Spencers Retail Ltd (NSE: SPENCER) Q2 2025 Earnings Call dated Nov. 06, 2024
Corporate Participants:
Anuj Singh — Managing Director & Chief Executive Officer
Sandeep Banka — Chief Financial Officer
Pankaj Kedia — Vice President, Investor Relations
Analysts:
Akhil Parekh — Analyst
Parikshit Gupta — Analyst
Chirag Pachisia — Analyst
Ravi — Analyst
Saransh Gupta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Spencer’s Retail Limited, Q2 FY ’25 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Akhil Parekh from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir.
Akhil Parekh — Analyst
Thank you, Sejal. Good evening, everyone. I welcome you all to Spencer’s Retail’s 2Q FY25 conference call. From the management side, we have with us Mr. Anuj Singh, MD, CEO; Mr. Saket Sah, Group Head, IR and ESG reporting; Mr. Sandeep Banka, CFO; Mr. Pankaj Kedia, VP, IR; and Mr. Harshil Gathani, Chief Manager.
So without taking much time, I’ll hand it over — over the call to Anuj sir for his opening remarks, post which we’ll open the floor for Q&A. Over to you, sir.
Anuj Singh — Managing Director & Chief Executive Officer
Thank you, Akhil, and good evening, everyone. Thank you for joining our quarter two earnings call. Before I start giving some more color on the numbers for Q2, the numbers were announced after our Board meeting around noon time.
Just would like to preface with the context that this period, quarter two was one where we were executing the previously announced decision of ramping down of our operations in South and NCR, an exercise that involved 47 stores, a large employee base in the stores, as well as a streamlined optimized workforce in the corporate office and the regional office. This large-scale exercise had to be managed without operational disruptions across the continuing regions, and I would like to acknowledge the tremendous work put in by the team in executing this in line with the agreed time frame.
Further, quarter two, as you would have also kind of noticed from all the earning calls of a lot of other retail companies as well as FMCGs was a tepid trading environment. There were weak consumption trends, particularly in discretionary categories like non-food FMCG, apparel and general merchandise, more pronounced in urban areas where we operate, we don’t really operate in any rural areas, and a quarter where we saw continued channel share shift from modern trade kirana to quick commerce. In that context, I would call the Q2 performance at Spencer’s as resilient and respectable and in line with the guidance given last quarter. If you look at it, the topline at a consolidated level de-grew by 9.8%. Spencer’s de-grew by 11.3%, largely an impact of the closure of stores and ramping down of operations. Our margins were also impacted due to this one-off one-time activity of ramping down.
At Spencer’s, at a stand-alone level, our gross margins were lower by 448 basis points, largely due to rundown of inventory in stores which were earmarked for closure as well as lower other income, which was happening in both the continued and discontinued regions as a result of the lower scale of operations. However, our controllable operating costs, both at a store and corporate level were lower than the comparable period last year, and this does not include the full flow-through of all the optimization, which has been done in the corporate office, which will only start coming through in quarter three.
So overall, at a consolidated level, our EBITDA, which is the post Ind-AS, was at INR16 crores for the quarter, which is roughly 4% of the sales versus the minus INR4 crores in quarter two last year. The PBT for quarter two was minus INR87 crores versus minus INR70 crores in Q2 last year, largely on account of increased interest costs. Translated at a first half H1 level, the revenue degrowth is minus 6.8%, Spencer’s degrowing by minus 8.3%, again, as an impact of the Q2 ramp down, whereas Nature’s Basket on a H1 level is a plus 4% versus last year H1. Our gross margins were lower by 142 basis points at 19%, again, largely on account of quarter two Spencer’s, where the Spencer’s H1 margins are at 17.5%. Again, I’d like to reiterate this is one-off. And post the closure of stores when we operate in our continuing regions, this will come back to the 19% level, which Spencer’s delivers.
Nature’s Basket was almost flat, a slight 10%, 10 bps reduction at 27.8%. Our operating costs for the first half were lower by INR10 crores, and the EBITDA post Ind-AS is at INR46 crores versus INR4 crores in H1 of last year. The PBT, slight reduction versus last year. We’re at minus INR131 crores PBT at a consolidated level for H1 versus minus INR134 crores in H1. We strongly believe that we are on the right path to streamline the fundamental shape of the P&L, specifically at Spencer’s, wherein we will operate in regions where we have demonstrable right to play and win. We’re talking about mid-single-digit growth, mid-single-digit store EBITDA in the continuing regions. Our e-commerce propositions in this region is gaining traction. We are growing by 20% compared to last year same period, and our support organization costs as a result of all the optimization would also be in mid-single digits. So we are quite confident that this is the right direction which we’re moving in. If I look at the Q2 results in the continuing regions of UP and East, it reinforces its confidence as we’ve grown by 4%, quarter two as well as in H1 versus last year quarter two and H1. Our margins in this region are around the target 19% level, and our store EBITDA is in the 5% region, and our e-commerce is growing at a healthy 20%.
So, with all of this resetting which we have done and the one-offs, effective consumption momentum, which has set in, in quarter three and the evolution of our e-commerce proposition to a 30-minute delivery proposition, wherein we are revamping the entire tech stack for an enhanced UX/UI, we are expanding the footprint of stores from where we do our fulfillment. So today, as you know, we don’t use dark stores, but we leverage our existing stores from where we do fulfillment of our e-commerce orders. We have enabled the back end, both in terms of technology and operations, to ensure that we can now start increasing the number of stores from where we fulfill, and this has a direct impact on reducing the delivery time. Today, for example, in a city like Kolkata, we have 42 stores, our e-commerce fulfillment happens from nine stores, and our average delivery time is 50, 55 minutes.
With the improvement, with all the tech and operations back-end optimization which we have done, we are today doing our e-commerce fulfillment from 12 stores, and we see that going up to as high as 30 stores in Kolkata, which will not only allow us to service all the PIN codes in Kolkata, but will also allow us to reduce the delivery time to within 30 minutes, if not less than 30 minutes. So, really for us, we are quite confident that quarter three, with all the decisive actions of ramping down, focusing on a few geographies, focusing on e-commerce will lead to strong results in quarter three, and we strongly believe that we can achieve the operational profitability for the business, and when I say operational profitability, I’m talking about pre Ind-AS EBITDA level, as early as quarter three end this year. So, that’s a brief commentary on how Q2 went in line with all the actions which we had earlier announced, and giving you a brief glimpse of where, what the outlook for quarter three is and what the shape is.
We will also continue to look at measured expansion in the continuing regions. When I say measured expansion, we’re talking about stores in regions of East and in UP. We’ve added one store for Spencer’s in this quarter in Siliguri. We are adding on two more stores in Kolkata in the coming weeks. And we see going up to three to four more stores by the end of the year in Spencer’s, and on Natures Basket, we’re looking at three more stores. So totally, we are looking at five to six stores coming online as far as these focused geographies are concerned.
So, that’s the overall commentary for quarter two. I’d just hand over to our CFO, Sandeep, to just talk a little bit more about the one-time expenses and the impact on the P&L as a result of the closures which we did in quarter two.
Sandeep?
Sandeep Banka — Chief Financial Officer
Hi. Good evening, everyone. Just to give more details about the recent closure cost of South and NCR, I’m just referring to the note number six of our — the financial statement. Pursuant to Company’s ongoing initiatives for improving operational performance and financial health, the management has initiated appropriate steps for opening stores in selected geographies and ramping down operation in South and NCR, where costs are higher, thereby adversely impacting overall margin at store level.
Accordingly, the necessary accounting treatment and impact relating to the stores identified for closure has been considered in the current quarter, resulting into a net credit of INR32.39 lakhs, which comprises a reversal of net liability on termination of lease contracts, INR57.546 crores. That’s a gain, and the accelerated depreciation, dismantling costs INR37.89 crores, and the provision against inventories and security deposits and other claims are INR19.24 crores, this is on estimate basis. Adding to this, I’m just mentioning the sale done by the Company in South and NCR region, where we are ramping down our stores, we had the loss of INR25.87 crores. If I’m not considering this loss, and I’m just taking the ongoing regions that’s East and UP, my overall EBITDA would have been otherwise INR7.5 crores.
Handing over the — to Akhil for further questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Akhil Parekh from Batlivala & Karani Securities. Please go ahead.
Akhil Parekh
Hi, thanks for the opportunity. The — My first question is the demand scenario. I mean, as Anuj sir has highlighted, right, we are seeing urban slowdown, and some of the FMCG players have already highlighted this. So, what are some of the key patterns or observations that we are seeing at our Spencer’s and Nature’s Basket stores in terms of demand weakness? And are there any specific line of items where the growth has fizzled out? And are there any items where you continue to see decent growth momentum? That will be my first question.
Anuj Singh
Yeah, so — sorry. I think it’s a great question. Giving some more kind of commentary around that, you’re absolutely right. While the overall consumption in Q2 has been a bit soft, if I were to break that down in terms of categories, like I mentioned, if you look at our — some of the discretionary categories when it comes to, let’s say, FMCG beauty, when it comes to general merchandise and apparel, that saw, I would say, flat trends as far as Q2 is concerned. However, when you look at categories which are non-discretionary, which are everyday consumption, when you look at staples, when you look at fresh bakery, these are all categories which have performed well for us.
Further, if I look at this whole mix between the NOBs, which is the Number Of Bills versus the average bill value, we see an interesting phenomena where our NOBs have grown. So it is not to say that we’re getting lesser traffic. The NOBs has grown by 5%, but the ABVs have gone down, which probably supports the hypothesis that consumers are maybe down trading, both from a — either from a price point or buying lower quantities, so wherein they would either buy a ten kg, they might be buying five kg, or if they were buying a more expensive one, they’re buying. So, it’s not a secular trend of degrowth everywhere. It is de-marketed between categories.
I think the discretionary categories have been impacted more. The non-discretionary items, which are part of monthly household consumption basket, have remained strong. So we’ve seen staples for us have done well, fresh has done well, whereas some of the non-discretionary categories have got impacted in quarter two, which subsequently, as the festive quarter sets in, in quarter three, we see a correction which sees a lot more non-discretionary going up and discretionary remaining the same. So, I think that’s a bit of a trend.
When it comes to Nature’s Basket, Nature’s Basket is slightly different. Our quarter two, I would say, muted growth of 1% was largely due to a bit of external factors. There were heavy monsoons which had hit us and our operations in August and September in the West. We also had some delays in terms of shipments, etc. And we had an festive order, institutional order, which did not come through. So, I think it’s largely because of that. But fundamental consumer trends of consumption trends in Nature’s Basket, given the nature of the categories there is not something which is a cause for worry. I think the overall sentiment is more in terms of Spencer’s where, yeah, certain discretionary categories were a little bit more muted, whereas the non-discretionary category did well.
Yeah? So I hope I’ve answered your question and given you some more. [Speech Overlap]
Akhil Parekh
Yeah. Just an addition to this, and before I get back in the queue, so, would you be able to quantify what will be the growth in fresh items like bakery you have highlighted, right? So in non-discretionary versus discretionary, if you can bifurcate if we have that number or at least some ballpark number.
Anuj Singh
I’ll give you — yeah, so I’ll give you some thing. So look, first of all, I think in our continued operations, which is the region where we’re continuing operations versus the operations where we have kind of ramped down, the sales — the numbers or the growth numbers are different. We were about 4% growth in continuing operations, whereas I won’t give — I mean, the number for the discontinued operation doesn’t make sense. For our staples business and for our bakery fresh business, we have grown in mid-single digits, whereas the other non-discretionary items have been flat. For our NOBs, which we said we’ve grown again mid-single-digit growth in number of bills, whereas our ABVs have dropped by 3% to 4%. So that’s the quantification.
Akhil Parekh
Okay. Okay. Great. And is this pattern is similar on the online channel as well, like what we have seen in the brick-and-mortar?
Anuj Singh
So I think online is very different because online is — for us, it’s coming off a small base. So, our growth in NOB are much higher. But as you know, the ABVs tend to be slightly lower in online. And as we’ve expanded our number of orders, our ABVs have come down, but our ABVs on the online business are around INR900. They used to be around INR1,100 when we were on a smaller base. So online, definitely, given the nature of consumption, given the fact that there are orders, there are lesser quantity per bill, the ABVs tend to be lower. But I would say, not that we are at the same scale as some of the other big guys, but our ABVs are definitely higher than the industry ABVs. The industry ABV in quick commerce tends to be INR500, INR550. We are at around INR900.
Akhil Parekh
Sure, sure. This is helpful. Just a suggestion, if you can provide this parameters, right, in terms of number of bill cuts or number of orders and average bill value, at least if not quarterly, maybe annual basis. That will be really helpful.
Anuj Singh
Sure. Do join us quarterly. Ask us the question, we’ll share the numbers. We’ll get the numbers, but yeah.
Akhil Parekh
Yeah. Sure, sure. Thanks a lot.
Anuj Singh
Thank you.
Operator
Thank you. The next question is from the line of Parikshit Gupta from Fair Value Capital. Please go-ahead.
Parikshit Gupta
Hello? Am I audible?
Operator
Yes, sir.
Parikshit Gupta
Thank you very much for the opportunity. So I have a couple of questions. I will start with the balance sheet, please. I read the note in the results, which mentions that the group aims to fulfill obligations in the next 12 months with the — along with the credit line availability and promoter capital. Can you please articulate the debt which is maturing in the next 12 months, please?
Anuj Singh
Do you like to — [Speech Overlap]
Sandeep Banka
Can you ask your second question? We’ll respond together.
Parikshit Gupta
Sorry?
Sandeep Banka
Can you ask your next question, we can respond together.
Parikshit Gupta
Sure. I just wanted to understand, are there any plans to raise any equity capital? And if yes, are there any debt covenants that restricts us from raising capital either through the debt or the equity market?
Anuj Singh
So your first question is, what’s the total debt and what is the debt which is maturing in the next 12 months, and your second question is plans to raise debt, and if there are any impediments in terms of any debt covenants, right? These are your two questions?
Parikshit Gupta
Equity as well, please?
Sandeep Banka
So, yeah — Hi. So my total debt as on 30th September is INR896 crores on consol level, and the debt amount for maturing within one year to pay is INR106 crores.
Parikshit Gupta
Okay. And just a follow-up on this, the company plans on servicing this current portion of debt along with the interest payments from internal accruals at this point?
Pankaj Kedia
Yeah. See, Parikshit, Pankaj Kedia, this side. You are already aware that we sometime back announced in one of our Board meeting enabling resolution for raising capital. Since then, the Board is consciously evaluating the multiple options for us to raise capital. In the last couple of calls, if you recall, our MD Anuj has very clearly articulated that at the company level, we are deeply engaged in looking at a path of profitability, and in the last one year, multiple measures have been taken for us to ensure that the business is streamlined. We have closed down a reasonable number of stores. And the guidance for Q3, which Anuj just mentioned, where we are actually looking at path to EBITDA breakeven pre-Ind AS level, we believe that these are the major catalysts which will actually help us to come to a point where we would be able to raise capital of an appropriate amount at an appropriate valuation.
But as and when we decide to do something specifically, you do understand that we have to first intimate the stock exchanges. But I can only give you an assurance that the company is working towards that path. Beyond that, it would not be able to — we will not be able to share any specific thing.
Parikshit Gupta
I understand. I have a — one more question on store operations, and then I will rejoin the queue. So you mentioned that in this quarter, you have already optimized the cost, which has resulted in about INR15 per square feet of cost savings. Is there any further room to it? And just along with that, I understand that the [Technical Issues] sales per square feet has been marginally impacted. [Speech Overlap]
Anuj Singh
Sorry, we lost you.
Sandeep Banka
Can you repeat your query, Parikshit?
Parikshit Gupta
Yes. So, the first part of the question is on the operating costs on a store level. I understand that you have already articulated savings of INR15 per square feet in the current quarter’s result. Is there more room to it? And second part of the question is to understand, is there any sales per square feet optimization activities being undertaken? Because I had the opportunity to visit a couple of stores in the Lucknow area, and there was a difference among different store sizes in terms of sales per square feet. Just this final question, please.
Anuj Singh
So, I think, again, I’ll take that question. So, I think on the opportunities for further store optimization, store cost optimization, I think I would say that a bulk of the heavy lifting has already been done, and that starts flowing in already in quarter two. Having said that, what we are going to do is also look at it at a store profitability at a store level. And I think it’s not good enough to look at an aggregate level and you say that we’re at 5.5%, 6.0%. I think every store has to be in that zone, and therefore, if you’re not getting the right level of efficiency, we’ll look at it on a case-by-case basis in a store where there is further scope of, I would say, opex reduction. But let’s remember that the levers available are limited in the sense that you can’t do much with your rent, you can’t do much with your utilities, so then ultimately it just boils down to staff and manpower. And there is a very fine line between going very thin on manpower and compromising your service levels. So, I think that’s something which we will be cognizant of.
So, I would say that I don’t see too much more headroom for optimization of controllable opex at the store level. However, at the corporate and the support level, we’ve been doing a series of optimization. The last one was done in July ’24, which means that what you’re seeing as costs at the support level, they have not flown through in quarter two given the fact that you typically have two, three months notice period. That will flow-through from quarter three. So, just to kind of give you a thing we had about 100-plus positions which were optimized — headcount, which were optimized, the full impact of which will start coming in, in quarter three. And just to give you, again, a number which I think I had mentioned in the last call also, our support costs, which is corporate overhead plus RODC marketing, last year for Spencer’s were INR172 crores, which is about 8%.
With all the activities, which we are doing, this entire corporate overhead plus RODC marketing, we believe we’ll be able to exit at a rate which will be closer to INR114 crores, which is almost a INR60 crore savings, and comes down from an 8% of sales to closer to 6% of sales. So, I think that’s the play which you would see flowing through in quarter three. The actions which have already been done in quarter two, and the full flow-through will start happening from quarter three and quarter four.
Yeah? I hope I’ve answered your question.
Parikshit Gupta
Yeah. Yes, absolutely. Thank you very much for your time.
Operator
Thank you. The next question is from the line of Chirag from SKP Securities. Please go-ahead.
Chirag Pachisia
So sir, my question is, what is the road map for the next five years? And how will there be a turnaround?
Anuj Singh
Yeah. That’s it? That’s the question? Okay. So look, I would say we are at that stage, and I think I’ve been consistently boring by repeating the same thing, the answer to this question. I think five years is too long a time frame for me to give you. And it is building, I think, for what we — the task on hand is what we’re going to do in the next one quarter, what we’re going to do in the next two quarters. And in service of that, our first primary objective, which the management had committed to the Board and also communicated to all of you, our first primary objective is to get to a level of operational EBITDA or pre-Ind AS EBITDA breakeven.
I think once we do that, that reinforces a lot of confidence in the model. The model P&L, which, again, I had mentioned last time, what we’re looking at is a P&L which gives the 19% gross margin, where our store opex is in the region of 12%, so that you end up with 6%, 6.5% of store EBITDA, and your corporate overheads are in the region of 5.0%, 5.5%, so that you get to 1% EBITDA. This is not the end state. This is where we want to get to. We had earlier, at the beginning of the year, we had given an 18-month to 24-month time frame to reach that. We have significantly accelerated that time frame, we are quite confident that we will be able to achieve this in — by the end of quarter four, exit of this year. And that will really set the base for us to build on where do we go from there. This will include clearly identifying further growth opportunities in the regions. It will also give us a good sense of the e-commerce growth, which we are able to drive at what profitability that comes. It will also give us more options in terms of looking at recapitalizing our balance sheet.
And I think that would truly set the stage for giving a three-year to five-year picture of how we can get to an EBITDA of 3% to 4%. If I start talking about in five years, I will deliver 4% EBITDA, you guys will not believe me because what we would want to see is, how soon can we reach to an EBITDA breakeven. And that’s the primary task and objective which we have focused at. I’m pretty sure once we get there, we are not going to rest at that level. We will then look from building that stage. But from where we are today, last year, we were — just to remind you, we were at minus 6% EBITDA. So I mean, let’s get to the breakeven. Let’s get to the 1%, and then we’ll build a very robust three-year pathway to getting to mid-single-digit EBITDA. Yeah?
Chirag Pachisia
Got it. Thank you.
Operator
Thank you. The next question is from the line of Ravi from Nuvama Wealth Management. Please go ahead.
Ravi
Hello? I have four questions. Why has depreciation gone up two times on a year-on-year basis? Is there an accelerated depreciation of closure of stores here? And do we take this depreciation level to be the new number for all quarters of the year? Other question, you mentioned that Nature’s Basket depreciate impact due to delay of consignment. How do you fundamentally derail from this? Is it possible to have more Indian merchandise in Nature’s Basket? And what is the average order value on quick commerce business with Spencer’s? And what is the percentage of business that now comes from quick commerce, and where can it go? That’s it. Thank you.
Anuj Singh
Okay. So, three questions. One is around depreciation, the increase in depreciation and will that be the base for all quarters, the second question is on Nature’s Basket, how can we have more Indian products and Indian supply chain to minimize potential disruptions due to import? And your third question is what is the ABV on our e-commerce business, and what is the mix of our e-commerce business? Have I captured your three questions?
Ravi
Yes, yes.
Anuj Singh
Okay. So on depreciation, I’ll ask Sandeep, if you could just comment on that. It’s a one-off increase, but maybe you can give more color.
Sandeep Banka
Thanks. Hi. There is a one-time depreciation on account of stores closure in South and NCR region, INR32 crores, which is an accelerated depreciation and considered into the books of account.
Anuj Singh
So going forward, we won’t see that — the base is not going to be at INR55 crores. It will be at the regular level of INR20-odd crores. [Speech Overlap]
Sandeep Banka
Over to you, Anuj.
Anuj Singh
Yeah. Now, I think on your second question, how do we kind of insulate the supply chain from import vagaries for Nature’s Basket, well, I think that’s something which comes with the nature of the products which we stock, given the fact that Nature’s Basket carries a gourmet range, a wide range of both international cuisine and international product, international taste products manufactured in India, but also it has to have products which are imported.
Now, I think having said that, this is a pretty well-established supply chain in India, and we’ve been dealing with well-established suppliers who have the capability to supply to us. So, this is — we don’t see this as a big risk in our supply chain. Yes, one or two odd incidents in a year happen, and the best way to mitigate this is to hold a decent level of inventories as well as these products. So, I think this is — I would not call it a continued risk factor, but as a one-off.
But having said that, yes, we do balance the inventory between products sourced from India, and what are imported products. But again, given the nature of the products, we do sell fruits which are both Indian fruits grown in India as well as we do sell high-quality imported fruits. We do have packaged goods, foods, which are international cuisine made in India, but we also do have imported products. So, given the nature of the whole proposition, the products which we have, the clientele and the pricing, it will always have a component of imported products, and the supply chains for these are very well established. We don’t expect major shocks or volatility in that. It was just a one-off impact which was there, and we will handle that.
Your third question was on the ABVs on e-commerce. I thought I had kind of explained, but I’ll again give color on that. So, our ABVs on our e-commerce business are in the region of INR900 crores — sorry, INR900 per order, and again, like I said, our e-commerce proposition is a combination of slotted delivery, which is if your pack size is high, 20-plus items, then you go into a slotted delivery, which happens at given times of the day. And those ABVs are much higher. The ABVs on our slotted e-commerce proposition are upward of INR1,500, and the express delivery format, which is our version of quick commerce, that is where we guarantee delivery within 60 minutes. There, the ABVs are in the region of INR900 per order. Still higher than the industry average, but again, what has to be borne in mind is that, today, we’re at a small base as far as number of orders are concerned. We do about 1.25 lakh orders a month, which is — which used to be 75,000 orders a month in last year in the same quarter.
But as — like I said, the primary focus there on e-commerce is to really increase your orders, increase the frequency of orders from the same customers, increase the retention of customers. And with that, you would probably be at an ABV of anything above INR650, INR700 is a decent industry benchmark to be at. Because let’s remember that this channel is not a channel which is planned month beginning, large basket filling. This is a top-up channel. An average consumer here shops upward of ten times a month, and therefore, the basket size will always be lower. So, we will evolve into that.
Right now, we are above industry benchmarks, but as we increase our base, as we increase our number of orders, this will come down. Yeah. So, I hope I’ve ordered your — I’ve answered all your questions on depreciation, Nature’s Basket as well as ABV. Your question on e-commerce mix is, e-commerce, what we call, is out of store, which is a combination of e-commerce and phone delivery is at 15% of the overall business mix. And again, as given stated ambition is to get it to 20%-plus, and the key driver for this would be, like I keep saying, is about further evolving our e-commerce proposition. As I mentioned, we are in the midst of doing all the necessary investments, upgrading our tech stack, looking at all back-end operations to get into an evolved e-commerce proposition for us. Today, our express delivery proposition in Kolkata, Lucknow and Banaras is within 60-minute proposition. With everything which we are doing, we are quite confident that by December mid, we will relaunch our express proposition to be within 30 minutes, which will be a big improvement and in line with what the market is demanding today.
So, that’s a bit of color on the e-commerce mix, yeah.
Ravi
Okay.
Anuj Singh
I answered all your questions, sir?
Ravi
Yeah, yeah.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Saransh Gupta from SVAN Investments. Please go ahead.
Saransh Gupta
Yeah. Am I audible?
Operator
Sir, I would request you to please use your handset.
Saransh Gupta
Yeah, is it better now?
Operator
Yes, sir.
Saransh Gupta
Yeah. So thank you for the opportunity. Actually, I have a couple of questions and few of them were answered already. So one is that, as you mentioned that there is no more headroom to reduce the store cost in the future, so what is the current store cost for Spencer’s and Nature’s Basket, if you can give a more detail insight on that? And the second one is that, as we know that we have gone through some stores closure, so what is the upcoming sustainable cost and the opex after store closures of [Indecipherable] in Spencer’s?
Anuj Singh
No. So, I think — look, I’m not going to give you numbers in terms of opex per square feet, but I think what would suffice is that our guidance is — like I said, is to get to a 12% operating cost at store which is broken into roughly 6% rental and 6% non-rental opex. So, I think that’s what it is. And we can — we will not break this up further in terms of giving you SPSF, and therefore, opex per square feet. I think that’s the rough number. Are we at that level? No. Are we going to get to that level soon? Yes, absolutely. That’s what the design tells.
Saransh Gupta
Sure. Thank you. That’s all.
Operator
[Operator Closing Remarks].