METROBRAND - Metro Brands Limited Share Price

Management's outlook for Metro Brands Limited emphasizes a sustained growth trajectory despite external challenges. For Q1 FY 2026, the company reported a 9% growth in both standalone and consolidated sales, attributed to favorable market conditions and strategic initiatives. However, management noted that early monsoon affected sales in key markets like Gujarat and Maharashtra.

The significant forward-looking points include:

1. Store Expansion: The company opened 23 new stores during the quarter and plans to continue its growth trajectory with openings in prime locations, balancing the store count against market opportunities.
2. New Partnerships: The recent exclusive partnership with Clarks aims to enhance brand presence in the premium segment and is expected to boost sales across all channels in India, with potential revenue estimates projected above Rs. 250-300 crores.
3. E-commerce Growth: Management reported a 45% growth in the e-commerce segment, attributing resilience in online sales to consistent consumer interest, especially during the monsoon season.
4. Margins: The company's gross margin stabilized in the high 50% range, achieving almost 60%, and management aims to maintain a long-term EBITDA margin of over 30%.
5. Future Guidance: Management is targeting a 15-18% CAGR for revenue and mid-teen growth for PAT, reaffirming commitment to profitability despite market fluctuations.
6. Marketing Investments: Increased marketing spend was noted, targeted at 3.5%-4% of revenue, focusing on brand positioning and customer engagement to drive sales.

Overall, management expressed confidence in navigating current market conditions while exploring future growth avenues through strategic partnerships and efficient brand management.

Questions and Answers from the Q&A Section of the Earnings Transcript:

1. Q: "Nissan, you touched upon the repositioning of Walkway. Can you please elaborate on that, what are the moving parts involved in the outcome that you are expecting over here?"

   • A: "We are actually not repositioning Walkway but focusing on growing it. Our aim is to tap into the value footwear market where 80% of footwear sold in India is below Rs. 1,000. We are refining aspects like store presentation and cost structure to ensure Walkway is set for profitable growth."

2. Q: "If you want to own the lower price point range in the entire pricing ladder, do you believe there's still some more work involved around the supply chain?"

   • A: "Supply chain management and design acceptance are continuous challenges. We're optimistic about our initiatives yielding results. The lower price point segment is significant, and Walkway has growth potential, particularly since it fits into that demographic."

3. Q: "Considering that consumption has not yet picked up, would you expect store addition to remain lower at 80 or 90 or would you be crossing 100 this year?"

   • A: "We're optimistic about store growth as rental rates have stabilized. We aim to capitalize on good rental deals without being locked into a specific number. The outlook on store openings is positive, allowing us to leverage promising rental opportunities."

4. Q: "You mentioned mid-teens growth being dependent on new initiatives. Do you think the existing scaled-up brands are enough for that mid-teens?"

   • A: "Our historical growth rate post-COVID shows stability, with a CAGR of 12%. We're committed to maintaining mid-teens growth through a mix of strategies: same-store sales growth, new store openings, and new brand introductions to meet consumer needs."

5. Q: "Can you talk about same-store sales growth for Metro Mochi and Crocs?"

   • A: "We do not break out same-store sales growth but it contributes to overall growth alongside new store sales and ASP growth. We measure the long-term trends, noting that performance generally recovers over time despite some quarterly fluctuations."

6. Q: "On e-commerce, is this growth sustainable or was it a one-off?"

   • A: "Our e-commerce grew 45% this quarter, and while Q1 is usually slower, we're seeing consistent gains from omnichannel initiatives. This suggests sustainable growth rather than a one-off, as we leverage in-store inventory for online sales."

7. Q: "What impact is the early monsoon having on your sales?"

   • A: "Early monsoon has affected sales in regions where we have a significant store presence like Gujarat and Maharashtra. However, e-commerce is less impacted, allowing us to maintain growth despite slower retail traffic."

8. Q: "How is Walkway expanding, and what are its unit metrics?"

   • A: "Walkway's expansion metrics indicate it is less profitable than our Metro and Mochi brands, but it effectively utilizes capital. We're targeting around a 30% ROCE long-term, and we're confident about its top-line growth potential without negative impacts."

9. Q: "Any updates on the Foot Locker strategy curbs?"

   • A: "Our caution previously stemmed from BIS regulations affecting imports. Now that we have clarity on that, we are reopening stores with plans for further expansion this year, confirming confidence in the Foot Locker brand."

10. Q: "What impact does the integration of Clarks have on your current portfolio?"

    • A: "Clarks, being previously successful under other partnerships, presents a chance for us to leverage our existing capabilities. We foresee significant potential with our exclusive agreement and will share more details on its performance in upcoming calls."

This summary captures the critical questions and management's insights while adhering to the requested length.