V2 Retail Ltd (NSE: V2RETAIL) Q3 2026 Earnings Call dated Feb. 04, 2026
Corporate Participants:
Akash Agarwal — Chief Executive Officer & Whole Time Director
Analysts:
Unidentified Participant
Ankit Babe — Analyst
Palash Kawale — Analyst
Abhishek — Analyst
Ankush Agrawal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the V2 Retail Limited, Q2 and H1FY26 conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Before we begin a brief disclaimer, the presentation which V2 Retail Limited has uploaded on the Stock Exchange and their website, including the discussions during this call contains or may contain forward looking statements concerning V2 Retail Limited business prospects and profitability which are subject to several risks and uncertainties and the actual results could materially differ from those in such forward looking statements. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. I now hand the conference over to Mr. Akash Agarwal, Director and CEO, V2 Retail.
Thank you and over to you Mr. Akash.
Akash Agarwal — Chief Executive Officer & Whole Time Director
Thank you. Good afternoon everyone. A very warm welcome to the V2 Retail Limited Quarter 3 and 9 month FY26 earnings conference call. Thank you for joining us today. We trust you’ve had the chance to review our results. The earnings presentation and the press releases are available on the stock exchanges and also on our website. We are pleased to report a very strong quarter reflecting continued momentum across our business. In Q3FY26 we delivered a 57% year on year revenue growth significantly outpacing the broader market. This performance once again demonstrates the scalability, resilience and execution strength of our operating model even on a high base.
Our ongoing investments in analytics driven merchandising, supply chain responsiveness and operational discipline have further strengthened our ability to scale efficiently. In India’s value fashion segment, customer traction across categories remain healthy. This reflects the continued relevance of our price value positioning and product refresh cycle. A steady flow of trend appropriate assortments combined with strong quality standards and competitive pricing has supported growth across our store network. On the expansion front, our focus this year has been improving our geographic coverage through a balanced mix of rural market engine and deeper penetration in tier 2 tier 3 cities. This approach has helped us broaden our customer reach and improve regional alignment through localized assortments and stronger store level execution.
During the first nine months of FY26, we added 105 new stores and our pipeline planned openings remain robust. Backed by a strong merchandising and inventory management team, we remain focused on disciplined expansion, efficient inventory deployment and sustainable operating performance. Looking ahead, we continue to stay focused on profitable growth capital efficiency and disciplined execution with a clear emphasis on enhancing shareholder value. Now moving on to some key updates for this quarter and the nine month period of FY26. First, the company successfully raised approximately 400 crores through a QIP with marquee investors. Second, we completed a physical verification of property, plant and equipment and reconciled this with the Fixed Assets Register.
As a result, we’ve written off assets with a carrying value of 5.06 crores and this has resolved the earlier audit qualification. Third, we have been consistently sharing pre indefinite numbers to provide better transparency on our operational performance and we will continue to do so going forward. While we fully comply with accounting standards for statutory reporting, the economics of retail operations are best understood when rent is included at the EBITDA level rather than below ebitda. Our annual business plans, budgets, cash flows, store level metrics and incentive structures are all aligned to pre India’s profit numbers. Our revenue and profitability guidance is also communicated on this basis in line with industry practices and to better reflect the true profitability of our business.
Both under pre India’s reporting and India’s 116 reporting, we reassess the lease terms for our store leases. This reassessment reflects the evolving nature of our store portfolio and our strategic plans. As a result, we re estimated lease tenures to better align with the period over which we expect to operate these stores. This led to a change in the measurement of our right to use assets and lease liabilities resulting in an exceptional gain of 27.69 crores with a tax impact of 6.97 crores. As of October 1, 2025. ROU assets and lease liabilities were reduced by approximately 484 crores and 499 crores respectively.
Lastly, the impact of new Labor Code is not material and has already been recognized in our financial results for the quarter and nine months ended December 31, 2025. Now moving on to the key highlights of our performance for the third quarter. Revenue in Q3 grew 57% year on year to 929 crores. EBITDA in Q3 stood at 174 crores compared to 112 crores in the corresponding quarter last year, registering a growth of 56% year on year. EBITDA margin stood at 18.7%. Tax for the quarter stood at 102 crores compared to 51 crores in the corresponding quarter last year representing a growth of 99% on a YoY basis and also surpassing the record FY25 full year PAT.
We opened 35 new stores during the quarter and achieved a net addition of 105 stores in the first nine months of FY26 taking our total store count to 294 stores with approximately 31.9 lakh square feet of retail space. Reported SSLG for Q3 stood at 2% and normalized SSSG adjusted for the Durga Puja shift stood at 12.8%. We recorded a 48% volume growth in quarter three with full price sales contributing 92% which reflects the strength of our proposition and reduced dependence on discounting. Now let me briefly cover our performance for the first nine months of of FY26.
Revenue for the nine months grew 64% to 2270 crores. EBITDA for nine months stood at 346 crores compared to 200 crores in the corresponding nine month of last year registering a growth of 73% year on year. EBITDA margin improved to 15.3% compared to 14.4% in the same period last year. Pads stood at a record 144 crores compared to 66 crores in the corresponding nine month period last year registering a very strong 119% year on year growth. Same store sales growth for nine months. FY26 stood at approximately 8.6%. Our ROE continues to improve and now stands at 24.5% compared to 23.2% in FY25 and 10.7% in FY24 reflecting disciplined capital allocation and strong operating leverage.
So now let me share our Pre India’s performance for the quarter and the nine month FY26 for quarter three FY26 on a pre Indias basis Revenue was 57% up year on year and moved to 929 crores. Gross margin was at 32.4% compared to 32% last year. EBITDA was 126 crores up from 50% year on year with an EBITDA margin of 13.5%. PAC came in at 82 crores up 47% year on year for the first nine months of FY26 our pre India’s performance reflects these Revenue was 2270 crores up 64% year on year, gross margin improved to 30.2% from 29.7% last year.
EBITDA Was 200 and 23 crores, up 80% year on year with an eBITDA margin of 9.8%. PAT stood at 138 crores up 83% year on year. Lastly, in line with our disciplined expansion, We’ve already added 10 new net new stores in the current quarter taking our total store count to 304 as of today. With that, I will now open the floor for questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ankit Babel from Supkam Ventures. Please go ahead.
Ankit Babe
Good afternoon Akash, Congratulations for the great set of numbers. I have a few questions. First question is if you can explain in simple language regarding what changes you have made in your lease accounting and you know how is it compared to the industry practice.
Akash Agarwal
So to answer your question, firstly we always focused on pre indas numbers because the India should not apply to retail businesses like us. But we obviously followed the accounting policy but it showed a very big difference because our industry peers use this lease accounting policy that we just moved to where our lock in for every location is around one year whereas the lease period on the lease is nine to 12 years.
So we have an option of reassessing whether we want to continue running the store or not. So now we have linked it to store sales performance so every year there will be a review of the store yearly performance and that’s how their lease period will be reassessed and updated in the accounting system. So everyone including Trent Vishal, Megamart Style, Bazaar, Vmart, they all moved to this new accounting standard. So we wanted to be at par with our peers and so we took a decision along with our auditors to move to the same.
Ankit Babe
So your pre index numbers won’t change because of this?
Akash Agarwal
No, the pre index numbers remains the same.
Only the post index changes.
Ankit Babe
So is it fair to assume now that from now on was the difference between your pre and post index numbers would reduce significantly?
Akash Agarwal
Yes, that is correct. Because especially because we are expanding and opening so many newer stores the impact of pre indef versus Post index was much higher on our books. That should be diminished now.
Ankit Babe
Okay, great. Okay. Second is on your working capital. What I observed was that your inventory days are stable, but there seems to be a sharp decrease in your payable days which has resulted into slight increase in your working capital.
So what was the reason for it and was it by choice or was there any some compulsion?
Akash Agarwal
So we raised around 400 crores from QIP proceeds and the needs of those funds for capital allocation would have been over the period of the next 12 months. So we always have a bill discounting feature available to our vendors. So we prepaid our vendors about 300 odd crores because we want to be the best paymasters in the industry and we always want to be in their number one priority. So we helped our vendors by giving them the bill discounting feature.
Ankit Babe
So is it fair to assume that this line of credit from your pay bill will always be available to you whenever you require it?
Akash Agarwal
Yes, that’s correct. So as and when we start using the funds for capital allocation and opening newer stores, you’ll see the credit term back to 55, 60 days.
Ankit Babe
Okay. Okay. Okay. Next question is on the difference in your numbers in your standalone and consolidated statements. So why is the difference? And as investors we should focus on which numbers basically standalone or consolidated.
Akash Agarwal
So because now we have shut down three manufacturing units.
So the numbers we should focus on for the future is standalone. But we are still liquidating the inventory left in our subsidiary and those inventory is being converted from fabric and accessories into finished goods. That is why we’ve taken an extra.
operator
Sorry to interrupt. The line for the management has been dropped. Please hold while we reconnect them. The speaker is back on the call. So you. Miss?
Akash Agarwal
Yeah, yeah. So. Yeah, hi. Sorry. So I was saying we. We’re going to merge both the entities now. So going forward the. We should always focus on the standalone numbers because we have almost liquidated and converted all the inventory. There is some left which will be done in the next six months.
Ankit Babe
So basically there is no business in the subsidiary. The whole retail business into the standalone numbers and the subsidiary numbers you, as you said you’ll merge and then we should focus only on standalone numbers. Is it the conclusion?
Akash Agarwal
Yes, that’s correct.
Ankit Babe
Okay. And lastly, what’s your outlook on the demand side both in the near term and medium term? And how is the response from the stores you have opened, say in the last couple of quarters? Are the PSF of those stores in line with your expectations and or you have any other thing to tell me?
Akash Agarwal
So the benchmark that we use for newer stores is they should be within 30% sales PSS of older stores.
So our older stores this year have already touched 1200 rupees per square feet of sale which was the next ideal milestone for our business. And all the new stores that we opened last year as well as all the new stores we have opened this year, both cohorts are performing better than 720,730 rupees per square feet of sale. So they are contributing to EBITDA from the first month of operations itself and talking about demand. So there’s a huge wedding season coming up and hopefully with the GST trickle down effect and government trying to ramp up consumption because it has been a little damp for the last two to three years, we always try to have a positive outlook and hopefully the decisions by the government also helps boost demand.
So we are taking a 8 to 10% SSSG target for next year also and adding 150 more stores next year also.
Ankit Babe
Any view on the gross margin side because your margins are way below compared to your peers at the gross level. I understand at EBITDA levels you might be better than them, but at the gross level your margins are way below their industry peers. So any thought on that? Is there a scope for improvement or you feel that these would remain at these levels next year also?
Akash Agarwal
So our gross margin strategy is by design we want to pass on most of the benefits of the consumer.
So we like having the metric that most matter to us is EBITDA margin. So we’d rather have more EBITDA margin by higher sales per square feet than higher gross margin. So going forward also we target a gross margin of 28, 29% and all the margin expansion should happen from operating leverage and from higher sales per square feet.
Ankit Babe
Okay, that’s it. From my side, if I’ll have anything, I’ll get back into the queue. Thank you. Thank you.
operator
Thank you. The next question is from the line of Palash Kawali from Nuvama Wealth. Please go ahead.
Palash Kawale
Yeah, thank you for the opportunity sir. As a continuing from the question of the last participant again I I would like to shed some more color on this major setup. So let’s you started expanding like eight, like in eight quarters you have added around 190 stores. So how are those older store performing on margins and PSF and how are new stores performing?
Akash Agarwal
So there are three cohorts to talk about. So one would be the stores that we had at the end of the 31st of March 2024. Then there are about 72 or 74 odd stores that we opened in FY25.
And then there are the 116 stores that we opened in FY26. So like I already mentioned, the cohort of stores that are mature that we had at the end of 31st March, 2024, they are already at a level of 1,200 rupees per square feet of sale per month. And both the other cohorts, FY25 new and FY26 new, they are at a level of 730, 740 rupees per square feet of sale per month on average.
Palash Kawale
And on margin, sir, how are the margins for the mature stores who are at 1200 psf?
Akash Agarwal
So the cost, company level is the same.
The cost is around 190 rupees per square feet and the gross margins are 28, 29. So you can calculate the margins because the costs remain constant for new or old stores.
Palash Kawale
Okay, okay, yeah, that’s helpful. And so good slide on space. So going forward, expanding, where is your focus? Is it on emerging states or new states or states which are already mature, like in person?
Akash Agarwal
Yeah, we entered about seven new states this year. So the whole expansion strategy depends on the performance of each geography. So to give you an example, Karnataka was a relatively new market for us, but it was performing so well.
Now we have 14, 15 stores in Karnataka. The same goes for West Bengal. So 60, 70% of our new stores will come in existing strong clusters for us where V2 is already performing well. And the rest, 30 to 40% of the stores will come in new geographies that are performing very well for us.
Palash Kawale
Enter any difference in the geographies
where you are entering, where players are already present, or if you are a new player there. So any difference in the performance of the stores there?
Akash Agarwal
I think out of 304 stores that we have now, there would be less than 20 stores where we don’t have any organized competition because competition has become the new reality.
So, you know, it’s not an external variable anymore. So it’s about surviving with multiple retailers around you. So it’s about focusing on your strengths and, you know, continuing delivering that value proposition to the consumer.
Palash Kawale
Okay. Okay, so last question. Your employee expenses, if I calculate on per square basis, have come down. So any, any reason for that or is it just a signal?
Akash Agarwal
So if you look at consolidated numbers, whatever we used to make in our subsidiaries, a lot of the manufacturing cost used to be employee expenses. So whenever you compare employee expenses, you should do it at the standalone level and even at A standalone level it has come down because we are adding more area so we are getting operating leverage because the same head office is now servicing to 50, 60% new area and we continue to get this as we expand to, you know, more, more and more stores.
Palash Kawale
Okay Sadhgya, thank you. Thank you so much. That’s it from my side. Thank you. And all the best for the upcoming quarters. Thank you.
operator
Thank you. The next question is from the line of Rehan Sayed from Trinetra Asset managers. Please go ahead.
Unidentified Participant
Yeah, good afternoon to the team and thanks for giving me the opportunity. So sir, my most of the questions have been answered so I just want a clarification regarding your mansware. So sir, you have man continues to contribute 41% of revenue while kids were rem 24%. So are you seeing faster traction in any specific subsegment like winter wear, occasion wear that could structurally alter a category mixed over the next two to three years
Akash Agarwal
there wouldn’t be any significant change. But what we have seen over the last two years is definitely our womenswear category has been growing the fastest and that is because of, you know, the kurti department and the kurti category growing the fastest.
But if you talk about any significant differences, I don’t see any significant differences coming in the future it will be very similar to the product mix that we have right now.
Unidentified Participant
Okay. And second on the ABB increasing to 964 rupees in quarter three FY26. So is this being driven more by higher basket size or renovation with the categories and or either does management cease for to push ABV further without dilution? The value position? Just wanted understanding regarding this.
Akash Agarwal
No. So if you see historically quarter three ABV is always the highest. It’s because of winter garments.
So the winter garments ASP is much higher than summer garments. So because we sell jackets, sweaters. So that is why you see a bump in ABV during the third quarter.
Unidentified Participant
Yeah. So you are seeing it’s a seasonal effect or it’s like a category which is happening more easily.
Akash Agarwal
Yes, correct.
Unidentified Participant
And last one more bookkeeping question. From my understanding, so like you have done 400 crore QIP. So how does management prioritize capital application between faster store rollouts or either supply chain management or balancer strengthening, especially considering roe dilution.
Akash Agarwal
So that is why you know most of the proceeds would be used for general corporate purposes.
So that is a mix of the new capital allocation from the new stores, that is a mix of additional working capital required, that is also some investment in the regional Warehouses and the hub and spoke model that we’re doing. So most of the capital is being used for expansion itself and these are the three biggest areas where we need to make the investment.
Unidentified Participant
That’s it for myself and good luck for the coming quarter. Thank you.
operator
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. The next question is from the line of Abhishek Sengupta from AB Capital. Please go ahead. Sir.
Abhishek
Hello. Am I audible?
Akash Agarwal
Yes sir, you’re audible.
Abhishek
Yeah. Just wanted to ask why has the sales per square feet reduced? Is it because of the new store rollout?
Akash Agarwal
Yeah. So new stores perform at about 70% of old stores throughput and it takes about two to three years to mature. And the share of new stores in our total portfolio has increased. That is why you see a slight dip.
Abhishek
So what will be, can you tell guide about the trajectory of it going forward? The sales per square feet.
Akash Agarwal
So if you talk about company blended level, we are targeting it to, you know, maintain at a thousand rupees per square feet even when we are adding 50% more area every year.
So even if we achieve that, that will be a very good target.
Abhishek
Okay, and why was that one store closed?
Akash Agarwal
The one store that we closed this quarter, it was below the EBITDA mark and we tried to revive it and we found a better location about 2 km away from it. So we with a bigger float plate. So we moved there.
Abhishek
And you, you stick to your earlier 8 to 10% SSS, the long term guidance for next year.
Akash Agarwal
Yes.
Abhishek
And before I had asked, and I also just wanted to ask like are you facing any significant competition from low cost online players like Misho and all because they are also operating in your market.
Akash Agarwal
So what you need to understand about pure online players is just logistic. Cost itself is around 65 to 70 rupees. In India if you move goods from state to state and then you add customer acquisition, you add tech cost, head office cost. So the total cost, if you’re selling a 250 rupee T shirt, it becomes almost 50, 60%. But cost of retailing for us is around 18 to 19%. So pure online cannot deliver the same value that we’re delivering just because of additional costs associated with online only players. Whereas if we are doing Omni channel which we will plan and which we are planning to do and we launch in the future where you are using your store inventory as a dark warehouse and delivering from the store itself within a very small radius, then your logistic cost comes down significantly.
Only then you can sustain low ASP items selling online.
Abhishek
Okay, and why was the proposal to do stocks done and when it will be done?
Akash Agarwal
I think now we’ve passed the resolution, it should be done very soon. And it has been 25 years since the company was incorporated. We started in 2001 and it’s been 25 year journey. So we wanted to have a broad base of investors also. It should be accessible to the retail investors also. And that’s why we took the decision.
Abhishek
Okay, thank you. Thank you. Thank you for answering all my questions. And all the best.
Thank you. Thank you.
operator
Thank you. The next question is from the line of Ankush Agarwal from Search Capital. Please go ahead.
Ankush Agrawal
Yeah, hi. Thank you for taking my question. So for me, just a clarification. You said older stores are at 1200 sales per square feet and the newer shows are 720, 730. So this number is for nine months or for Q3? This is for nine months. Nine months. Okay. And like have you changed any classification for older stores? Like I think earlier we had like one year old stores were older stores. But this in the conversation today, you have sort of mentioned older stores that are those that have been opened in March 24th. So have we done some reclassification even for SSG?
Akash Agarwal
No, we’ve always calculated SSG this way.
So for example, all the SSG that we calculated this year has been on stores that were operational throughout the last financial year and we have used the same policy throughout our company history.
Ankush Agrawal
Okay. Okay. So basically for FY27, you’re saying that only stores that are open till March 25 would be considered for exist.
Akash Agarwal
Exactly, exactly.
Ankush Agrawal
Okay. Okay. Then technically if we take the one year threshold and actual SSG would be higher, right?
Akash Agarwal
Yes, yes, because then you have to find out the weighted average of every new store, how many days they were operational, and calculations become very complex.
Ankush Agrawal
Okay, thank you. Thank you.
operator
Thank you. The next question is from the line of Shayan Jen from Swank Investments. Please go ahead.
Unidentified Participant
Hello. So my first question is, can you help us with the absolute inventory amount at the end of this quarter and what was this last year?
Akash Agarwal
I don’t have the exact numbers with me, but I think the inventory is around 900 crores. But if you look at the stock turnover days, it is at a very similar level that was there last year. So there has not been any significant increase, whereas we have increased the pace of expansion. So the inventory for the stores that we are going to open in the next two months is already in the system.
Unidentified Participant
Okay. All right. And we’ve obviously done well on the employee cost per square feet. So I’m just trying to get some sense, you know, where does this, you know, actually stop at, you know, 65 rupees psf? Is that the threshold that we should look at? Or you think there’s some more room in, in this line item to go down? Because I’m just looking at Vmart and you know, Vishal. So Vmart obviously is operating at 70, 72 rupees a square feet and Vishal is obviously at, you know, 45 to 50. So I’m just trying to understand with higher store addition and you know, you’re adding at what, 45, 50%.
So is there room for this number to actually go even further down?
Akash Agarwal
Yeah, so our head office cost currently is around 26, 27 rupees. And that is mostly employee expenses. So I think it has the potential to come down to around 15, 16 rupees. So there’s a scope of 10 rupees per square feet reduction in the future.
Unidentified Participant
Okay. Okay. And blended cost of retailing, you’re at about 195 for Q3 and you were at about 205 last year. So overall, you know, including rent and opex, what should the cost of retailing be? As we gain as size and scale in terms of store edition, what is this number that ideally we should look at?
Akash Agarwal
I think we can target 180 rupees in the near future.
Unidentified Participant
Okay. Okay. And sorry, just the last participant had asked. Can you just clarify again? Sssg. You’re calculating. So this, this is for a two year period, is it? Because when you’re saying FY27, you’re looking at stores which were opened by the end of FY25. So that’s actually two years. Right. So you’re looking at two years which have, which have been in operation, is it?
Akash Agarwal
So it’s not really two years. So when you’re in first quarter of FY27, for example, you’re in June. So those stores have been operational for only 15 months that opened in March.
Are you getting my point? So it’s basically all the stores that were there operational at the end of the last financial year. So some stores will be two years, some stores will be 18 months, some stores will be 15 months. And it works like that.
Unidentified Participant
Okay, got it. Thanks. And all the best. Thank you.
operator
Thank you. The next question is from the line of Anupama from Rajnathraya, please go ahead.
Unidentified Participant
Yeah. Hi. I think I missed the number on. Per square feet revenue per square feet. Could you just repeat that for the next year? Like what is your target?
Akash Agarwal
So we target to maintain it at a thousand rupees even after adding 150 more stores.
Unidentified Participant
Okay. For the. That is overall number company blended level. Yes. Including new and old stores. And you’re saying old stores will be at around 1200. 1100.
Akash Agarwal
So old stores are at 1200 this year and they will have an SSSG. So they will move even higher. But the new store contribution in the total stores portfolio would be much higher. That’s why it will bring the per square feet sale at the company level down. Right, Right.
Unidentified Participant
Okay. Yeah, that’s. Thank you.
operator
Thank you. The next question is from the line of Vidisha Sheth from Ambed Capital. Please go ahead.
Unidentified Participant
Yes. Hi. I’m sorry this question’s been asked before but what is the kind of demand momentum that you’ve observed now that we’re in one month or ready into the quarter? And what would your outlook be for the entire fourth quarter of this year?
Akash Agarwal
So the momentum has been the same. We are seeing the same kind of footfalls and demand in the fourth quarter. And that is why the next year guidance is also the same. We guide for 8 to 10% SSSG for next year and at least a 50% revenue growth and adding at least 150 new stores.
Unidentified Participant
Noted. Thank you. That’s also nice.
operator
Thank you. The next question is from the line of Aryan Singh from Hem Securities. Please go ahead. Sir. You may unmute and speak.
Unidentified Participant
Congratulations for great set of numbers. Hello. Yeah, we can hear you. So most of my questions are already answered. I had questions related to like what will be next, your stores, PSF into the future and how many mature stores we have. So great for future quarters.
Akash Agarwal
Yeah. So I think I’ve already answered that question.
Unidentified Participant
Yes. Yes. Thank you sir. So thank you.
operator
Thank you. The next question is from the line of Vignesh Iyer from Sequint Investments. Please go ahead.
Unidentified Participant
Yeah. My first question is. Sorry, I missed the point where you said 150 new store editions in FY27. What would be the size of each new store?
Akash Agarwal
Average size would be the same. Around 10 to 11,000 square feet.
Unidentified Participant
Average would be 10 to 11,000 square feet. And so what? So what? What are we expecting in terms of new store edition in quarter four?
Akash Agarwal
So quarter four I think the total addition would be around 30 odd stores. 30 to 35. 30 to 35.
Unidentified Participant
Okay. Yeah, that’s awesome. Thank you.
Akash Agarwal
We have already opened 10 and we should open 20 more.
operator
Thank you. The next question is from the line of Arvind Arora from A Square capital. Please go ahead.
Unidentified Participant
Hello. Am I audible? Yes sir. Yeah. Hi. Congratulations Akashan team. A very good number. So my question is on more is like an advance that we have paid 15 crore to BCCL in April 29. So like could you please throw some light like why we have paid, what is the nature of this advance and how we are planning to utilize it? Because it’s like been six years when we are paid to them.
Akash Agarwal
Yeah. So it was a equity barter deal where they gave us you know this balance to use in their various publications and various channels of marketing.
And they took equity in the company and we took it that time because we had a big focus. It was around Covid time there was a huge focus on E commerce. So we thought we’ll do above the line marketing for E commerce. But that did not work out. But now because we are present in 25 states in India now a lot of new states that we’ve entered have big times of India prominence. So we have started utilizing about 50 to 60 lakhs of this every quarter. And the plan is to increase IT to about 1 crore utilization per quarter.
So I think it should be finished in the next two years.
Unidentified Participant
Okay. But it says we will be utilizing in next four to five months. Like the agreement is still April 26th only.
Akash Agarwal
So we have been, we have a word with them. Like we have a verbal agreement with them. They have been extending our agreement for the last four years and we’ve already had a word with them. And as long as we are utilizing 60 lakhs to 1 crore every quarter they are willing to extend the agreement again.
Unidentified Participant
Okay. Okay. And this is like open to all other advertising.
It’s not only for e commerce. Correct?
Akash Agarwal
Yeah it is. It covers all the publication, all the company assets, everything.
Unidentified Participant
Okay. And sir, any. Any thread due to this a quick commerce thing in the business
Akash Agarwal
we haven’t felt any impact. And if you look at the data also apparel is a very very marginal or a very small contribution of quick commerce. Apparel purchase is still an experience for customers especially in tier 2 tier 3 towns. So I don’t think there will be any impact or any significant impact.
Unidentified Participant
Okay, thank. Thank you so much and congratulations once again.
Akash Agarwal
Thank you.
operator
Thank you. The next question is from the line of Vidisha shares from Ambit Capital. Please go ahead.
Unidentified Participant
Hi, just one more question from my end at an industry level have you seen now in the light of competitive landscape being having intensified, have you also seen discounting inch up in this end of season sales season?
Akash Agarwal
There is not a big significant change. We also sold more than 92% of goods at full price in this quarter. So in fact our full price sales have been increasing but we haven’t seen at the industry level also like other retailers because see everyone has a lot of margin pressure. So I think putting discounts would increase that pressure.
Unidentified Participant
So. Right. So discounting industry is not inched up accordingly.
Akash Agarwal
No,
Unidentified Participant
got it. And just one more question is that when you’re entering into newer markets where there is an existing value retailer, what is your observation as to how are they looking to gain back the lost market share which they land up losing once you enter the new region?
Akash Agarwal
See that’s a very I think difficult question to answer because every retailer has a different strategy. There is no fixed template that everyone uses. When we enter a market, somebody puts a special offer, somebody gives more incentives, somebody gives gift items.
But ultimately we’ve seen no matter what marketing schemes you give, the retention of customer and the long term performance of the store completely depends on the store’s assortment. And that assortment is obviously a mix of quality, price, fabric, size, color. So more than 95% of the locations, we are at least 30% higher in terms of SPSS than our peers whether we entered that market first or whether we entered that market last.
Unidentified Participant
Got it. Thanks a lot for answering. Thank you.
operator
Thank you. The next question is from the line of Harshita Jain from Eterna Investment. Please go ahead.
Unidentified Participant
Hi, my question is regarding the net working capital days. So we’ve seen a steep increase from 37 to 69 and I understand this is from the creditor payment cycle that. We’Re giving them better terms here. What is the sustainable level here and do you see a corresponding improvement in gross margins due to discounting or how should we look at this strategy?
Akash Agarwal
Yeah, so whenever we have extra cash on our books, we always give bill discounting to our vendors and we get a 1.5% per month build discount from those vendors that becomes a part of gross margin. And going forward, like I said, as we utilize this money for capital and capex, then you would see the sustainable level. The working hours will go up to around 60 days.
Unidentified Participant
Got it. So the improvement in gross margin from 29 to 32% in Q3, is that because of the discounting or is this the sustainable level of gross profit you’re expecting?
Akash Agarwal
No, that is also a part of this. But you’ll see a gross margin improvement in the first six months of the year also. And we have done this bill discounting for the last two years. So of course the quantum of it has changed in this quarter and definitely it also had an impact on the gross margin.
Unidentified Participant
Okay, thank you. One more question is regarding the capex per store. So what is the maintenance capex you need to incur on the already built out stores every year.
Akash Agarwal
That is already covered in 190 rupees per square feet cost. It differs a lot but yeah that is already covered in the per square feet cost expenses that we talk about.
Unidentified Participant
Got it. Thanks. Thanks a lot and all the best.
Akash Agarwal
Thank you.
operator
Thank you. The next question is from the line of Samarth Nagpal from Suranu family office. Please go ahead.
Unidentified Participant
Akash. As we are expanding through newer states also. Sorry to interrupt. Anything on the leadership hiring. Just wanted.
operator
Yeah, sorry to interrupt. Your voice is breaking.
Akash Agarwal
Hello. Yeah, so your voice is breaking. It’s not clear.
operator
So can you please speak to the handset?
Unidentified Participant
Yeah. Yeah. So am I audible now? Yeah.
operator
Yes sir.
Unidentified Participant
Yeah. So Akash, congratulations on a great set. So just wanted to ask with the kind of store network we have right now, what is the update on the leadership hiring? I mean are we moving in that direction?
Akash Agarwal
Yeah. So we had about I think 360 people in our head office just last year and now we have more than 600 people. So like I always mentioned, a big emphasis and focus is being given on hiring and getting good leaders because you know the growth that we’re targeting, we need a very good foundation. So we have leadership team already in place.
But to reduce the workload on each one of them and to make more broad based management, we are regularly hiring and every month good quality people are joining our organization. On the leadership front only. Just wanted to understand that do we have a CEO or something of that sort to handle the operations at the 350 odd kind of stores and 500 we would be eventually having by the end of next year. So just wanted some color on that. So we haven’t hired a CEO. I’m the CEO currently I am handling that part. But we have a marketing head now.
We have a HR head now. We have an IT head now. So all those positions are covered and they are handling the department. But definitely we are on the lookout for a new CEO also so that I can take a more strategic role. But of course finding a good CEO is a is a long term challenge. We have met of certain people but it did not work out. But Definitely. Like we are always on the lookout for good professionals.
Unidentified Participant
And in this segment, I mean the kind of customer assortment we have, the kind of demographics we have.
So just wanted to understand what is the kind of repeat purchase we have in value retail? I mean, what’s the kind of retention we have for customers? I mean some color from the older stores only. I mean new stores are very skewed towards getting new customers. So any color on that? What’s the kind of retention rate we have or repeat per se? Percentage.
Akash Agarwal
Yeah. So for stores more than two year old, our repeat customer percentage on the total revenue is almost 68%. Okay. And this number used to be just 56%. So the retention has improved significantly over the last three years.
So the frequency, average frequency used to be every five months, every five, five and a half months. And it has also increased. Now it’s every four months, 4.25 months.
Unidentified Participant
That’s very heartening to listen to. And is it also because we have any loyalty program for the customers or is it purely organic? Because of the assortment and the kind of service we have,
Akash Agarwal
our gross margin, our assortment, our product, everything is the loyalty program. Because we work on such thin margins, I think, you know, it’s not feasible for us to have a loyalty program. But because we believe in true pricing so customers know that we give the best value proposition.
So that’s why they come back.
Unidentified Participant
Got it. Omnichannel piece. If I can squeeze in. I think we are really doing well offline. So is it that we are taking a lot of investment into the Omnichannel or would it be a pilot sort of a thing? Because understanding the customer only, we are doing fairly well from our stores only. So any color on that? What is the vision about Omni channel? Is it going to be some percentage of the sale only or are we going to scale it very rapidly?
Akash Agarwal
So the best thing about it is there is no additional fixed cost, there will be only variable cost and there is no huge investment because now all, you know, softwares and technology companies give their services as a software, as a service basically.
So the expenses are monthly. So there will be no additional capex. There will be no additional investment. And in terms of sale, we’re not looking at a huge or a big chunk of sales coming from their channel. It’s just to have a presence. And I think even when it matures, the sale from the channel should be around 5%.
Unidentified Participant
Got it, got it. And this time I think Eid and Holi both are in Q4. So I hope that we are able to maintain the momentum going forward. Also because both the festivals are falling in Q4 for D2.
So am I right in assuming that.
Akash Agarwal
Yes. So Q4 should be. But I think Eid most of the sales fell in Q4 of last year also. So yeah, there won’t be much difference. So yeah, both the festivals were in. Yeah.
Unidentified Participant
And how has winterwear done for us this year? What’s the kind of percentage sale we have done? I mean this is the last question which I had.
Akash Agarwal
Sorry, can you repeat that?
Unidentified Participant
How has winter wear done for us? What is the percentage of sale from winter wear in Q3 compared to last year? Any color on that? How has been the winter launched?
Akash Agarwal
I don’t have that number ready.
But winter was very good. There was an early onset of winter. That is why you’re seeing this SSG and Q3 numbers. Because bulk of the sales come from winter wear. It’s a high asp, high margin category for us. So winter was very good for us. I think much better than last year. But I don’t have the exact number of winter contribution for this quarter.
Unidentified Participant
Sure. Akash, I think that’s it from my end and wish you and the team the best. I mean the very best. Thank you. Thank you.
operator
Thank you. The next question is from the line of Vidish Shah from CR Kothari and Sons. Please go ahead.
Unidentified Participant
Can I know what is the capex per store that you incur?
Akash Agarwal
The capex per store is around 1.1 crore. And the investment in inventory for that store is around 1.3 crores. Total investment is 2.4 to 2.5 crores.
Unidentified Participant
Okay. Can you repeat your outlook on the working capital cycle? Why it has increased in.
Akash Agarwal
We did early payments. We prepaid our vendors. We prepaid about 300 crores of our creditors. Because we had that extra cash on our books. So you know we get a 1.5% build discount from them and we wanted them to have help them with the working capital. So as and when we start using it for our capex for new stores the working capital will come back to normal.
Unidentified Participant
We can expect it to go back to six, 60, 70 days.
Akash Agarwal
Yes.
operator
Thank you. The next question is from the line of Prabhal Jain from SM Holdings. Please go ahead.
Unidentified Participant
Yeah. Hi. Hi sir. So sir, as you have classified your stores into three cohorts. The mature stores. Right. And they are at 1200 PSS. And the new stores that you are adding they are starting at around 750pss. So sir, my question is over the next 23 years with your new stores which are right now at 750, would they scale up to, you know, 1200 number and if you know they would like, what kind of factors do you see, you know, in contribution to this and if not, what are the risks to this thing?
Akash Agarwal
So if you take out the data of FY23 in FY23, this old cohort of stores that are at 1200, they were at 650 rupees per square feet.
So it’s the same journey that the new stores will take. And that’s the plan of course, if we keep doing the things right because more and more customers come, there’s word of mouth, you retain the old customers and your catchment area of each store increases. It’s about maintaining the offering and the customer service and the assortment at the store. Every customer should feel that when they go to a V2 store they would get the latest trends, latest fashion that they see their celebrities wearing or their fashion influencer wearing at the best price possible. Once they get that brand positioning in their head then the growth happens.
And two to three years it takes historically. So all these stores should move towards that number.
Unidentified Participant
So we are reasonably confident to take this number to 1200 PSR in the next 2, 3 years for new stores.
Akash Agarwal
Yeah. So we have done that for these stores also. So looking at that, the new store should also move in the same trajectory.
Unidentified Participant
Yeah. Do you think geographical, you know, location of the stores or you know, anything plays any role in this, this growth figure from 750 to 1200.
Akash Agarwal
See now we have moved away from trying to open a store in the middle of the market.
We used to find market proximity as the number one factor. But what we realized later is what matters more is parking space, frontage of the store, floor plate. Because opening in the center of the market might get you customers from the first day. But long term sustainability matters more where customers get the best experience. So now we look for locations even if they are 12 km away from the market. It should have a big frontage, good parking space and good floor plate. So that is good in terms of customer experience.
Unidentified Participant
Okay. Okay sir. Thank you.
Akash Agarwal
Thank you.
operator
Thank you. The next question is from the line of Deepak Prudhi from Wealth with Wisdom. Please go ahead.
Unidentified Participant
Hey. Hi Akash. Hi sir. How are you? Congratulations to you and entire V2 retail team for posting great set of numbers. Very elementary question, Akash. Can you help me understand what is the store level economics that works. So let’s say you know, you’re setting up A store. What are the cost involved? Like you said, you know, you, you incur around one one and a half crore on setting up and then you know, one, one odd crore in putting inventories. And what are the costs involved in running a store?
Akash Agarwal
Yeah, sure. So the capex like I mentioned is 1.1 crores.
The inventory investment is 1.3, 1.4 crores. Total investment for a store is 2.5 crores. And store level cost is around 140 rupees square feet. And head office and warehousing cost together is around 40 to 50 rupees per square feet. That is how the costs are allocated.
Unidentified Participant
So when you’re, when you’re saying 140 rupees per square feet, what are the cost heads? Just, just a basic overview. In terms of employee cost. In terms of, you know, what are the cost heads involved?
Akash Agarwal
So rent is around 50 rupees. Employee cost is around 40 odd rupees. Power and fuel is 20, 25 rupees.
And rest is, you know, marketing and other miscellaneous expenses. These are the three main heads.
Unidentified Participant
Okay, okay, okay. And, and Akash, just happening on the previous question. How much saving are we incurring on, you know, reducing payables which is we are taking less credit from our vendors. How much is the gain from. You know that.
Akash Agarwal
So it depends on the, it depends on the number of days that we prepaid. But like I said, per month it’s around one and a half percent that we gain from our vendors.
Unidentified Participant
Perfect, perfect, perfect. One more last question. If I can weave in.
In terms of employee and retrition, are you seeing a big challenge there? You know, how is it vis a vis your competitors or peer group? Is it a challenge to retain people in, in a retail setup?
Akash Agarwal
So see, there are two parts to this question. One would be the floor level staff. So their retention is a challenge for every retailer in the country. Because most of the staff is at minimum wage. They jump ship even for a 500 rupee raise. But when you talk about the crucial manpower at the head office then our attrition is well under control.
Most of them have retention bonuses and they’ve been with us for a long, long time.
Unidentified Participant
Okay, and in terms of definition of store, new store, you said, you know, any, any, any new store will become a old store. When you know, you consider it for a full financial year. If you know it has been in operation. Right. Is it the same for all? Is this reputation the same for all retail players on your competition or is it something which varies from player to Player.
Akash Agarwal
It’s very hard for me to comment. I don’t know how other people do this, but we have always done this historically, if store is old, only if it has run for a whole financial year.
Unidentified Participant
Understand? Thanks, Akesh. Cheers for the coming year. Thank you.
operator
Thank you. The next question is from the line of Shreyans Jain from Swan Investments. Please go ahead.
Unidentified Participant
Yeah. AKA just one follow up. So when you’re talking about 8 to 10% SSSG, typically matured stores and the newer stores, what is the SSSG that you kind of experience or you build in? When you’re talking about 8 to 10%.
Akash Agarwal
So see, even mature stores need to be broken down into different cohorts. Then there is a cohort that is, you know, stores more than 10 years old, 7 to 10 years old, 5 to 7 years old, and so on. So of course the newer stores, the newer cohorts perform at a higher ssg. So you can say that the newer cohorts will be at a 12%, older cohorts will be a 5 to 6%.
So the blended will be at 8 to 10%. That’s how it works.
Unidentified Participant
Got it. And in your experience, stores which are more than five years, seven years old, SSSG, typically gets saturated 5, 6%. That’s how we should look at it.
Akash Agarwal
If you look at last two years, even the stores that were, you know, more than five years old, they grew at more than 20% SSSG for us. So there is no cap or, you know, there is no limit that I can tell you. Okay, this is what happens again. If we are able to do, you know, the things that we have done in the last two to three years, we might get a double digit SSSD on those mature stores also.
Unidentified Participant
Got it. And can you just break that down? How have the older stores done 20%? Is it largely because of the value that you’re offering at those price points or there is something more to it?
Akash Agarwal
So it’s a combination of everything. And most of the growth was volume growth. There were more bill cuts, so more and more customers were coming. So I think it’s a mix of better supply chain, a bit of assortment, bits of pricing strategy, fabric color and robust backend. Like it’s a combination of everything.
Unidentified Participant
Okay, okay. And how big would our design team be?
Akash Agarwal
If you talk about complete buying and merchandising, including design, there are about 180 people and just pure design is about 45 to 50 people.
Unidentified Participant
Okay, got it. Got it. Thank you. And all the best. Thank you.
operator
Thank you, ladies and gentlemen. Due to time constraints. That will be the last question. And now I hand the conference over to Mr. Akash for closing comments.
Akash Agarwal
Thank you all for joining us today. We hope we’ve been able to address your questions and give you a clear view of our performance and outlook. If you need any further information, please feel free to reach out to Marathon Capital, our investor relations advisors. We sincerely appreciate your continued interest and support. Thank you and have a nice day.
operator
On behalf of V2 Retail Limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.