Shoppers Stop Limited (NSE: SHOPERSTOP) Q3 2025 Earnings Call dated Jan. 15, 2025
Corporate Participants:
Mamta Samat — Investor Relations
Kavindra Mishra — Customer Care Associate, Managing Director and Chief Executive Officer
Biju Kassim — Customer Care Associate and Chief Executive Officer of Beauty
Devang Parikh — Business Head of Intune
Karunakaran Mohanasundaram — Customer Care Associate and Chief Financial Officer
Analysts:
Ankit Kedia — Analyst
Sameer Gupta — Analyst
Gaurav Jogani — Analyst
Varij Bangur — Analyst
Akshay Kothari — Analyst
Shalini Gupta — Analyst
Naitik Mutha — Analyst
Rajiv — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Shoppers Stop Limited Q3 FY25 Analyst Conference Call. [Operator Instructions]
I now hand the conference over to Ms. Mamta Samat from Perfect Relations. Thank you. And over to you, ma’am.
Mamta Samat — Investor Relations
Thank you, Sejal. Good morning and thank you all for joining us on the Shoppers Stop Q3 FY25 Earnings Conference Call.
Today we have with us the senior management represented by Mr. Kavindra Mishra, Customer Care Associate, Managing Director and CEO; Mr. Karunakaran Mohanasundaram, Customer Care Associate, Chief Financial Officer.
We will begin the call with the opening remarks from the management, after which we will have the forum open for the interactive Q&A session.
I must remind you that the discussion in today’s earnings call may include certain forward-looking statements and must be viewed, therefore, in conjunction with the risk that the company faces. Please restrict your questions to the quarter performance and to strategic questions only. Housekeeping questions can be dealt with separately with the IR team.
I will now request Mr. Kavindra Mishra for the opening remarks. Thank you. And over to you, sir.
Kavindra Mishra — Customer Care Associate, Managing Director and Chief Executive Officer
Thank you, Mamta. And thank you, Sejal. Hi, good morning, and hope everyone is doing well. Though we have completed a fortnight, I wish everyone and their extended families a very happy New Year.
As usual this morning, we will cover the results of Q3 for this fiscal. I have with me Karuna, our CFO; JP, who is our FP&A lead; and Rohit [Indecipherable] with me. We’ll also have Biju, our Beauty CEO; and Devang, our INTUNE lead at a later stage.
The investor presentation is available on our corporate website and on stock exchange website. I’m sure you would have read this. Specifically, I request you to go through a sneak peek view of our recently renovated Inorbit Mall, an ultimate destination for the customers and marketing campaigns in this presentation. They will substantiate increase in premium quotient across all format of the stores. Overall, it has been a good quarter for Shoppers Stop.
Before I start setting the context, let me recall my statement which I had made two quarters ago. I said that we will focus on premiumization and make our stores as a top destination, focus on consumers’ choice and profitability by rationalizing the private brands, expand Beauty, both in Shoppers and through our 100% subsidiary, Global Beauty, and have a seamless omnichannel journey for our customers. As I take you through in the next 10 minutes, you will observe all these strategies have started bearing results.
Before I dwell in detail on Q3 results, let me start by dissecting the broader market landscape during the quarter gone by, after which I will touch upon our performance and strategic objectives going forward. Overall, for retail, last quarter has been topsy-turvy. The festive bit up to Diwali was exceptional, but November had slowness. December has been mixed for most of our peers. Inflation continues to be higher, though it has tapered down in the last week. Discretionary spending has been lower and consumer sentiment, though, it’s better than last quarter but it’s nowhere near the pre-COVID or FY23 levels. On an informal discussion with other peer members, there was a unanimous view that the last quarter was lower than expectations, particularly considering the slowness we had in the first two quarters.
Let me take you through the growth levers for the year. Firstly, our marketing campaigns delivered exceptional results. We have developed new IPs in our marketing campaigns, such as India Weds with Shoppers Stop, Winter Magic and the Big Fab Sale. And I’m proud to say that these campaigns significantly increased our revenue, besides retention of customers. Specifically on India Weds with Shoppers Stop, we have as of now registered 16,500 customers, generating a sale of INR66 crores in the last two months with an average spend of INR40,000. There are other campaigns on Beauty which I will talk about in detail in the Beauty section.
Secondly, our premiumization journey. We started this journey three years back and there has been consistent progress in the last 18 months. Our premiumization as a share of total revenue was circa 55% two years back and it has now reached 64%. Let me elaborate in detail. Through our partnerships, we started getting premium brands, and within these premium brands getting higher price products as well. We launched Dockers, True Religion, Armani Exchange, Gant, Garp [Phonetic], Tommy and CK in the women’s wear category; Birkenstock, Bugatti in footwear; Tom Ford, [Indecipherable] in Beauty, and many other brands across the categories. As you read the investor presentation, you can see the brand-wise details on page number 5.
In addition to apparel brands, we have increased our non-apparel contribution, particularly in the premiums category. Our share of premium non-apparel brands has increased from 64% to 72%. On Beauty, we have opened high-end Beauty stores such as in Quest Mall, Bangalore, T2 Airport, and three Armani stores as well. And along with initiatives such as coffee shops within our high street stores, gaming arcades, Personal Shoppers has led to increased premiumization for our customers in our stores.
From premiumization, I will move to Beauty. Beauty has been a strategic pillar for several years now and it has been outgrowing this fiscal. More importantly, our Beauty offering in the department stores has also increased in the last two years, contributing from 9.5% to 11%, a increase of 150 bps. Our ShowStoppers campaign in November has been a runaway success. We had more than 200,000 makeover events contributing to 35% of our total revenue. We have launched number of brands such as KIRO, Stila, Prada Beauty et cetera. And our fragrances were the star performers [Technical Issues] and they grew by around 14%.
The other star in the Beauty business was our 100% subsidiary Global SS Beauty. We launched it a year back in full scale and this is the second year in operation. We have nearly doubled the sales from INR39 crores last year to INR77 crores this year in Q3. In addition to this, our EBITDA has grown by four times in the quarter. For year to date, we have achieved sales of INR168 crores, which is again — it’s doubling from the last year. For the full year, we expect the Global SS Beauty business to achieve circa INR240 crores to INR250 crores of revenue. And these sales were at distributor price to our retailers. The sales at customer prices will be circa INR400 crores-plus, which we have built in the last two years. Presently we are second-largest Beauty distributor in India. And if we continue this growth, we intend to be the top Beauty distributor in India in the next two years.
And lastly, I will discuss INTUNE. We have opened nine stores and expect to open another 26 stores in Q4. Like our departmental stores, our opening of new stores was impacted by regulatory restrictions. During the quarter, INTUNE recorded INR63 crores, and year to date we have recorded INR138 crores of revenue. We are very close to breakeven store EBITDA level. I’m happy to say that the progress has been on track and we are confident that our SS ’25 full price sale — sell-through would be higher than the present average.
Other than the growth levers above, we are also working on a sustainable business strategies that worked in the last quarter and they are: Expansion. We have opened 52 stores across all formats for the first nine months and expect to open 32 stores in Q4. Renovation, we successfully completed Malad and opened in December. In addition to this, we have completed the renovation of six stores during the year. We expect to renovate circa 10 stores next fiscal year. Every store addition has increased our premiumization journey with number of new brands. Capital allocation; our capital allocation has been prudent with investments primarily in the departmental stores, Beauty and INTUNE, besides [Indecipherable] departmental stores.
Let me talk about the digital journey. We just moved to a new platform, Magento for Shoppersstop.com and we expect further improvisations in the next two months, including a new order management system in place. With the launch of the latest version of SS.com app, our conversions have increased. In Beauty, we have also launched the same-day delivery from two stores. This is an experiment and we are working on this project. With all these initiatives, while the market has been muted, we delivered extraordinary results, both in the top line and in the bottom line.
Our non-GAAP sales grew by 7% and our EBITDA grew by 20%. Let me outline some of the KPIs. Sales grew by 7%. Non-apps, which includes watches and handbags, continued to outperform with 22% and 18% like-for-like growth. Our customer entry in Q3 declined by 6%, primarily in November. Customer entry was almost flat in October and December. The Beauty story and Beauty growth has been consistent. We opened 16 stores; nine INTUNE, six Beauty and one departmental store during the quarter. Because of regulatory restrictions, especially in North, we were not able to open the stores as per the plan. Our store KPIs which includes the ASP, ATV and IPT, all of them have grown and the increase in ATV which was at 6% was led by premiumization. Our EBITDA increased by 20% due to increased revenue, increased gross margins owing to lower obsolescence and optimized markdown in private brands, and a strong control on costs.
Let me put some color on the First Citizen program. Our First Citizen Club contributed to 83% with 11.5 million First Citizen customers. Our repeat customers are now at 69% and it grew by 9% vis-a-vis last year. As you observe, the contribution from First Citizen customers has been continuously increasing from 78% to 83%. Our Premium Black Card customers contributed 17% mix with a whopping 28% growth over the previous year. The First Citizen Black Card renewals were at 71%. I’m delighted to share that we had the highest enrollments of First Citizen Black Card customers and Silver Card customers during this quarter. And this is something which we continuously are looking at driving.
HomeStop. With new stores opening in Q2, HomeStop sales has increased by 10%. The festive season combined with our personal shoppers, help us to increase the overall sales to INR60 crores. We’ll increase the presence by opening smaller HomeStop stores and curate the products towards premium category which will augment our premiumization journey.
In my previous calls, we have spoken about personal shoppers and how they improvise on the premiumization journey. I’m happy to share that we have now 450 personal shoppers across 115 stores all over India. We have recruited more than 150 personal shoppers during the year. Our personal shopper contribution has also increased from 15% to 28%. The ATV of the personal shoppers continues to be 3x of the store ATV, substantiating our premiumization journey.
Now, if I talk about the department formats, the department format which is the Shoppers Stop, grew by 8%. We had closed seven departmental stores and resized three department stores during the year. The stores were closed as they were making losses due to multiple factors, and to improve productivity we also resized three stores. If we had continued to operate those stores, our growth would have been circa 10% this quarter. As I mentioned at the start, we have completed the state-of-the-art innovation of our Malad store. Looking at the initial responses and the very high growth in productivity, we are planning to have similar stores for our high productivity — similar model for our high productivity stores.
Now, let me talk about the CapEx, working capital and cash flow. We added 16 stores during the quarter. We have spent INR53 crores during the quarter on capital and deposits to these leases. Our working capital reduced by INR30 crores against the beginning of the year. And against last year, it has increased by INR29 crores, primarily due to increased volume and INTUNE. We have spent INR141 crores as CapEx and deposits year to date, and expand [Phonetic] to spend further INR90 crores in Q4.
Outlook. The wedding season will start from tomorrow post the New Hindu month. We expect the weddings to continue and I’m confident that our India Weds with Shoppers Stop campaign will add further — will further boost our sales and customers during the quarter. Our investments in experiential retailing will continue, our USPs on our customer journey which we have built over a period of time, and with every single thing which we are doing it is getting strengthened.
In addition to Beauty retail, our Beauty distribution has stepped up the pace in last two years and we will continue to invest in this business over the period of time. Our investments in marketing will continue to sustain the loyalty levels. We will continue to have customer-centric personalized communication as well, which will help us to outgrow our KPIs.
On the cost, and I think very important, we are continuously rationalizing the cost. At the like-for-like level, the cost has increased just by a mere 2%, and that’s a testimony of the controls which we are trying to maintain at the cost level. Lastly, with growth levers firing on all cylinders, besides mitigating some of the critical risks, we expect a decent Q4. At the start of — or in my last call, we had spoken that in H2 we will be close to a 5% like-for-like. That was the guidance and we stick to that number for the coming quarter as well.
I will conclude now and take the questions from all of you. Thank you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Ankit Kedia from Phillip Capital. Please go ahead.
Ankit Kedia
Hi, Kavi. Congrats on good set of numbers. Just wanted to know on Shoppers Stop departmental stores. YTD, we are still negative store count. So, in quarter four, while we have alluded we will open six stores, are any store closures expected in quarter four. And in FY26, how do you see the pipeline of store opening and store closures?
Kavindra Mishra
Thanks, Ankit. Thank you for the good feedback. So, I think as we have spoken last time in the last call, getting and rationalizing the stores is one of the most important activities for us. I’m happy to share that — I think we are more or less at the end of that cycle because we have taken exceptional efforts in Q3 to reduce the — or to execute most of the closures which we wanted. I see six stores opening in Q4. In the year FY26, we are looking anywhere between 12 to 15 stores opening as a new store count. As I’ve mentioned, I think we are at the end of the cycle of rationalizing our stores, Ankit. So, I don’t see a lot of stores getting closed or rationalized in the coming year. I think we have done a lot of legwork in this quarter.
Ankit Kedia
So, any particular geography where the demand was not there, these stores were loss-making and hence the store closures have come? Could you give some color on what type of stores have been closed? Were they on aging basis, last five years store opened, or previous — the bigger stores which we were rationalizing.
Kavindra Mishra
No, I think there what we are seeing is that in certain markets when the market shifts, right, then standalone stores at times are not able to drive that kind of a walk-in. And I think, primarily, those are the kind of stores which we have looked at — looking at the market opportunity and then saying that okay, we will take a call. In very few cases we exit the market. For example, we exited the market in case of, say, Agra, right? But otherwise, we don’t exit the markets. Maybe we move it to a mall store, that kind of a thing.
Ankit Kedia
Sure. My second question is on the Beauty business. While we have spoken a lot on premiumization, in Beauty, predominantly we are masstige or premium with Estee Lauder. Despite that, our growth in Beauty has only been 3%. So, what are the challenges we are facing despite getting so many brands, despite stores opening, we had only 3% ex-B2B business in Beauty?
Kavindra Mishra
I will request Biju to answer that question, Ankit. But just to clarify, 3% doesn’t include our 100% global. I mean, that’s a completely different vertical. So, we have not considered that growth in the 3%, Ankit.
Ankit Kedia
Right. That’s why my question is for the B2C business and not B2B which is the SS Global business.
Kavindra Mishra
Okay. Got it. Got it. Biju — are you there, Biju?
Biju Kassim
Yes, I will take that question. Thank you, Ankit. Just to come back and reflect on your question. See, principally, there has been a bit of softness on the masstige or lifestyle segment, the value segment. That is quite the case overall and that is also reflective in our ecosystem. But for us what has worked well and to what Kavi expressed, are the premium and the premium-plus. And particularly in the Beauty segment, we also have luxury brands. I think that segment has consistently grown. And because we focus heavily and because Shoppers has become a — Beauty in Shoppers has become quite a destination for these segments, I think there’s an over-indexing of those segments growing quite well, while masstige, the reality is that masstige at the value segment has really seen some pressure.
Ankit Kedia
And, in that context, we have just launched a private-label brand in Beauty. What is the positioning of that and what is the white space you are looking to fill? Because I believe that’s also in the masstige category. Right?
Biju Kassim
Yes. So excellent question. So, basically, as you can see, the landscape in masstige is getting quite crowded in the context of profitability. And basically, opportunities still exist because that is a recruitment category. So, when we did our market mapping, we understood that there is still a good opportunity for masstige brands with value proposition so long as the quality and consistency is good and high. And this is the reason why we launched a new brand by the name Joyology, in conjunction with Intercos because Intercos is one of the largest or the best in class when it comes to manufacturing. So, together, we collaborated and 100% made in India because Intercos set up their own factory here in India. So we have embarked on this journey because we think that for consistent growth we need brands that are able to have quality but good value proposition. So, to mitigate the risk that we see currently or the fluctuation that we see in the masstige category with existing brands not being able to scale up profitably, we said that, okay, there is an opportunity to enter, and that’s where Joyology is positioned.
Ankit Kedia
But given that with the marketing muscle of the existing brands and they would be available across channels, and if they are not able to make a profit and with Joyology only present in our stores and little bit online, it would be more tougher for us to be profitable, right, given that the value differentiation is only on product and not on assortment?
Biju Kassim
So, basically here what we are trying to do is we are not going the discount route. We are — and as you know, we are quite good when it comes to the experience part of it. So, we want to replicate the success that we have seen in Prestige, which is largely the services and the experience part of it, but with a value proposition, because there is a set of customer that is eager to try that experience and there is a bit of a fatigue that is coming around masstige revolving around discounts. And we want to differentiate Joyology with that set of experiences. And that is where we would focus on. And for the moment, we have launched in Shoppers Stop from a brick-and-mortar perspective, and as you mentioned, most of the online players, but we are also introducing them in the other brick-and-mortar players. So, this is just launched and the expansion is in the pipeline.
Ankit Kedia
Thank you, Biju. My last question is on INTUNE. INTUNE growth has been a bit soft. We are at around 9,000 sales per square feet run rate, plus minus INR500. That’s a little muted compared to the market leader. While I understand it’s a one and a half year old brand, at what level do you see EBITDA level breakeven for INTUNE in next one or two years, and what is a consistent throughput we should model over next two years for this business. And if you have to say one year older stores, how are they — what is their SSG and what is their throughput in INTUNE?
Devang Parikh
Thank you, Ankit. I will try and break this question into two parts. The long-term view on EBITDA breakeven, maybe Karuna or Kavi can touch upon. But the part on the sales productivity, you are right, INR9,000 is a little muted. If you break that down, we see the network as mature stores and new stores and we are too young to see a year old age as mature. For us, even a six-month-old store is considered as mature. So, there is at least a 25% productivity increase when you see the productivity for mature stores. Mature stores hover somewhere around 11,000 square feet — INR11,000 per square foot. So, there is that journey which has now demonstrated that as the store matures in age, the productivity improves. That’s part one to your question.
Part two is the overall softness of SPF in Q3. There were some clear reflections that brought it down. One, you may have seen from your last three quarters decks that this is the first time we got into markets where winter came into play. Predominantly north and a larger expansion in Bangalore. As a business, we took a conscious call of being conservative on winter because this is the first time Intune was getting into this play. And a pleasant surprise, a blessing in disguise, we outperformed. So, as we entered December, softness of availability in winter wear is where these markets pulled us down. We are confident we will get this corrected next year, now that we have a demonstration of success.
The other thing that we saw which pulled us down a little bit is, starting end of November and all through December, a lot of brands in this space were running discounts in the name of Black Friday or in the name of mid-season sales. We consciously took a call that we did not want to go down that route. We started our USS [Phonetic] only on 28th December. And in the process, we did see some additional softness. So, both these factors were factors that we had cognizance of. That combined with the fact that as the store matures the productivity improves, gives me confidence that there is no long-term dissonance as far as Intune’s success is concerned. Does this answer the first part of your question? If yes, then I will request Karuna to focus on the EBITDA part.
Ankit Kedia
Yes, Devang, thank you for the elaborate answer.
Karunakaran Mohanasundaram
Hey. Hi, Ankit. On the breakeven part of Intune’s tools, Kavi did cover in his speech. We are very close to breakeven at the store EBITDA level. You also said that, right? We are just 18 months of operation. In fact, the first six months we had less than 10 stores. I mean, most of the stores have opened in this year. To answer your question, next year, sometime in Q3, Q4, we should have a complete breakeven, including the SO cost and from year three onwards, we should make a decent profit, Ankit.
Ankit Kedia
So, is it fair to assume at INR350 crore, INR400 crore revenue run rate you should break even in Intune?
Kavindra Mishra
Yeah, Ankit, it’s a fair assumption.
Ankit Kedia
Thank you. And all the best.
Karunakaran Mohanasundaram
Thanks a lot, Ankit.
Operator
Thank you. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Sameer Gupta
Hi, sir. Good morning. Congratulations on a good set of numbers and thanks for taking my question. Firstly, just wanted to touch upon the store closure part. I understand Ankit also asked it in some way, but I have a slightly different question. So, last nine years, if I look at it, including this one, we have closed around 31 department stores. So it seems that for whatever reasons, closures are a normal occurrence. Maybe it gets bunched up in a particular quarter, but over a two, three-year period, normally this business will see closures and that could be due to relocations or some other aspects. So, how do you look at it? Going forward, when you say 12 to 15 store additions, you are not baking in closures. So, as a modeling — from a modeling perspective, we should take it as a prudent exercise to bake in some closures. Your thoughts.
Kavindra Mishra
So, thank you for the question. See, when we looked at a complete — the aging of our stores and the profitability, we did a very detailed exercise and we saw that there are certain set of stores which we should have taken a call before. And I think that’s what we have done. So that’s why while they have bunched up together, the discussions or the process started around six months back. I think most of the stores which we have closed now were — a lot of them were high street stores and stores which were aging anywhere between seven to eight years. I think we have done a lot of cleanup now. So, if I’m talking about next year, if you’re looking at 12 to 15 stores of gross, there might be two or three closures at Max — one or two closures at Max, which will come. Otherwise, a lot of that work has happened as we speak this quarter.
Biju Kassim
Gaurav, I’ll just add only one thing, Gaurav — Sameer. Sorry. Sameer. Sorry. Sorry. While you’re modeling, what you should also factor in is that all these stores are — as Kavi said, has lost its sheen. And for a number of reasons, like the customers have shifted, like there would be a bridge or — where it’s passing through or a number of reasons, the sales have come down significantly. That’s the reason we are closing down the stores. So, while calculating the sales per store or something like that, just factor that. I mean, that’s the only suggestion I would have.
Kavindra Mishra
I mean, what — I think, in other words, is the stores are getting closed because they have lost that critical mass. So the impact in terms of closures won’t be on an average size. The weighted average would be still better is what we are trying to say.
Sameer Gupta
Yeah, definitely. That I understand, sir. Thanks for answering it in detail. Second question is on this LFL growth of 4%. And when I see the ASP is also up around 4%. You have mentioned a challenging retail environment. So just wanted to understand how sustainable do you think this LFL is? Is it significantly impacted by the store closures that we have done, like seven in this one year? If you remove them from the base, like that is how you will calculate LFL? Or do you see it sequentially improving, this LFL growth, from here on? I remember last quarter when we started, October was at 9% LFL. So, it’s already materially deteriorated from that. So just wanted to understand on this aspect as well.
Kavindra Mishra
So, Sameer, if you remember my commentary of last quarter, I said H2 will be around 5%, right, because what was happening was that October was when all the festivals were getting bunched. Then November had a lower base and then December again the weddings took over, right? What we are seeing is that, as I mentioned, we stick to the stance of H2 5% like-for-like growth. And it is — so while the market might be tough, there are a lot of these initiatives, the IPs which I talked about is helping us to get more reason for the consumer to come and shop with us. And I think that is the basis on which we are trying to say that, okay, this is the way we want to look at our business. And, I’m pretty sure that that number which we have mentioned — and as we speak the first 15 days of this month, we are, in fact, doing better than the average of last quarter. So, the LFLs continue to steady — they remain steady with us. And we have that mechanism in terms of driving consumers through product, brand and the IPs to ensure that we have a higher right to win vis-a-vis our peers.
Sameer Gupta
Kavi, my question is actually a little bit beyond second half. So, let’s say, the market conditions remain muted, how confident are you with your initiatives to sustain this 4%, 5% LFL?
Kavindra Mishra
I’m very confident, Sameer, to answer that.
Sameer Gupta
Okay.
Kavindra Mishra
Yeah, because this is just the start. So for example, I spoke about India Weds with Shoppers Stop. Now this business was not there with us in certain ways. In the last two months, we have got a revenue of around INR60 Cr., right? A part — INR66 Cr. A part of that would be something which would anyway come to us and part of that is something which is an additional thing for us. This initiative alone should be a INR300 crore IP for us next year.
Then we have just renovated our Malad store and we are looking at amazing productivity there. In fact, our productivity for Malad has gone up by 50% — the SPSF and gymloss [Phonetic] are higher by 50%. So what I’m trying to say is there are enough reasons and mechanisms by which we are driving this customer growth, and I think this is a new way of our ability to drive LTL, which is not only dependent upon the market, because customers are shopping. It’s not that the customers are not shopping. With the option of being the location where you get the brands, which are not available everywhere else, by having a great mix of categories and by rationalization and focus on premiumization, I think there are a lot of reasons why we can drive this LFL.
Sameer Gupta
Great, Kavi. I’ll just squeeze in one more question if I may.
Kavindra Mishra
Yes, please.
Sameer Gupta
So this Beauty part. So I mean we’ve delivered a 3% Y-o-Y growth. I understand masstige, there are some challenges but when I look at your peer Nykaa, they are reporting consistently 20%, 20%-plus kind of a growth in this channel and there’s a fair bit of masstige — actually their masstige contribution might actually be higher than Shoppers. So why is there such a big dissonance in the top two players in beauty retailing category?
Kavindra Mishra
Biju, you would like to answer that?
Biju Kassim
Yeah. So I’ll take it. So basically, you’re right. The point is, we see the October, November season — October, November, December season heavily focused on promotions and offers, particularly the Black Friday, Singles Day et cetera, et cetera. So obviously their strategy is quite different from our strategy. And here we are looking at sustainable long-term growth which is revolving around experiences, and this is largely tied up to the premiumization journey and the experiential journey that we are working around. And hence, we are sometimes constrained to do things on a long-term sustainable model than just to live in the moment. And that is where probably we have not been able to follow the competition. Secondly, we are clear that we are an omnichannel destination, and we want to focus our strategy on that direction. So that is also one of the reasons why we probably did not do at par with what Nykaa did.
Sameer Gupta
Got it. But you don’t foresee this as a clear shift in the customer buying pattern in terms of retail, like, as a Beauty product basket, more online and more discount-oriented, that’s not happening.
Biju Kassim
No. So basically for us, as I said, our strategy is quite focused on long-term sustainable growth. You are right, the market is overheated and obviously, today it’s all about the acquisition of the customer and to continue sustained growth, because there is already a pressure to continue to do that. But how long that is going to be sustainable is a bit of a question. And I think — and this is not from the context of Shoppers, but as a beauty expert, it’s going to be tough to continue to sustain these type of offers, promotions and grow. But having said that, at Shoppers we are very clear, and Beauty within Shoppers, we want to be clear that we want to do sustainable growth. Obviously, we are not going to ignore the competitive landscape, but we will try and do what is appropriate, so that we don’t get into the desperate measure and get sucked into that situation where then you are compelled to burn to earn.
Sameer Gupta
Great. I think this answers my question in detail. Thanks. Thanks a lot for taking all these questions. I’ll come back in the queue for any follow-ups.
Kavindra Mishra
Thank you, Sameer.
Biju Kassim
Thank you.
Operator
Thank you. The next question is from the line of Gaurav Jogani from JM Financial. Please go ahead.
Gaurav Jogani
Thank you for the opportunity, sir. And, I mean, would like to congratulate you on the renovation of the Malad store. It looks really fabulous, the way it’s done.
Kavindra Mishra
Thank you.
Gaurav Jogani
So, sir, my first question is with regards to the revenue growth for the core business in the standalone, that is if we adjust for the Intune’s revenues in both the quarters, the growth comes to around 3%-odd. Now, despite net store additions that we have seen on a y-o-y basis there, still the growth remains anemic, it’s just 3%. So, what are we doing additionally to drive this growth here in the segment on the growth ex of the Intune’s?
Kavindra Mishra
So, Gaurav, I’m sorry, I was not able to understand the question. Was it that the growth minus Intune, is that the question you asked? I didn’t — sorry I didn’t get [Speech Overlap]
Gaurav Jogani
Yeah, yeah, yeah. So, growth minus Intune’s is 3%-odd if you look at it on the standalone basis.
Biju Kassim
Gaurav, while we are including the Intune, Kavi just explained to Ankit also, we have almost closed seven to eight departmental stores in the last nine months. In addition to that, we also had Malad, we have to close particularly during the Diwali season because we were renovating the store. If you exclude those bases from last year and this year, our LFL growth is still between — is close to 4%, because these store closures and Malad renovation will be anywhere between INR45 crores to INR50 crores in terms of top line only for quarter three. So, you have to factor both to get the LFL growth.
Kavindra Mishra
So, the LFL growth of 4%, Gaurav, which we mentioned is I think amongst — many quarters, it’s among the highest which we have got.
Gaurav Jogani
Sure. And, sir, would — this LFL growth that we are seeing in this Q3 also, specifically because there was a better wedding season and a better festive season around. So, that was also one of the factors. Do you see this sustaining going ahead in even Q4 and the months ahead given the initiatives that you have taken around the First Citizen, the other parts of the business?
Kavindra Mishra
Yes, Gaurav, we are very, very confident that what we have done in Q3 is not a one-time phenomena. There are — right from the mix — and I think this is something which I’ve been — always been talking through my — through all my calls is that we need to make Shoppers of — the destination for consumers. We need to give them a reason to come and shop and there is enough business happening in the market. We need to make the customers come to us. I think we have now got the fundamentals in place. Whether it’s through premiumization, whether it is through the business — through the brand IP, whether it’s through the mix, Beauty, non-apparel, I think we have a very, very strong offering for the customer, a compelling choice. And that’s the reason we are very sure that this LFL will continue. It’s not one-time.
Gaurav Jogani
Sure. And sir, on the Beauty part of the business, while we have been adding the EBOs in the stores there, if you look at the absolute sales in the Beauty business, I mean even I have [Phonetic] considered Q3 FY23 levels, the revenue growth is around that INR240 crore to INR270 crore mark, in that range. So would it be prudent to understand that while it would have gone down on a per store basis in that sense, but the focus largely is to drive profitable growth, and hence the hit in the short term. Would that be a right understanding? And does this pattern also follows to the overall larger piece of the business, not only Beauty but the whole part of the business wherein the focus would be on a sustainable profitable growth? And if we were to sacrifice some of the growth for it, we are ready for the same.
Kavindra Mishra
So let me answer the broader thing and maybe then Biju can also add in for — specifically for Beauty as well. See, I think across the last three to four quarters, we have been talking the thesis which is on sustainable profitable growth. So all the actions which we are doing has to result in profitability at the end of the day. So whether it’s store closures, whether it is rationalizing of private brands, whether it is giving up spaces for brands which are not right, I think we have done this journey continuously. And that is something which as a team we strongly believe in, Gaurav. And you can see that. So, for example, private brands, while the overall top line has come down as a contribution, actually if you look at it, the profitability in this — and though we don’t share a segment by this thing, the contributions actually have gone up substantially.
So I think that is the journey in which we are. And on the Beauty piece, so while Biju can talk about the quality piece, as a number, the Beauty CAGR over the last two years is around 7.5% for us. So I think that’s something which is sustainable and we’ll keep on building on that.
Biju, you want to add on something — any point here?
Biju Kassim
Yeah, sure, sure. So just two points here, like, for department store. Even for Beauty, whenever we have a store that is not profitable and we see that in the mid-term, long term it is not going to be profitable, we also tend to take the same actions that we do with department stores. That’s the point number one.
Second, what we have been doing in the last two to three quarters is starting to show results. But as a strategy, when we talk about a strategic intervention, our desire here is to allow the Indian beauty consumers to have the best of the representation. So, you touched upon rightly the boutique journey. So, the boutique is the best expression, but maybe sustainability-wise, yes, few, but not many. So, we have multiple formats. And between Beauty within Shoppers Stop, SS Beauty and boutique, we think that we are feeding in the right strategy which will eventually take us to that bigger, bolder number. So, these are the two things that I would like to reflect upon to give you confidence that this is something that we’ll continue to do in line with the larger, broader strategy, and obviously driving the premiumization, the premium, premium-plus and the dominance in fragrances, et cetera, et cetera.
Gaurav Jogani
Sure, sir. Thank you. That helps. Thank you so much.
Operator
Thank you. The next question is from the line of Varij Bangur from GE Shipping Family Office. Please go ahead.
Varij Bangur
Yeah. Hi, sir. Congratulations for a good set of numbers. Sir, when we speak of, let’s say, rationalization on stores, from a stores point of view, do we also — are we also doing in-store rationalization? Like, are we looking at third-party brand and how much area to give to each brand as per the sales they generate? And also, are we looking at the area split between Beauty and non-Beauty segment within the departmental store? Are we looking at those sectors or we are just talking about opening and closing of departmental stores?
Kavindra Mishra
Varij, thank you for this question. See, we — I think the question which you rightly asked is that do we keep on looking at how the productive areas are, right? Whether it’s within the categories and within the brands. So, Varij, happy to share with you that it’s a once-in-a-six-month process when we look at how are the brands performing within categories, and if we feel that certain categories are going to do better, then give — allocate more spaces to them. So, I think brand churn is not only at the chain level, but it is also at the store level. So, that is one point of view.
We have a KPI called Gymloss [Phonetic], which actually means the profitability of each the — of each square foot. And that’s something which is very sacrosanct for us, which means that in certain cases, if we feel that certain private brands have no right to win because the gymloss in certain categories are lower, we have also taken calls to reduce and rationalize that space. I think that is for any retailer, the heart of the business. And it’s something, which we at the category level do it continuously. I think there’s a continuous monitoring of this data point, because finally the space is finite. As a team, we need to deliver the maximum productivity out of it.
Biju Kassim
And we churn the brands also at the store level.
Varij Bangur
Got it. So this is a recent exercise or — I mean, I’m sure you must be doing it from the inception, but recently, anything more that you have done on this space?
Kavindra Mishra
So, it has always been there. See, Varij, it’s the heart of running the retail business. So I think this is something which we continuously do it. If your question is that have you seen certain categories perform better and then — have you increased the space? So yes, for example, in certain cases. For example, when we renovated Malad, the spaces for Beauty was increased. In certain stores where we see watches have got a right to win, we ensure that that happens. If in certain renovation, we feel that the women’s Indian wear has to do better or is doing better than women’s western, we do that. So I think it’s a continuous journey, Varij.
Varij Bangur
Got it. And my question is around Intune. Now that some of the stores are matured, what is the average inventory we are keeping in the store or let’s say, the inventory cycle in a particular mature Intune store?
Devang Parikh
Thanks, Varij. The idea is to have anywhere between six to eight weeks of inventory in the store.
Varij Bangur
Okay. So that is the actual number that we are currently on?
Devang Parikh
Yes.
Varij Bangur
Okay, thank you.
Operator
Thank you. The next question is from the line of Akshay Kothari from JHP Securities Private Limited. Please go ahead.
Akshay Kothari
Yeah, thanks for the opportunity. Sir, I had two questions. First of all, is Intune value fashion or is it value fast fashion? And my second question would be, sir, I recently visited the Intune store which has opened at Jogeshwari, which was placed next to Zudio. So while I agree that the experience, and I have also visited Shoppers Stop, the experience at Shoppers Stop is amazing. But when we visit Intune, and since it is placed next to Zudio, there are a lot of stark differences in the experience. For example, the store at Intune doesn’t have automatic doors. In fact, none of the Intune stores have automatic doors. There is their guard, who is going to pull up and then you enter. There are no mannequins. The designing of — you can say the changing rooms is pretty — like you are entering a cave. And I have — I had also visited Vashi and Nalasopara stores. So I. I don’t know whether you are going for — just because you are selling the product cheap, are you also looking to offer experience at Intune?
Kavindra Mishra
Thank you, Akshay. I’ll answer the first part of the question first. I think we are in — at a time when fashion which is not fast is no longer fashion. So we are everyone in the business of fast fashion. Right? Customers will not forgive us if we are not. And Intune is also in the same boat. Secondly, about your experience, feedback well taken. I think the experience of a customer inside a store is a journey and it improves over time. I would like to believe that we’ve improved from the first month to the 18 month. And I would definitely like to commit that as we go along, this is a continual improvement.
To the specific points that you raised, well noted. To a point about whether experience is important or not, it is definitely important. Maybe if you got a chance to interact with the staff in the store, a big part of the experience is the way the staff helps you out and the way the staff responds to you. I hope that experience was good for you and that experience was in the line of the Shoppers Stop legacy that as a company we’ve created over the last 30 years. If yes, then all the other points, I think — do keep visiting our stores. I think you will keep seeing significant improvements in experiences.
Akshay Kothari
Okay. Thanks a lot and all the best.
Operator
Thank you. The next question is from the line of Shalini Gupta from East India Securities. Please go ahead.
Shalini Gupta
Sir, I had one — sorry, I had one question regarding private labels. Now, private label was a focus area for Shoppers Stop for many years. But now I find is that the sales have kind of tapered off because you are probably rationalizing your portfolio. So, is it still a focus area and what can we expect going forward from private labels?
Kavindra Mishra
Absolutely, Shalini, great question. I think private brands continue to remain the focus for us. But as I said, I think in the other query, I think which Varij asked me, any category, whether it’s private or national brands, has to justify the space in the store, which means that the gymloss [Phonetic] has to be strong. It’s not only about the top line, but it’s about the profitability. And I think we have really focused on that. What we have also done is, and as a part of rationalization, we have discontinued non-core categories in private brands. So, when you see the comparison, you will see that there are certain categories like footwear, et cetera, which we used to run, or handbags, which you have ensured that we have reduced them.
The core categories actually have become very sharper. And if you visit the stores, Shalini, you will find that the product quality, the premiumization which we are talking in national brands can be easily seen in the way it is there in private brands. In fact, I’m very happy to share that Kashish, which is our womenswear brand, was the number one brand for productivity in Q3. And for menswear, it was Bandeya. So I think we are actually doing very, very interesting work in — well, in private brands, the story is less is more. You need to make less merchandise, light merchandise and get more profitability. That is the journey of private brands. It’s not about top line. It’s about profitability and able to have products in the categories where you don’t have the right to win in national brands. I think that’s what we are focusing on and that will help us to remove — to improve our profitability as well as Q3.
Shalini Gupta
Okay, thank you, sir.
Operator
Thank you. [Operator Instructions] The next question is from the line of Naitik from NV Alpha Fund. Please go ahead.
Naitik Mutha
Hi, sir. My question is regarding the expansion plans of Intune. So, if you could just mention how many stores you plan to add in FY26 and, say, FY27, because I believe in the starting you mentioned that you were planning to add 15, 16 overall stores in FY26. So that I believe does not include Intune.
Devang Parikh
Yeah, yeah. That — what Kavi spoke about is the departmental store. You are spot on. Let me talk in detail about Intune. We said we have opened 59 stores as of 31st December 2024. We are planning to open another 26 stores in Q4, taking us to 85 stores in FY25, which is March 31, 2025. Next year, we are planning anywhere between 90 to 100 stores. Some of them have been already contracted with the landlords. And that’s our plan right now for ’25, ’26.
Naitik Mutha
Right, right. And sir, my another question on Intune as a format was, what kind of payback period do we work with when we are working on, say, 90, 100 store additions? What is our thought process behind that?
Kavindra Mishra
The payback is slightly more than three years right now. But just now my colleague Devang spoke about, I mean, as the stores get matured, we expect the payback also to come down.
Naitik Mutha
Alright, sir, got it. That’s it from my side. Thank you.
Kavindra Mishra
Thank you.
Operator
Thank you. The next question is from the line of Rajiv from Nuvama Wealth Management Limited. Please go ahead.
Rajiv
Yeah, morning, sir. Thanks for the opportunity. Sir, with regard to Intune, so your earlier target was 50 stores in the second half, right? So what actually happened? Why this [Technical Issues]
Devang Parikh
Yeah. So when we opened the 49th store on 30th of September, we said we will open 51 stores in second half. We also — and Kavi also spoke about in his speech, there are — because of the fog or smog, whatever you call, there are restrictions imposed by the local government and we could not open — we were supposed to open 25 stores. We could open only 10 this quarter, taking it up to 59. We could not open between 10 to 15 stores during this quarter because of the pollution and other things, and that progressively got delayed. So that’s the reason we were unable to open 100 stores this fiscal. We will be opening up to 85 stores this year.
Biju Kassim
In addition to that there is a certain productivity that we have in terms of opening the stores and we would not like to compromise the effectiveness of opening stores by covering up all the backlog in the months of Feb and March. That is why we’ve consciously taken a call that 85 is what we will have by March end. But the journey continues seamlessly from the 31st March to the 1st April and I think we will hit the 100 mark very soon.
Rajiv
And in terms of, let’s say, getting leases on Intune or other formats, has it become slightly more tricky now since more profit — revenue-linked leases is what we are getting now?
Kavindra Mishra
No, we have not seen any such shift. I mean it’s a fixed rental. And if the sales go beyond a particular amount then the variable part gets triggered. So the same model continues. There is no change in that. We have not seen any change.
Naitik Mutha
Perfect sir. That’s all from my side. All the best. Thanks again.
Operator
Thank you. The next question is from the line of Jay Prakash [Phonetic] who is an Individual Investor. Please go ahead.
Unidentified Participant
Yeah. Good afternoon to everyone. First of all, congratulations for this quarter. Hopefully, you will continue this growth trajectory. My first question is, you have planned for 26 Intune store and six department store in this Q4. In the southern part of India, you have planned for Andhra Pradesh, Telangana but you have not considered anything about in Tamil Nadu. If you talk about Tamil Nadu it is one of the top GDP-contributing state, as well as per capita income also it is higher. Have you done any geographical study and things why you have not increased resource beyond Chennai, cities like Coimbatore or any other southern part of cities?
Kavindra Mishra
So Mr. Jay Prakash, thank you for your remarks and the question. Actually, eventually, definitely we will come into Chennai and TN as well because as you said it’s an important market, and our CFO also comes from there. So I’m sure he will put enough pressure on us to do that. I think we — as a start, we actually started in a cluster approach for Intune. So we are just trying to populate for the Hyderabad, Telangana, Andhra markets, and slowly you will see TN also coming next year, right? Yeah.
Unidentified Participant
Yeah. My second question is how about your short-term borrowings? It keeps increasing from INR105 crore to INR174 crore to INR177 crores?
Kavindra Mishra
Sorry, your voice is not clear Jay Prakash, are you talking about the borrowing?
Unidentified Participant
Yeah, short-term borrowing.
Kavindra Mishra
What borrowings? I’m sorry.
Unidentified Participant
Short-term borrowings keep increasing from last three years from INR105 crores to INR174 crores to INR177 crores.
Kavindra Mishra
Okay, let me — I mean, probably I’ll just take a minute to explain. So we have INR149 crores as a cash credit limit with the banks and that has been consistent for many, many years right now, probably for seven or eight years. And as per the GAAP, all these cash credits are classified as short-term borrowings. We also have INR80 crores as a term loan, 50 from Kotak and 30 from HDFC. So any repayment that comes within a year is also classified as a short-term borrowing. All I want to say is, I mean, there are borrowings and the short-term borrowings and long-term borrowings are completely fungible. There is no difference as of now.
On your next question, has the borrowings have increased? The borrowings have increased. If you have seen our first quarter results — the first half results, the profits were slightly lower but we continued our expansion plan in terms of CapEx. And we also increased the number of Intune stores. On the CapEx, we will be spending round about INR230crores this fiscal. On Intune working capital also we will be spending about INR50 crores to INR60 crores. So whenever there is a gap between our expansion plus working capital increase vis-a-vis the EBITDA, we have to borrow but we are reasonably confident that this year is one of the worst years. From next year onwards our EBITDA and — EBITDA should be equivalent to the capital plus — the fixed assets, plus the working capital and we should be able to easily manage that.
Unidentified Participant
Okay, fine, thank you. And last part as a individual and as well as a retail investor, I was expecting some long-term benefit from your company. That lost a dividend was in 23 July 2019 and rights issue was on 2020. Since then there was not — is there any discussion on the table about — for dividend or bonus or something to the investors?
Karunakaran Mohanasundaram
We do discuss from time-to-time but I mean, normally these things happen at the year-end. We just completed the quarter three. So if there is any such discussions, I mean, obviously it will be available in the public domain. There was no such discussion in Q3, Jay Prakash.
Unidentified Participant
And one more thing is that I expect your strategy should be more bringing that — the people who are going to college that that kind of age category, that is around 19 to 25 are the first time who are going to job and those people must visit the Shoppers Stop. Accordingly, you have to cater them there with their products for their Intune, because they are the ones going to come back again and again. And also, they will be your ambassador. That is they — both youth people will purchase some good things which — obviously, they will bring more people to your stores. So, I need that your product portfolio must include that — those — satisfying or catering those category. And thank you for the opportunity.
Kavindra Mishra
Thank you so much [Speech Overlap]
Devang Parikh
And thank you for your suggestion Mr. Jay Prakash. We will work on that.
Operator
Thank you. The next follow-up question is from the line of Naitik from NV Alpha Fund. Please go ahead.
Naitik Mutha
Hi sir. My question — my follow-up question is on — again on Intune. If you could give me a bit of the store economics, like the store sizes, the CapEx and OpEx that you plan to — along with inventory in the new stores that you’re going to open.
Devang Parikh
Sorry, I didn’t understand [Speech Overlap]
Karunakaran Mohanasundaram
Yeah, again, we could not understand. Are you saying that you need [Speech Overlap]?
Naitik Mutha
Store economics. Yeah, yeah. On Intune, the store economics that we plan, like the size of the stores that we are planning to add, average size and what is the CapEx and OpEx that would be required and inventory that would be required in store, et cetera.
Devang Parikh
The size of the store is around 5,000 square feet. That’s always been our guidance, plus or minus the normal tolerance that’s available. I think as far as the overall economics are concerned. Karuna did mention sometime back the ideal payback period is three years, so everything is back calculated keeping in mind what a three-year payback affords us to spend on. I think we are pretty much industry benchmark as far as OpEx standards are concerned. There is no number which significantly deviates between us and any of the other markets. So, I’m pretty sure that you will have those benchmarks available. Is there anything specific?
Karunakaran Mohanasundaram
Yeah, CapEx is between INR1,600 crore to INR1,700 crore depending upon the stores. And again, Devang spoke about inventory at the stores. It is between six to eight weeks of inventory. I mean, they are fairly consistent with every other value format you can see in the industry.
Naitik Mutha
Got it. So, sir, even for Intune the average size is 5,000 square feet, right?
Karunakaran Mohanasundaram
Yeah. Our average size is 5,000 square feet. You are right.
Naitik Mutha
Got it. Got it. Thank you, sir. That’s it from my side.
Operator
Thank you. Ladies and gentlemen, we will take that as the last question. [Operator Closing Remarks]
Kavindra Mishra
Thank you.
Biju Kassim
Thank you, everyone.