology and innovation coming into mining of data and big data and artificial intelligence that plays a role into mining of data, that is an evolving field. And we are investing to it, we are aware of the potential of it. We are utilizing it very well currently, but I also am excited that as time moves, technology is giving us better ways to utilize those findings through artificial intelligence, machine learning, all of those things that you see now.
Bhargav Buddhadev — Kotak Mutual Fund — Analyst
Okay, thank you very much and all the very best.
Nissan Joseph — Chief Executive Officer
Thanks, Bhargav.
Operator
Thank you. We have the next question from the line of Nikunj Gala from Sundaram AMC. Please go ahead.
Nikunj Gala — Sundaram AMC — Analyst
Yeah, good evening, everyone. Sir, just want to understand what would be the impact on your gross profit margin only on account of the higher raw material on a Y-o-Y basis? Just want to understand that negative impact [Phonetic].
Kaushal Parekh — Chief Financial Officer
Nikunj, generally, what we have been able to do over so many years is pass on the increased raw material impact in our MRPs. And even if you see last year, our gross margins were rock solid. In fact, we saw slight improvement in margins — gross margins compared to, say, earlier period. So that’s been the case. Last year, when we saw significant push on account of inflation, we priced our products appropriately just to make sure that we price our products properly and at the same time ensure we hit our gross margin target.
Nikunj Gala — Sundaram AMC — Analyst
Like, if I just want to break it down, our gross margin, understanding, into variables, I think in first comment, you mentioned you have taken 6% to 7% price increase in the footwear and some 3% to 4% at the overall level. So price increase was higher. Even, I think, on a mix, upwards of INR3,000 is higher, so which is positively impacting gross margin. Third, I think you mentioned the EOSS was lower in this quarter, hence your — the discounting was lower, which is again positively impacting your gross margin. So the only negative factor was the RM. So all the three positive factor which ideally should have taken gross margins slightly on a higher side was got impacted on the account of RM. So hence, our gross margin was flattish, right. So just wanted to understand how much that positive delta was negated by the RM.
Nissan Joseph — Chief Executive Officer
First of all, not every price increase is an RM increase. Sometimes it’s just a matter of mix of goods, so you’re selling better priced products than you are before. So it’s a mix of prices. Secondly, how shall we say, discounted sales was not a factor, but also it was not a factor last year, so it’s not a comparative number, right? So I don’t think we work in an FMCG business where the products are consistent in their composition year-on-year, that one could tag a number distinctly to one single raw material. And even if you could, because we do have core products that we sell year-on-year, that’s not necessarily going to move the needle. I think what you’ve got to look at is, we’ve had an inflation, a normal inflation for our input costs and all our costs, somewhere between 4% and 6%. We’ve also had our higher fees go up because of mix of goods. We’ve also been — we also priced our products to where there is demand that we can sell-through the product correctly.
Nikunj Gala — Sundaram AMC — Analyst
Okay, sure. So just on the gross profit margin front, till last quarter, we used to make a comment on the gross profit margin that we are always looking at in the range of 55% to 57%. I think that comment was missing in this presentation. So is there anything to read on that or like — just want to understand your thought process on the gross profit margin going forward.
Nissan Joseph — Chief Executive Officer
I did touch on it, albeit a little bit broader than that. I think what I said was that we feel — we were excited that it delivered to our guidance in gross margin, EBITDA and PAT. And our guidance on gross margins has always been 55% to 57% and I say that because we know that when you chase the gross margin number, that’s not always the best thing you can do for business. What we chase is what we believe the customer sees value and we believe that 55% to 57% is a very good sweet spot for Metro Brands to target and hit it very consistently as we have for many multiple years. And every now and then you’re going to see it blip up like you’ve seen in the last few quarters. Every now and then you’re going to see it blip down. But equally, I’m saying it has to blip up that we maintain that 55% to 57% gross margin is the range that we model our business on.
Nikunj Gala — Sundaram AMC — Analyst
I understand, sir, but where I’m coming from, in the last six quarter, it has been always upwards of 57%, then it becomes — whether that range still holds true or internally you might have just upped the — in that range. Just wanted to understand. Okay. Thank you. Thanks a lot for your comments, sir.
Operator
Thank you. We have the next question from the line of Madhu from Canara HSBC. Please go ahead.
Madhu — Canara HSBC — Analyst
Yes, hi, sir, congrats on a good quarter. So just on the Fila and the Proline, could you give the roadmap and how that traction and what are the initiatives being taken there? More detail?
Nissan Joseph — Chief Executive Officer
Yeah. I think from a long-term perspective, we’re extremely optimistic about both those brands for a couple of reasons. One is that, it was a white space in our portfolio. As you know, we do not have anything in the athletic space. This acquisition gives us two significant brands in the athletic — athleisure space, that’s number one. Number two, when you look at the market size today, it is considerable already today. And when you look at the potential for growth in sports and athleisure in the country, that is predicted to grow the fastest in the footwear segment is the sports and athleisure segment. So when you look at the forces out externally that drive it, it’s — and internally that’s — with the white space work, it’s extremely positive.
So what I think is also exciting is that our operational capabilities across the country geographically, our operational capabilities in terms of managing multi-branded stores and with mono-branded stores make us even a better candidate to unlock the potential of both these brands in India. The good news is the market size is so big in India for both these brands for this category that it has room for multiple players to do well and we believe we will position the brand to make sure that we’re leveraging its full potential.
Madhu — Canara HSBC — Analyst
So initially you’ll go through the e-commerce route more or even general trade is an option that you’ll be using.
Nissan Joseph — Chief Executive Officer
So, initially, as I mentioned, our first focus right — three focuses right now is to rationalize the distribution. E-commerce is always going to be a key channel, but I don’t know it’s a e-commerce-first strategy at all. We have mono-branded stores for Fila. We have LFS distribution for both Fila and Proline that we value, and that we will continue to operate. So first is rationalize the distribution. Second is clean up the inventory because we would like to position the brand for where we believe the market is going to be in a few years and that’s what we would want to spend our time on.
Madhu — Canara HSBC — Analyst
Sir, and lastly on the accessory side, I mean any initiatives there in terms of — and what is the ASP for the accessories? Thanks.
Nissan Joseph — Chief Executive Officer
So I’ll pull up the accessory ASPs in a second, but we’re very excited about our accessory programs in our Metro and Mochi stores. We sell about 10% of our sales in accessories and we see that as an opportunity for us because the consumer related our accessories to a shoe purchase whether it be socks with a shoe or whether it be a handbag with a shoe, right? So, we see potential in that space and India is a transient nation, a pedestrian nation. So they do need bags of all nature of all kinds and sizes and we’ve invested in getting a team together to unlock the opportunities that we believe exists. And the exciting part is, we can improve our accessory sales. It has kept up with our growth. That’s the good news.
The first good news is it didn’t lag behind in our growth, it was part of our growth story the last quarter. And we also believe we can accelerate and improve our sales productivity per square foot in it. The accessories is a wide range of products. We have products that start at INR299, and we have products that go up to INR499. So It’s not — giving an average number would not be as significantly meaningful. But, Kaushal, If you have a number you want to share.
Kaushal Parekh — Chief Financial Officer
Madhu, If you see our average realization including accessories, it is around INR1450. If you see purely footwear, that ASP number would be somewhere close to INR2100. So obviously average ASP — if you’re seeing ASPs for accessories, it would certainly be lower than INR1450, that is an overall number. However, even within accessories, we have, say, bags where the accessories — where the ASPs would be higher. And we also have like the shoe polishes and show creams and few other products where, as Nissan mentioned, our average ASPs could start from as low as INR299 and things like that. So that is what I would say for accessories. It should be in that range of around INR500 if you were to take for overall accessories as such.
Madhu — Canara HSBC — Analyst
Okay, sir. Thanks and all the best.
Operator
Thank you. We have the next question from the line of Manish Poddar from Motilal Oswal AMC. Please go ahead.
Manish Poddar — Motilal Oswal AMC — Analyst
Yeah, hi, thanks for doing the call. So, I have only two questions. One is just a continuation on the Fila part. So I’m just wondering, are you — let’s say, how much is this inventory which you intend to clean up, just a rough ballpark number? And in terms of stores, you’re saying, [Indecipherable] rationalize distribution. You’re already at 25 stores as per the disclosure. So just can you highlight what do you intend by these two sequence, just?
Nissan Joseph — Chief Executive Officer
So, that business is a little bit different than a black and brown business, it tends to be very seasonal, it tends to need a lot of refreshes. Technically, it would be anything that came in this season and also potentially that comes in into spring-summer because it may not align with where we want to take the brand. I don’t want to, at this point, disclose where we may or may not want to take the brand for a lot of reasons, not the least of it, competitive. But fundamentally, Manish, we believe we would spend the next six to seven months ensuring that we clean up both distribution and inventory.
Manish Poddar — Motilal Oswal AMC — Analyst
And would you call out the absolutely inventory? How much did you take over when you took over the asset?
Kaushal Parekh — Chief Financial Officer
So Manish, if you see the closing inventory as of December, it’s about INR49 crores to INR50 crores at cost.
Manish Poddar — Motilal Oswal AMC — Analyst
At cost.
Kaushal Parekh — Chief Financial Officer
Yeah.
Manish Poddar — Motilal Oswal AMC — Analyst
Okay. And just one more clarity on the Fila part. So did we not take the other parts, let’s say, did we take only Fila and Proline or did we take the Vans and the other parts in the business?
Nissan Joseph — Chief Executive Officer
The only other part in the business was Vans and we are distributing that…
Manish Poddar — Motilal Oswal AMC — Analyst
[Speech Overlap] wholesale thing also, right, something? I’m not sure.
Nissan Joseph — Chief Executive Officer
For Fila or Proline? Two of their brands. We’ve taken over the entire brand. So that brand — okay, so the brand has three components to that. They have obviously, they both have a mono-branded play. Fila is bigger than that of Proline. They have a multi-brand play, which is largely large format stores and they have an e-com play. Both brands have all three channels presence today in distribution. And yes, we’ve taken over all of those channels. And then as far as — the other question was?
Kaushal Parekh — Chief Financial Officer
Manish, as Nissan mentioned, it is Fila, Proline and Vans is what is continuing. CBL also has some sort of health equipment business that was liquidated prior to us taking over. So that portion is not taken up, but everything else — because we’ve bought 100% shareholding of the company, so everything else that was in the company has come on to us.
Manish Poddar — Motilal Oswal AMC — Analyst
Okay, thanks. Thank you so much.
Operator
Thank you. [Operator Instructions] We have the next question from the line of Ankit Kedia from Phillip Capital. Please go ahead.
Ankit Kedia — Phillip Capital — Analyst
So couple of questions from my side. Firstly, given that RM inflation is now peaked out, do you think the company has the ability to take price increases next year, while I understand premiumization could happen and it’s happening? But purely on the price increase, do you foresee taking price increases across…
Operator
Sorry to interrupt, Mr. Kedia, your voice is fumbling. We are not able to hear you clearly. Can you please use your handset to ask questions?
Ankit Kedia — Phillip Capital — Analyst
Sure, can you hear me now?
Operator
Yes, this is more clear. Kindly proceed.
Ankit Kedia — Phillip Capital — Analyst
Yeah. Sir, my question was on price increase, given that RM inflation is behind us and it’s stabilized, do you think, next year, the company is expected to take price increases if the RM stays at the current rate?
Nissan Joseph — Chief Executive Officer
So price increases don’t happen only because of RM, Ankit. They happen for a number of reasons, right? Rentals go up every single year for almost every retailer, number one. We all know the cost of living goes up every single year. So raw materials aren’t always the driving force. They are one of the driving forces. So given that, we’re constantly evaluating our prices and we always have a cadence of increasing our pricing quite consistently to ensure that we never get behind the curve because the reality is that you don’t increase your prices, you’re not going to be able to sustain. And then if you’re — like you’re any customer [Phonetic] or business that imports any product, there’s always an exchange rate factor, there’s inflation, there’s rentals, there’s employee wages, there’s minimum wages. All these things add to price increases, it’s almost inevitable that every year, you have to have price increases.
Ankit Kedia — Phillip Capital — Analyst
Sure. My second question is regarding Fitflop. It’s been more than one year we have taken the brand, we have opened only two EBOs of Fitflop. Are we doing justice to the brand or do we have some agreements with them, we need to open X number of stores in particular number of years? And over next two years, what is the guidance on Fitflop store revenue?
Nissan Joseph — Chief Executive Officer
So, I think we are very comfortable with the way we’ve done with the brand. First thing we have to do, by the way, was, as we found out with Fila, it was an incumbent here. The difference between Fila is we are — we were aware of it going into it. The difference with Fitflop is we were not aware of what the incumbents did or didn’t have. So we have to clean up inventory in the marketplace, first and foremost. The second thing is, we believe it’s a premium brand that needs to have controlled distribution. The third thing is, we’re not going to open stores because there’s a number to hit. We’re going to open stores only because it makes financial and brand sense to open it. We are fully aligned with Fitflop on our opening strategy. They are extremely pleased with our performance in India and so, as are we.
Kaushal Parekh — Chief Financial Officer
Also, Ankit, just to add, at the start of the year, when we signed the agreement, we had guided that we would be opening total four to five stores in current financial year. We are on track for that.
Ankit Kedia — Phillip Capital — Analyst
Sure. And my last question is on IndAS portion. You highlighted the depreciation was higher due to IndAS accounting. What was the PBT impact for nine months, if not quarter, due to IndAS accounting in our standalone financials? If you can just…
Kaushal Parekh — Chief Financial Officer
It was — this number was around INR20 crores for nine months ended December.
Ankit Kedia — Phillip Capital — Analyst
That’s helpful. Thank you so much.
Kaushal Parekh — Chief Financial Officer
It is a non-cash expenditure and as you would know, IndAS, a typical accounting, in the first half of the lease — first half tenure of the lease, you have negative impact. The expense that you book in financial is more than the rentals that you pay. And in the second half, it starts unwinding. So that’s how it sort of works.
Ankit Kedia — Phillip Capital — Analyst
So the nine month impact due to IndAS accounting is around INR20 crores.
Kaushal Parekh — Chief Financial Officer
Yes.
Ankit Kedia — Phillip Capital — Analyst
That’s helpful. Thank you.
Operator
Thank you. We have the next question from the line of Jignesh Kamani from GMO. Please go ahead.
Jignesh Kamani — GMO & Co. — Analyst
Hi, just want to understand more on the Fitflop. Can you throw some light, how is the revenue, profitability? Is it in line with the Crocs for the one store, which is close to one year-old? And in terms of the opportunity size, how many store Fitflop can have in four, five year down the line?
Nissan Joseph — Chief Executive Officer
So from a revenue standpoint, profitability standpoint, one thing we always make sure we do is that any new acquisition we do meet our expectations and our expectations, as you heard on this call, is it produces a realized gross margin of 55% to 57% and Fitflop is very much achieving that for us. The only difference is Fitflop does have a wholesale business. That has a different margin metric, but yet very profitable. So we’re very pleased with all of the Fitflop numeric that come through it. It’s very comparable, very competitive, very compelling for us. So that’s number one.
When we look at the Fitflop opportunity, don’t forget, it’s a very, very premium product, the average price point is somewhere between INR7,000 and INR8,000, for example and the consumer loves it, they appreciate it, they see value in it. Having said that, as one of our previous analyst ask it on their account, there is a limited amount of people around the country that can go that high. We think INR3,000 is a lot more but at INR7,000 to INR8,000, it’s much more limited. So it’s not as wide as across distribution that averages INR3,500 for an average shoe. It’s definitely more selective than that. But we also have the opportunity to sell a lot more wholesale accounts with Fitflop than we do on our own business, because we do not sell anything wholesale in our own business.
Jignesh Kamani — GMO & Co. — Analyst
Understood. And second thing on the price, have you taken any price hike in the third quarter?
Nissan Joseph — Chief Executive Officer
We’re always taking price hikes. The only question is, what is the driver to the price hike? And because this is a business where we do have new products coming in all the time, and no, you cannot really compare two product, we look and see if that product in what price that come in that product will command. So have we taken any price hikes on existing products? We did hedge our inventories, as we mentioned in the previous calls, so we didn’t need to. But does that — our ASPs went up because we are bringing in products that have value to the consumer at a higher price point.
Jignesh Kamani — GMO & Co. — Analyst
Understood. Sure, thanks a lot.
Operator
Thank you. We have the next question from the line of Vivek Joshi from Three Tones Research [Phonetic]. Please go ahead.
Vivek Joshi — Three Tones Research — Analyst
Yeah, thank you very much for the opportunity to ask the question. So I’m trying to understand the business of Metro and I have two queries. The first query is are all the 700-plus stores owned by the company or are they just like kind of franchisee model? And second is, what is the approximate market value, hypothetically, if you could sell all these stores right now? If you could give some numbers.
Nissan Joseph — Chief Executive Officer
Okay, so to answer your first question, out of the 720 stores in our chain, only nine are franchisees and all of those exclusively in our Walkway division. That’s the only division that has any franchisees in it. The rest of the 720 stores are all company-owned, company-operated stores. We believe that, that is the strongest way to run our business. We’re well-capitalized as a company. As you can see from our financials, we’re not in any way handicapped by owning and operating our own stores. It also gives us operational excellence in all geographies in the country. So that’s number one. Secondly, your second question is really something that we don’t even consider. We’ve never ever tried to put a valuation on it, because we just aren’t in that business. But I want to make sure you’re not asking if we own the real estate in those stores. And the answer is, we don’t own the real estate, we own the lease. So if you’re asking me what’s the real estate value of the stores, I wouldn’t know because we don’t own it. But if you’re asking me, what’s it up to sale for, it’s not up for sale. We don’t know either. Vivek?
Vivek Joshi — Three Tones Research — Analyst
Okay, sir. Okay, got it. Thank you very much for answering.
Nissan Joseph — Chief Executive Officer
Thanks, Vivek.
Operator
Thank you. We have the next question from the line of Aliasgar Shakir from Motilal Oswal Financial Services. Please go ahead.
Aliasgar Shakir — Motilal Oswal Financial Services — Analyst
Yeah, thanks for the opportunity. So just on your store additions, last nine months, we have done about nearly 95-odd stores against our average annual guidance of about 80-odd stores. In fact, now we have also Fitflop and Fila. So, I mean, could you share what should be our annual store addition going forward annually? And related question is, I mean, how do you think Fila should grow over the next three years, both from new store addition as well as other channels of growth?
Nissan Joseph — Chief Executive Officer
So, as I mentioned, what we are focused is on two things, Aliasgar. One of them is ensuring that we meet or exceed the 260 stores that we submitted in RHP and we’re confident that we will achieve that. And that’s our one vector of focus. The second vector of focus is opening the right real estate, right? So we don’t want to come up with a number that we get fixated to opening that in any ways decreases our financial discipline or in any ways threatens our operational rigor. So we want to stay very focused and say we want to open the right stores at the right location at the right time as opposed to find and hit a number. But we will hit the 260 number that we promised to, and that 260 number does not include Fitflop stores when we went public. So that’s number one.
Number two, when we look at the runway of growth for any brand, not just Fila, in the market, right, I think, what one must do is look at what is the stores and the distribution and the sales of other brands in the same space. And I think most of the other brands in the 300-plus stores range, they have distribution points that run in a couple of hundred distribution — over quite a few hundred distribution point. And those are all vectors that I think you can use to say, that makes meaningful sense.
Aliasgar Shakir — Motilal Oswal Financial Services — Analyst
Understood. This is very helpful. Just on the follow-up on the store addition, you mentioned 260 stores. That was over a three-year period, which imply about 85 stores. So does that number now go up significantly on an annual basis?
Nissan Joseph — Chief Executive Officer
We’re going to open every store that we can that we believe is the right opportunity for one of our concepts to open in, Ali.
Aliasgar Shakir — Motilal Oswal Financial Services — Analyst
Okay, thank you very much. That’s helpful.
Operator
Thank you. We have the next question from the line of Akhil Parekh from Centrum Broking. Please go ahead.
Akhil Parekh — Centrum Broking — Analyst
Thanks for the opportunity. My first question is on the journey of a new store. Like, how long it takes for the new store to ramp up and how many years it takes to reach the sales throughput, which is similar to a mature store?
Kaushal Parekh — Chief Financial Officer
So, Akhil, it depends store-by-store, but generally if I just had to give an overall average number, we see significantly higher sales growth in first three to four years because that’s the time when store reaches to the maximum audience in the vicinity where the store is located. And over a period of maybe seven to eight years is when the store matures. Having said that, even for our Colaba store which is more than 70 years old, we have these targets which exceeds the inflation numbers that you see in India. So that’s how we sort of see metrics for all the stores.
Nissan Joseph — Chief Executive Officer
On the other hand, just the other dimension of new stores is we want to make sure that every store is profitable from day one. Rafique, our Chairman will tell you that there is no gestation period in retail, if you don’t make money on the first day, you’re going to have an uphill battle the rest of your lease. So we expect all our stores to be profitable and most of them are in their first year and, as a rule of thumb, we get our cash back from a store within two years of opening it.
Akhil Parekh — Centrum Broking — Analyst
Okay. Just clarity on it, I just wanted to know if, for example, if the matured store is making INR100 of sale per month, and if I open, say, 15-odd new stores in a given fiscal year or financial year, during the year one, would it be fair to assume it will clock at least INR50 to INR60 of sales?
Nissan Joseph — Chief Executive Officer
It would be more than fair. In fact, it’s probably much higher than that, but don’t forget, store sales are determined by where you open, how big the store is, what your competition is. So we’ve had stores that we’ve opened that exceeds some of our average store performance across the chain and we’ve had stores that don’t. But as a rule of thumb, you would say that if it’s a 100, the new store number would be less than 100, which is why you see in the first few years, we expect them to have considerable like-for-like growth and start catching up to that number.
Akhil Parekh — Centrum Broking — Analyst
Got it, got it.
Nissan Joseph — Chief Executive Officer
And we have a wide array of stores, right? So we have stores — using your 100 number, if 100 was the average number, then like any good math dispersion would have for a chain of 720 stores, we’re going to have stores that go from 60 to 140, that’s a significant swing, right? So just because a new store comes in at 60, doesn’t mean it’s a bad store.
Akhil Parekh — Centrum Broking — Analyst
Got it. And second and last question is on the — if I look at products which are priced above INR3,000, the contribution has been consistently going up over the last four years from 34% to almost 44% over the last four years, but average selling price per unit is broadly similar at INR1,450 to INR1,500-odd. So would it be fair to assume that extremely higher end of products are getting sold more and more and slightly less premium are getting less sold?
Nissan Joseph — Chief Executive Officer
I think it’s a combination, right? So yes, we are seeing some decline of sales in the lower price points obviously. But we’ve had to come from somewhere when the contribution of one category grows, the contribution of a category goes down. But also, we put a lot of emphasis into our resales which is at a much lower price point. As Kaushal pointed out, if you look at our average rate, 14 — INR1,550, but if you take out accessories, it jumps up to north of INR2000. So that’s a significant delta, and in accessories is a place that we want to focus in on because we believe it’s a low cost incremental sales that we can add to our bill value.
Akhil Parekh — Centrum Broking — Analyst
So is it fair to assume that accessories was in the lower single digits as a percentage of total sales, say, four years back and it’s 10% right now?
Nissan Joseph — Chief Executive Officer
I would have to check on that, but while he’s checking on that, we also see — to give you an example of accessories, one of our best-selling accessories is actually the [Indecipherable] line, which is a charm that goes inside the Crocs shoes, right? That’s the INR299, so we could have incredible growth in Crocs. But the average is going to go down, it’s going to diminish the average sale if you look at it, just from a total sales standpoint. So there’s a lot of factors that go in here. But fundamentally, it’s not because we are selling fewer products in general. We are seeing some — we’ve exited some price points in our Walkway business below INR500 and below INR1,000 with the GST increase that we had at the turn of last year. Right? So that has happened, but also there is a whole mix of goods, it’s very hard to read that it’s coming solely at a cost, one category to another.
Akhil Parekh — Centrum Broking — Analyst
Sure, fair enough. And best wishes for coming quarter. Thanks a lot.
Nissan Joseph — Chief Executive Officer
Thanks, Akhil.
Operator
Thank you. We have the next question from the line of Umang Mehta from Kotak Securities. Please go ahead.
Umang Mehta — Kotak Securities — Analyst
Thanks for the opportunity. I just had two questions. One was, can you share what is the difference between your pre-IndAS and post-IndAS EBITDA margins typically? And the second one was on your, basically, revenue per square feet. How do you basically account for the new stores if they’re added mid-quarter? Do you consider only the period for which they were operational?
Kaushal Parekh — Chief Financial Officer
So, Umang, on you first question on IndAS difference between pre and post-116, the delta is somewhere around 8% to 9%. So if we were to see pre-IndAS margin, it would be close to around 25%, 26%; 34% minus 8% to 9% would take you to that number. Revenue per square feet, thanks for asking that question, if you see, what we do, just to keep it simple, we take total sales delivered by all our stores divided by the total area that has been added. So especially in the period where you add more stores, for a temporary period obviously numerator has only sales for one, two, three months maybe. However, denominator would have the complete area, square foot as area.
Umang Mehta — Kotak Securities — Analyst
Understood. Makes sense. That’s why maybe perhaps we are seeing some decline year-on-year, but because of the aggressive store additions. Got it.
Kaushal Parekh — Chief Financial Officer
Right.
Umang Mehta — Kotak Securities — Analyst
Thanks a lot. Thank you for clarifying.
Nissan Joseph — Chief Executive Officer
Thanks, Umang.
Operator
Thank you. We have the next question from the line of Sabyasachi Mukerji from Centrum PMS. Please go ahead.
Sabyasachi Mukerji — Centrum PMS — Analyst
Yeah, hi, thanks for the opportunity. So, two questions from my side. Firstly, if I hear all the retailers and brands that are coming out with in interviews and some quarterly updates of the last quarter, Q3, most of them are saying that there has been some slowness post the festive season in the demand environment. So, wanted to have some sense and if you can give for your case probably in a monthly basis, I mean, how was October, how was November and have you seen some slowdown in December?
Nissan Joseph — Chief Executive Officer
As I mentioned before, we did see a little bit of slowdown in November, but October and December, very strong month for us. And with — when you have a pan-India operation and you cater for footwear for multiple occasions, it’s festival season year round for us, right. We’d go from Durga Pooja to Onam to Janmashtami to Lohri to wedding season. So, I can’t speak for other retailers but we’ve not — we’ve definitely not seen that.
Of course, nobody is posting 60% gains over last year like we used to, simply because we now have true numbers to go against. So, we are seeing some realistic numbers finally after many, many years of waiting, but we see a lot of strength. It also goes to show you the diversity of consumers that we cater to. It’s not only just festival that people come to us for, there is a multitude of reasons that they come to us to take care of their footwear and their wardrobe.
Sabyasachi Mukerji — Centrum PMS — Analyst
Got it. My second question is bit of fundamental one. So, if I looked at your product mix, the pricing mix, the bucket of more than INR3,000, that bucket sales contribution has moved from 34% to 44% in the last, let’s say, three, four years whereas the sales from Tier 2 and Tier 3 cities have increased from I believe somewhere around 28%, 29% to currently around 32%, 33%. So, this is in generally contrary to the belief that the Tier 2 and 3 cities would be having a lower affordability compared to vis-a-vis metro and Tier 1. But this theory actually falls flat if I look at the premium product mix for your case. Can you throw some light on this thing?
Nissan Joseph — Chief Executive Officer
It’s hard for me to throw some light on your theory, but I can definitely tell you from our end, we believe that Tier 2 and Tier 3 cities are a significant opportunity for all our concept — most of our concept stores, not all of our concepts stores but most of our concepts stores. The consumer in these cities is very eager to buy — get value for their money. And Metro though premium is still value for the money and we want to make sure that everyone understands that. We’re not just about premium for the sake of premium, which is when you might see an erosion of customers as you go down in the tier of cities, we are about value. And there are consumers in every tier cities that sees value, so that’s just simply our point of difference.
People have been coming driving into Tier 1 and metro cities to shop us. Now, they can do it from the convenience of their local shopping areas. So, I can’t speak to your theory or the theories of other people, but what you’re commenting on our performance Sabyasachi is very true. We see that number consistently holding up as we go into other tier towns too.
Sabyasachi Mukerji — Centrum PMS — Analyst
And related to that, your own brand sales has also gone up from 69% to 74%. That has I believe has helped in the margins as well. Going ahead for the next three, five years, do you have any target of moving it to let’s say 80%, 85%? Do you have a ceiling for that?
Nissan Joseph — Chief Executive Officer
Yeah. So, our target there is very simple. We work customer backwards. If we’re not taken care of a customer with one of the — some of the brands we own, we’re going to go find that brand, because we want to keep that customer happy, satisfied and have a complete customer journey in our stores. So, that’s the first source that we go through. Okay? You look at the, you look at the brands that we typically take from the outside, Crocs, Fitflop, very unique propositions that we don’t believe we can cater to that consumer ourselves. So, we’re happy to go get those brands for our consumers.
Would I like for 100% of it to be my brand, of course I would. But the reality is we would always have a mix and that mix is going to depend on the season. And it’s going to depend on the season, because we’re going to be very agile as retailers, very in tune with our consumers, so we can always react to what — where the consumer is going instead of trying to force them to come a certain way.
Sabyasachi Mukerji — Centrum PMS — Analyst
Got it, understood. Thank you. That’s all from my side.
Nissan Joseph — Chief Executive Officer
Thank you, sir.
Operator
Thank you. We have the next question from the line of Mansi Desai from Dalal and Broacha Portfolio Managers. Please go ahead.
Mansi Desai — Dalal & Broacha Portfolio Managers — Analyst
Hello. Sir, I wanted to understand what has been the demand scenario on the lower end especially, Walkway if you could throw some light.
Nissan Joseph — Chief Executive Officer
Mansi, it’s not unusual that we’re seeing some eroded demand on the lower end of this segment. But to be very fair, it’s also caused by the fact that we’ve exited some price points in the lower-end, right. When GST goes up from 5% to 12%, which is 700 basis point hike, you’re going to lose some price points unless you take away quality or start selling product of a much lower quality. You don’t want to stay and you cannot stay and so some of it is that. But you’re right, we are seeing some challenges in that segment. Having said that, it’s not like we’re not seeing growth come in those — in that category, in that concept. It’s just that it is definitely more challenging for the concept in the lower-price points.
Mansi Desai — Dalal & Broacha Portfolio Managers — Analyst
Okay. And second question was on the store guidance despite opening 90-plus stores, in the first nine months we continue to kind of maintain the store guidance. So, are we like being conservative on that front, considering penetration story is so large in India even at the moment?
Nissan Joseph — Chief Executive Officer
Some people call it conservatism, people financial discipline, right. We like to call it financial discipline. So as I said, we’re going to vector to two things. We guided to 260 stores, as you said, Mansi. And we’re going to ensure that we hit that number or exceed it. And that does not include Fitflop or anything that we got from the Cravatex opportunities that come through FILA and Proline. But we are we are going to open as many stores as we can that we think is the right opportunity for us in all geographies in India. So, it’s not about Tier 1, 2 or 3, it’s not about North versus South, it’s not about 200 versus 300 stores, it is about is the deal that we’re looking at today the right deal for whichever one of our concept. And given the fact that we have multiple concepts, we can really quickly filter these opportunities well and see if there is a fit.
Mansi Desai — Dalal & Broacha Portfolio Managers — Analyst
Okay, sir. And just one last question on ASP particularly for Q3, it stood at INR1450, am I correct or that’s the nine-month number?
Kaushal Parekh — Chief Financial Officer
It’s an nine-month number, YTD nine-month number and it is around INR1450, yes.
Mansi Desai — Dalal & Broacha Portfolio Managers — Analyst
For Q3, if you can share the ASP.
Kaushal Parekh — Chief Financial Officer
For Q3, it would be around INR1510, INR1511 maybe.
Mansi Desai — Dalal & Broacha Portfolio Managers — Analyst
Okay. That’s all from my side. Thank you, sir.
Operator
Thank you. We have the next question from the line of Rishi Mody from Marcellus Investment Managers Private Limited. Please go ahead.
Rishi Mody — Marcellus Investment Managers — Analyst
So, hi, Nissan. Good afternoon. In your presentation you have written that you’ll have invested in the tech front to get as much data as you can from your membership and your retail point-of-sale software. So, just wanted to get more granular details on what sort of investments on the systems or software as well as on the people front that you’ve done, as well as what sort of insights has this activity been throwing? Any couple of instances or any couple of insights that have helped you, which you weren’t aware of earlier?
Nissan Joseph — Chief Executive Officer
Good afternoon, Rishi. And thanks for that question. So, we are — we’ve invested in multiple technologies. As you know, all these tech stacks, all offer something unique and we have to speak to other tech stacks, so integration becomes quite the challenge as well. But we do have OMCs, CMSs and WMSs now thinking. So, Order Management Catalogs, Catalog Management System and Warehouse Management System, now all thinking with each other, that’s a significant, both investment in time and in money that we’ve done to get these programs installed in our company. And we are still not completed with it, because we believe we want to layer on other technologies like I mentioned of artificial intelligence picking up, correlations between data points that we would not have normally picked up on.
Don’t forget, we are only — it only answer the questions you ask it, whereas AI will figure out what you need to be looking at as well and that’s what we’re excited about. We’ve done an extremely good job of mining what we have today. Having said that, I think there’s a lot of opportunity left in what we can do, whether it’s informing of cohort groups are looking at shopping behaviors. We were quite pleased to see that the overlap between Metro and Mochi. And we’re not going to disclose it, but I’ll tell you it’s not as significant as we would have thought it would be, especially since almost 80% of our stores overlap. So, we are catering to unique customers between those two.
We’re also kind of pleased to see that there is an overlap between Walkway and Metro and Mochi, which also surprises us because we thought we were keeping to totally different consumer. So, these — I’m just sharing with you some little insights to give you an example of the kind of stuff it’s throwing back at us. But fundamentally today, our systems are geared to tell us what we ask it to tell us. Core growth adjacencies, the same recency- frequency, monetizations of consumers and consumer segments and groups. But we believe that with the technology additions that we’re doing, it will give us an opportunity to leverage those 12 million customers we have in our database even more.
Rishi Mody — Marcellus Investment Managers — Analyst
Right. Understood. All right. And my second question was on Walkway, right. So Walkway, we had earlier attempted our value format footwear brand, but we didn’t seem to be so successful and hence we relaunched as Walkway this time around. So, just wanted to understand what learnings have we picked up from last-time around? What have we changed basis those learnings? And what’s the confidence given that we have scaled-up Walkway really fast, really well, 64 stores, I think by this by nine-month FY ’23? So, just wanted your insights on the value format.
Nissan Joseph — Chief Executive Officer
Yes, so I think we tried a lot of different things with Walkway, some of them have worked. Some of them have not worked. As you know, last year about this time we exited the SIS stores that we had in our value format department store, right. So, it is one of those things that we will continue to experiment with. It is a different business from our core premium business. It requires different real estate, it requires extremely different product lines, it requires a different sales force. And these are things that we have been unwinding and putting together very carefully.
We believe we are now strategically positioned to focus Walkway in the South and the West of the country, where we’ve had the most success with it. I think it’s still a work-in progress but we’re quite pleased with where it’s going. But I think it’s still has some work to do. And given the fact that we’ve gone through this K shaped recovery and seeing some pressure on the lower segment of the business, that definitely hasn’t helped it. But I think these are just periodic things that happen in the lifecycle of a retail concept.
Rishi Mody — Marcellus Investment Managers — Analyst
Right. So, Nissan just a follow-up on this Walkway piece, right. So, what sort of team have we created for Walkway? Is it an existing Metro team, which has been allotted to the Walkway team or have you hired someone from relevant value format background?
Nissan Joseph — Chief Executive Officer
So just to be clear, all our business units are run by individual what we call, SBU leads, right. So, each of these strategic business units have a leader inside. The people running the Walkway business come from the value business. They do not come from Metro and Mochi. They come from the outside, they come specifically from this industry. And we look for that kind of talent to put into that business, because we know it’s a different business to ours.
Rishi Mody — Marcellus Investment Managers — Analyst
Right. All right, that’s great to hear. I’ll reserve my questions for some other time, more questions and I’ll pass on the baton on to someone else.
Nissan Joseph — Chief Executive Officer
Thanks, Rishi. Thanks.
Rishi Mody — Marcellus Investment Managers — Analyst
Thanks, Nissan. Thank you.
Operator
Thank you. We have the next question from the line of Gaurang Kakkad from Haitong Securities. Please go ahead.
Gaurang Kakkad — Haitong Securities — Analyst
Yeah, hi, sir, congratulations on a very good set of numbers. So, I have two questions. Firstly, in terms of the Cravatex portfolio like we have a vision in terms of scaling this business over the medium to longer-term. Say for the next one or two years, how much would the investment would be required in this business, if you can quantify that maybe in terms of say, impact on the Metro margins? That would be the first question.
Kaushal Parekh — Chief Financial Officer
So Gaurang, let me break this up into two parts. In terms of investment expected in this business, it’s still work-in progress. But as of today, we have funded them by INR115 crores. Of that, INR106 crores was the repayment of debt, which was part of the overall consideration that we finalized for acquisition of the brand. So, in last month effectively, there is an investment of around INR8 crores to meet working capital mismatches that we see for a temporary period. Our expectation is over a period of time over next three to four months, this working capital mismatch should get addressed and our long-term endeavor would obviously be to make sure that Cravatex as a standalone entity is able to fund its own growth and the balance sheet.
In terms of gross margins, I’m talking about long-term period in this extension of what Nissan said, we have carefully evaluated the brand and we we don’t foresee any reason why the long-term gross margins, EBITDA and PAT margins for FILA should be lower than our current margin structure with the existing 5 times [Phonetic]. Over a near-term period since our focus would be on liquidation of excess inventory and the cash conversion cycle, you may see some pressure on gross margins on a standalone basis for Cravatex. But once we have post six to 12 months when we shift our focus more on EBOs after testing the products within our NBO network, once that process starts, we see our margins would be similar to what we do in other five formats of ours.
Gaurang Kakkad — Haitong Securities — Analyst
Thanks, Kaushal. That is helpful. And secondly, see, the business is doing pretty well in terms of growth in terms of growth, in terms of margins, etc., and is throwing out a lot of cash. Now given that the expected cash generation is going to be strong based on what the numbers current year are, are we looking at say materially improving the dividend payout ratios, or is there a stated dividend policy? What will be the thought process on the cash that is likely to be generated?
Kaushal Parekh — Chief Financial Officer
So Gaurang, if you see our history over last more than 15 years, we have consistently paid out 25% or thereabout of the PAT that we generate over a period of time. So, our endeavor would be to try and stick to that ratio. We also have a dividend policy, which says 20%, but historically, we have done 25% and we would want to stick to it. There are other sectors. We just invested in CBL, that is our biggest investment till date wherein we invested about INR203 crores. So, unless and until we see such sort of an opportunity, we intend to continue to maintain the dividend payout ratios that we have done for last 15 years. And also just in last quarter, we have declared interim dividend of 2.5% — INR2.5 rupees, sorry, per share in this quarter.
Gaurang Kakkad — Haitong Securities — Analyst
Sure. Thanks a lot, Kaushal, and all the best.
Kaushal Parekh — Chief Financial Officer
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Nissan Joseph — Chief Executive Officer
Thank you very much. Thank you, Axis Capital for hosting us and thank you, all for joining us through this. We’re very excited about Q3 and we remain optimistic for the future. Metro Brands is always going to do what’s financially disciplined and with operational rigor. We’re all about delivering what we said we would deliver against our numbers of gross margins, EBITDA and PAT. Thank you for your support and we look forward to meeting some of you in the near-future.
Operator
[Operator Closing Remarks]