V2 Retail Earnings Call for Q4FY26 & Full Year

Added: 2026-06-01

[00:00:00]Participants will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes.

[00:00:08]Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone phone.

[00:00:15]Please note that this conference is being recorded.

[00:00:18]Before we begin, a brief disclaimer. The presentation which V2 Retail Limited has uploaded on the stock exchange and their website, including the discussion during this call, contain or may not contain certain forward-looking statement considering V2 Retail Limited business prospect and probabilities which are subject to several risk and uncertainties.

[00:00:44]And the actual result could materially differ from those in such forward-looking statement. I now hand the conference over to Mr. Akash Agarwal, Director and CEO of V2 Retail Limited. Thank you, and over to you, sir.

[00:00:58]>> Good afternoon, everyone. And a uh very warm welcome to the V2 Retail Limited quarter four and FY26 earnings conference call.

[00:01:07]Thank you for joining us today. We trust you've had a chance to review our results. The earnings presentation and the press release are available on the stock exchanges and also on our website.

[00:01:16]Our quarter four results reflect the continued momentum across our business and the ability of of our teams to execute with discipline and agility.

[00:01:26]Even on a high base, we have demonstrated that our model can scale effectively while maintaining resilience in dynamic market conditions. The 60% year-on-year revenue growth for the fourth quarter significantly outpaces the broader market.

[00:01:43]Importantly, we have consistently delivered growth in excess of 60% for two consecutive years, underscoring the strength and sustainability of our operating model.

[00:01:53]In addition to our strong top line performance, I want to highlight the strategic investments that are reinforcing our ability to scale efficiently in India's value fashion segment.

[00:02:03]Our ongoing focus on analytics-driven merchandising, supply chain responsiveness, and operational discipline has strengthened our operating leverage and positioned us to capture growth at scale.

[00:02:16]Customer traction across categories remains healthy, reflecting the continued relevance of our price value positioning and product refresh cycle.

[00:02:25]A steady flow of trend-appropriate assortments, combined with strong quality standards and competitive pricing, has supported growth across our store network.

[00:02:34]This validates our approach of balancing affordability with fashion relevance, ensuring that we remain the preferred destination for value-conscious consumers.

[00:02:44]As we look ahead, we'll continue to deepen our investments in technology, expand our store footprint, and enhance our customer engagement. These initiatives, together with our disciplined execution, gives us confidence in sustaining momentum into the FY27 and beyond.

[00:03:02]On the expansion front, our focus this year has been on improving geographic coverage through a balanced mix of rural market entry and deeper penetration in tier two and tier three cities.

[00:03:14]This approach has helped us broaden our customer reach and improve regional alignment through localized assortments and strong store-level execution.

[00:03:23]During FY26, we added 136 stores, and our pipeline of planned openings remains robust.

[00:03:30]Backed by a strong merchandising and inventory management team, we remain focused on disciplined expansion, efficient inventory deployment, and sustainable operating performance.

[00:03:41]Importantly, our current store footprint has crossed 350 stores nationwide, marking a major milestone in our journey.

[00:03:50]Now, moving on to some key updates for the quarter and the for the whole financial year.

[00:03:56]First, we completed the physics physical verification of property, plant, and equipment and reconciled this with our fixed assets register. As a result, we have written off assets with a carrying value of 5.77 crores and this has resolved the earlier audit qualification.

[00:04:11]Second, we have been consistently sharing pre-IND numbers to provide better transparency on our operational performance and we will continue to do so going forward.

[00:04:21]Our annual business plans, budgets, cash flows, store level metrics, and incentive structures are all aligned to pre-IND numbers.

[00:04:31]Our revenue and profitability guidance is also communicated on this basis.

[00:04:35]Third, we are now focusing on retail business only and have moved away from in-house manufacturing operations.

[00:04:42]Fourth, the impact of new logo labor code is not material and has already been recognized in our financial results.

[00:04:50]Lastly, due to geopolitical tension, we have increased our safety stock in the month of March for seamless availability of stock, which has resulted into higher inventory levels in the month of March.

[00:05:01]Once the situation normalizes, we will reduce our safety stock. We are looking to maintain inventory at 90 to 100 days and creditors at 45 days.

[00:05:11]Now, moving on to some performance highlights.

[00:05:13]Revenue for the fourth quarter grew at 60% year-on-year to 797 crores.

[00:05:20]The EBITDA for the quarter stood at 109 crores as compared to 57.5 crores in the corresponding quarter last year, registering a stellar growth of 89% and EBITDA margin stood at 13.7% as compared to 11.6% in the corresponding quarter last year.

[00:05:38]PAT for the quarter stood at a record 17.5 crores compared to 6.4 crores in the corresponding quarter last year.

[00:05:47]We opened 33 new stores and closed two during the quarter and achieved a net addition of 136 stores in the whole financial year, taking our store total store count to 325 stores with approximately 3.5 million square feet of retail space.

[00:06:04]The SSG for quarter four stood at 7.74%.

[00:06:09]There was a robust volume growth of 53% in the quarter. The full price sales contributed 89% in the fourth quarter.

[00:06:18]Now, consolidated performance highlights for the whole financial year. Revenue for the year grew 63% to three 3,067 crores.

[00:06:28]EBITDA for the year stood at 455 crores compared to 258 crores in the corresponding period last year, registering a stellar growth of 77% year-on-year. EBITDA margin improved to 14.9% compared to 13.7% in the same period last year.

[00:06:48]Profit after tax for the financial year stood at a record 162 crores compared to 72 crores in FY25, registering a strong growth of 125% year-on-year.

[00:06:59]Same store sales growth for the financial year stood at approximately 8.6%.

[00:07:05]Robust volume growth of 47% in the whole financial year. The full price sales contribution was 90% in FY26.

[00:07:13]Our ROE continues to improve and now stands at 26% compared to 23.2% in FY25 and around 10.7% in FY24, reflecting disciplined capital allocation and strong operating leverage.

[00:07:28]Now, moving on to pre-IndAS reporting.

[00:07:31]For quarter four FY26, revenue remains the same at 797 crores, 60% up year-on-year. Gross margin was 30.3% compared to 27.6% in the corresponding quarter last year.

[00:07:46]EBITDA was 54 crores up 98% year on year with an EBITDA margin of 6.8% in the fourth quarter.

[00:07:53]PAT came in at 25 crores up 118% year on year.

[00:07:59]Now, the full financial year highlights on the pre-India as basis.

[00:08:04]Gross margin improved to 30.2% from 29.2% last year.

[00:08:09]EBITDA was 277 crores up 83% year on year with an EBITDA margin of 9%.

[00:08:16]PAT stood at 162 crores up 87% year on year.

[00:08:22]Further, it is important to note that company has achieved the PAT of 173 crores on standalone basis.

[00:08:28]Looking forward, our priorities remain clear. Profitable growth, capital efficiency, and disciplined execution.

[00:08:35]With sustained revenue momentum and improved inventory operating leverage, every initiative is directed towards one ultimate goal, enhancing long-term shareholder value.

[00:08:47]With that, I will now open the floor book for questions.

[00:08:52]>> Thank you, sir.

[00:08:53]Thank you. We'll now begin the question and answer session. Anyone who wishes to ask question may press star and one on your touch-tone telephone.

[00:09:01]If you wish to remove yourself from the question queue, you may press star and two.

[00:09:06]Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assemble.

[00:09:17]The first question is from the line of Piyush Jain from Growth and Infinity.

[00:09:22]Please go ahead.

[00:09:24]>> Hi Akash, am I audible?

[00:09:26]>> Yeah.

[00:09:28]>> Hi Akash, congratulations on good set of results. Like last two years have been really great for us and like it's just the uh like you and the whole team has contributed a lot in this.

[00:09:40]So, kudos to kudos to that.

[00:09:42]I have a few questions. First will be on the um store side. So, like last year we operate opened around 136 stores. How much we are planning for this year?

[00:09:52]Around 170 to 180, we guess.

[00:09:56]>> So, I think for this year the target would be anywhere between 170 to 200 stores. Uh completely dependent on how we are performing and how the momentum continues.

[00:10:08]>> Okay. And like we are able to manage like store openings through our internal accruals only like and the cash on the balance sheet, right?

[00:10:18]>> Yes, for this at least this financial year we are covered with internal accruals and the cash on the balance sheet.

[00:10:25]>> And so for next upcoming 2 to 3 years like we have to do another QIP for that?

[00:10:31]>> No, but there are like our debt-to-equity ratio is very very healthy, so we have the option of, you know, getting more debt on the books.

[00:10:39]So, I think that would be our first preference even if we need some cash for future expansion.

[00:10:45]>> Okay. Uh I have another question on the SSG side as uh like can you tell us because we are maintaining around 8 to 10%? So, like going forward like this doesn't go below 8%. So, what kind of a strategies we are using on our existing stores so that we can able to achieve like 8 to 10% SSG going forward.

[00:11:07]>> So, I think the strategies remain the same and we are focusing on the strengths and all the strategies that have previously worked over the last 3 years. It is strengthening the product.

[00:11:17]It is making the back end more robust.

[00:11:19]That includes the supply chain. That includes the visual merchandising. That includes the customer experience at the store. So, I think if you're giving a good product at the best value and it It supported by a, you know, good supply chain and good retail operations, good visual merchandising. That itself should lead to at least 8 to 10% SSSG. So, we just doubling down on all the strategies that have previously worked on us and now, you know, investing more in technology that can future support this better.

[00:11:51]>> Are we running any kind of a loyalty programs or something like that to like something like that?

[00:11:59]>> So, we don't have a loyalty program per se, but we have a database of about 8 crore customers and we do reach them through WhatsApp, RCS and SMS and we give them gift vouchers and you know, other kind of gifts, not loyalty points.

[00:12:17]>> Okay. I just have two more questions.

[00:12:19]First, will be on the as we are seeing like recent geopolitical tensions like have increased the commodity prices. So, we are capable enough around 3 to 4% will pass on the prices to the customers so that they won't impact the margins going forward.

[00:12:34]>> Yes, so we have seen some you know, movement in yarn prices and that have that would have been that would have to be transferred to the customer. So, we will maintain our gross margins and prices might go up in the future by 3 to 4%.

[00:12:52]>> Okay. And just like last on the capex side, so as of today, I think last quarter we have around 2 crores 2.2 crores per what we require. So, like it's maintained right now as well.

[00:13:04]>> It's about 2.6 crores and it will increase because of the price increase so it will become around 2.7 2.8 crores now. That includes capex and inventory.

[00:13:12]So, the capex would be about 1.2 to 1.3 crores and the rest would be paid inventory.

[00:13:20]>> Okay. Thank you. Thank you and all the best for the future.

[00:13:23]>> Thank you.

[00:13:25]>> Thank you. The next question is from the line of Avinash Karumanchi from MOSL. Please go ahead.

[00:13:34]>> Hi sir, good afternoon. Congrats on good set of numbers.

[00:13:37]My next question is regarding the gross margin. So, this year uh because of the higher fuel prices and all, we have seen a good improvement in the gross margin.

[00:13:45]So, how should we see this number going forward? Uh one in the near term and two uh mainly because of the uh the yarn in the cotton wages that you have indicated.

[00:13:56]>> So, uh you know, we started focusing a lot on inventory management and freshness of inventory. And we started doing inter-store transfers of inventory also.

[00:14:06]And uh better product mix at stores, so that all led to a better gross margin this year. So, going forward, you can look uh for us to maintain this gross margin anywhere between 28 to 30%.

[00:14:19]And uh like I mentioned earlier, all the price increases in raw materials will be passed on to the customer.

[00:14:25]And uh there will be an increase in uh MRP while maintaining the margins.

[00:14:31]>> Okay, okay. Because I'm asking this uh the other competitors, they have said that uh they don't want to pass on the full increase to the customers. They want to retain some part and take a hit on the margins.

[00:14:41]So, how do you see that?

[00:14:43]>> Well, I don't want to comment on any competitors, but our strategy is uh we won't absorb it in our gross margins because uh 3 to 4% increase is not significant. And uh yeah, I thought average selling price is 300 rupees. That translates to about 10 to 12 rupees additional MRP. So, uh I I don't think it's a significant impact.

[00:15:03]So, we would look to maintain our gross margin at 28 to 30%.

[00:15:09]>> No, okay. So, that clarifies. Thank you. I will hand it over.

[00:15:14]>> Thank you.

[00:15:16]The next question is from the line of Palash Kawli from Now Wealth. Please go ahead.

[00:15:22]>> Uh hi thank you for the opportunity.

[00:15:25]Sir, what gives you confidence that despite of all these uncertainties on a global front, you'll be I like demand will be good and you'll be adding 170 to 200 stores, which is higher than what you had guided earlier.

[00:15:41]>> So, what we're building today is not for the near term. We are building for our 20-year vision, which is to be one of the top value fashion retailers in the country. And hopefully what is happening around the world is temporary. And India is poised to grow at 5 to 6% GDP in the next 20 years. And if you look at organized retail, it is poised to grow at 9 to 10%.

[00:16:06]So, we want to capture most of that market. So, that's why these kind of short-term hindrances don't sway us from our long-term plan.

[00:16:18]>> Uh And so, what one is put any pressure on your near-term margins?

[00:16:25]>> So, we have seen a little bit of sale impact in May because of the war, but I think overall what we've seen in March, April, I think we can continue the positive momentum and it will not have a huge impact, especially in tier two, tier three towns.

[00:16:44]>> And so, two more questions. One is what is your what is the quantum of more than six months and one year old inventory? Uh what like will you be able to grow at 50% despite of everything?

[00:16:58]>> So, more than one year old inventory is less than 5%. And more than six months old inventory is less than 24%.

[00:17:06]So, about 76% of our inventory is less than six months old. And out of that also about 50% of the inventory is less than three months old.

[00:17:18]>> Okay. And uh so, uh on growth, any comment?

[00:17:23]>> No, we are guiding for at least uh you know, 50% revenue growth over the next 2 years.

[00:17:29]>> Okay. That's it from my side, sir. Thank you.

[00:17:32]>> Thank you.

[00:17:33]>> Thank you. The next question is from the line of Raj Shah from Trident AMC.

[00:17:39]Please go ahead.

[00:17:41]>> Yeah, hi. Thank you for the opportunity.

[00:17:43]Uh so, this year I was just noticing that we have opened up quite a few uh home stores in quite a few new states. You also entered Gujarat, Maharashtra, and increased uh >> Sorry to interrupt, Mr. Raj Shah. Could you please come in a network area? Your voice is breaking, sir.

[00:18:06]>> Uh can you hear me now?

[00:18:08]>> Yeah, much better.

[00:18:11]>> Yeah, I was asking So, we have >> Sorry, sir. You're breaking again.

[00:18:18]>> Sorry, the stores in quite just >> So, can't hear you. There's a lot of disturbance from your phone.

[00:18:30]>> Hello. Can you hear me now?

[00:18:33]>> Yeah.

[00:18:34]>> Yeah, I was saying that uh I mean, we have entered quite a few new states uh in this financial year, uh particularly in the western region. So, going forward, what is our strategy? Uh I mean, are we going to go deep in these states, particularly Gujarat, Maharashtra, Rajasthan? Uh and in terms of new store expansion, so uh I mean, which which geographically area will be they will largely concentrated into?

[00:18:57]>> So, our strategy remains the same. Uh whenever we enter a new state, we open about four to five stores there just to get a lot of data points in terms of what assortment, what sizes, what colors sell there. And then we make an optimal model. And for future expansion, it all depends on the performance of each state. So, we are tracking that every month. And uh for example, we had entered Karnataka and now we have almost 15 to 16 stores there.

[00:19:22]So, the future expansion would completely depend on how each state stores are performing. And uh looking at the data now, Gujarat is performing very well for us. All the South states, Andhra, Karnataka, Goa, they have been performing well.

[00:19:38]Maharashtra also, we have opened three stores and two of them are performing phenomenal.

[00:19:43]So, we are looking to open 30 to 50% new stores in the newer regions that we've entered. And of course, 50 to 60% will come from our core strong regions.

[00:19:54]>> Understood. Uh uh secondly, on our SSG growth, SSG growth has been close to 78%, but the sales per square feet has declined by close to 78%. So, what is the what explains this? Is it because we are opening larger stores? That is one of the reason?

[00:20:09]>> So, we opened 130 new stores and the new stores started about 70% of old stores per square feet sale.

[00:20:16]So, if you look at only old store PSF, that those have increased 8 and 1/2% uh equal to the SSG, but because we have opened so much new area this year, uh it it gets the overall company per square feet sale down, but as they mature, you'll see the growth in company PSF also.

[00:20:34]>> Understood. So, I mean, if your sales per square feet improve from here on because uh function in terms of percentage of new stores opened will slightly come down. So, do we see your EBITDA margins on a pre-India basis uh to improve further from here on? So, it's on standalone basis, we closed at around 9.4%. So, can we cross close to around 11% in the next 2 years?

[00:20:56]>> Because we are, you know, again uh guiding for opening more than 50% new area, so it becomes a challenge to uh you know, increase the company level PSF and expand EBITDA margins along with the 50% growth. So, you're right. The year when we you know, add only 20% new area, then you can expect that. But, next 2 years we want to add 50% new area, have 50% revenue growth. So, we are guiding for the similar margins and the similar P&F.

[00:21:28]>> Understood. Okay, thank you. Thanks.

[00:21:33]>> Thank you.

[00:21:34]The next question is from the line of Anupa from Batnatri Capital. Please go ahead.

[00:21:46]The next question is from the line of Arvind Arora of Squad Capital. Please go ahead.

[00:21:57]Mr. Arvind Arora, please go ahead, sir.

[00:22:01]As there is no response from Mr. Arvind Arora, the next question is from the line of Kushal Rungta from Mangal Keshav Financial LLP. Please go ahead.

[00:22:13]>> Thank you. Congratulations on the good set of numbers.

[00:22:15]My first question is So, how does the management look into thinking into related verticals or opening new format stores?

[00:22:24]I'm just trying to extrapolate from the likes of Trend which created different brands under one umbrella. I know you would not need to do that because uh you got a lot of scope to expand.

[00:22:35]But, uh won't you use that uh if there is any discussions in the board meeting and uh have you thought about it about the thing? And at what scale do you start thinking about it?

[00:22:48]>> I think we don't want to dilute our focus till we have at least 2,500 V2 stores. I think we've built a very strong model.

[00:22:57]And we want to get to every part of the country because still good fashion at an affordable price is not available to most middle class consumers in India.

[00:23:09]So, we want to capture that uh blue ocean first and then maybe we would think about the other strategies.

[00:23:18]>> Okay.

[00:23:18]Okay, that sounds good.

[00:23:20]My second question is looking from a naked eye and from the likes of investors, you seem to be a one-man show. However, it's the whole unseen team that is building this collaborative My question is if tomorrow hypothetically uh you are not able to attend a con call, who are in the organization would be suited to answer?

[00:23:41]We would really love to know the people uh who knows the in and out of the company and has a fair understanding and works closely with you.

[00:23:49]Yeah, that's my second question.

[00:23:51]>> So, there would be at least six people who would be able to take the call if I'm not available. And uh most of them have been with us for a journey of more than I think 10 years now.

[00:24:03]So, it's just that I have been the face of uh you know, the investors and uh the community.

[00:24:09]But of course, the all all the business leaders and the senior management people we have, they have uh all the list of the data because most of our reviews, most of our performance appraisals, everything is uh done on data. And most of the decisions that we take is also done on data. So, that is how we built the culture around the company.

[00:24:29]>> Okay, uh just a suggestion you could just include the the management team and the people closely working in the presentations also.

[00:24:37]So, that uh you can have a view on that.

[00:24:41]>> Sure, that is noted. We'll >> Yeah, and and just the last uh small clarification, there was a mutual pledge creation of some 3.5 lakh shares, I guess. So, any reason behind that?

[00:24:55]>> No, that was only for working capital needs because like uh we give a lot of prepayments. Even the QIP proceeds we use for a prepayment. You'll see that our creditor days have come down. So, we want to be the best paymasters in the industry, and we want to be the priority vendor for all our suppliers. And we want to work them help them with their working capital.

[00:25:18]>> Thank you so much. Thank you and best of luck.

[00:25:22]>> Thank you.

[00:25:23]>> Thank you, sir.

[00:25:25]The next question is from the line of Aman Bansal from PSP. Please go ahead.

[00:25:33]>> Hello. Can you hear me?

[00:25:35]>> Yes, sir. You are.

[00:25:37]>> Okay, sir. I'm an associate at Edelweiss.

[00:25:40]I just have two questions.

[00:25:42]Um the first one would be Uh I think in the last conference call you had mentioned that you did not want to increase the prices of our uh of our clothes. Uh basically we want to remain at the same price.

[00:25:55]But this year we saw a volume growth of 47% while your revenue uh the entire group grew by 63%.

[00:26:03]So, like like what was the main driver for that?

[00:26:06]And how do you look at prices going forward?

[00:26:10]>> Uh so, that's not a right insight. So, it's all because of product mix. So, what we have seen is products like kurtis, product like men's women pajamas, product like men's casual shirts, these were the highest growing categories for us. So, we gave them more space in our stores.

[00:26:26]So, what that does is that reduces the quantity of maybe lower price point items like a kids bermuda.

[00:26:33]So, it's all because of product mix. The price ASP increase within the categories only inflationary.

[00:26:40]I think that would be around 4 to 5%.

[00:26:42]But everything else is attributed to different product mix.

[00:26:49]>> Okay.

[00:26:49]So, like just to understand, so like between men's, uh ladies, and kids, what would be like the ideal uh ratio?

[00:26:58]>> Uh men's would be about 41-42%, uh women's wear is around 27%, and kids is about 25%.

[00:27:06]>> Okay, so we are we are basically at what we wanted to be in this in this segment.

[00:27:10]>> Yes.

[00:27:12]>> Okay, sir.

[00:27:13]Uh so, it's telling me um so, you mentioned that uh every new store will start selling about 70% of the EPS at cost, uh men's also. So, this how long does it take to uh become a bit of positive the new stores? So, >> So, it is a bit of positive from the first month itself, because the break-even point is around 500 rupees per square feet of sale, and uh they start at about 700 to 750, but to mature and reach old stores level, it takes about 3 to 4 years.

[00:27:44]>> Okay, that's amazing.

[00:27:46]Thank you so much.

[00:27:48]>> Thank you.

[00:27:50]>> Thank you.

[00:27:51]The next question is from the line of Ankush Agarwal from Sergy Capital.

[00:27:55]Please go ahead.

[00:27:57]>> Yeah, hi Akash. Uh Akash, can you share the sales per square feet of the older stores and new stores for FY26?

[00:28:06]>> Sorry, can you repeat that question?

[00:28:09]>> The sales per square feet of old stores and new stores separately for FY26.

[00:28:14]>> So, our old stores were at 1,124 rupees per square feet for the whole year, and new stores were at 750 rupees per square feet. And new stores is any stores that opened after FY24.

[00:28:26]>> I'm trying. And we are continuing to see that new stores are starting at more than 70% of the old stores throughput, and which is why I think they're continuing to Yeah.

[00:28:37]scale up aggressively beyond new stores, right?

[00:28:40]>> Yes, of course it changes month to month, but uh it is at a very uh respectable level, and like I said, it's already at a 750 rupees per square feet of sale level, which already starts contributing to the company EBITDA from day one.

[00:28:53]So, I think we have a good amount of margin of error for the new stores.

[00:28:56]That's why we continue expanding.

[00:28:59]>> Okay.

[00:28:59]And secondly, you mentioned that the using inventories partially because of new stopping up because of geopolitical uncertainty. So, is there a number of, you know, what quantum of inventory will be because of that on resources?

[00:29:15]>> So, according to our closing area in March, if you look at like, you know, we look to maintain about 2,500 to 2,600 rupees square feet of inventory. So, that's around 900 crores of inventory that we need. And we have additional inventory of about 125 to 150 for the 60 stores that we have planned to open this quarter.

[00:29:37]And about 100 to 150 is the pre-GRC that we did because we saw a lot of supply chain disruptions. And because we were opening so many newer stores and we had a good festival coming up in April and wedding season, we did early GRC and, you know, we wanted to have extra safety stock rather than empty shelves at our store. So, I think if you include new stores and this together, it'll be about 300 crores of inventory.

[00:30:05]>> Okay.

[00:30:05]Good. Good. That was important.

[00:30:08]>> Thank you.

[00:30:10]>> Thank you. The next question is from the line of Smith Gala from RSP and Ventures. Please go ahead.

[00:30:17]>> Yeah, thank you for the opportunity. My first question will be filed throughout the year.

[00:30:22]For three first three quarters, we have been outperforming the peers in terms of SSSG growth. In this fourth quarter specifically, the SSSG growth was a bit under par as compared to the peers. So, any color and on that and how we supposed to go back to normalcy where outperforming our peers?

[00:30:43]>> I think again, you have >> look at look at it from a different lens.

[00:30:47]What the base that we're talking about so the SSG that we're calculating is on a base of 1,000 rupees per square feet of sale.

[00:30:55]So growing at 8 and 1/2% on you know 1,000 40 rupees per square feet of sale we are all stores are now at 1,125 which is I think at least 40 to 50% more than our peers.

[00:31:10]So as the base increases of course the percentage growth you cannot keep being number one but I think if you look at the full year SSG growth we are still right at the top even with the higher base.

[00:31:23]And look at the profitability numbers, look at the EBITDA numbers that for us the ultimate aim is you know highest per square feet GP and the highest per square feet EBITDA and highest return on equity. So I think we beat our peers on all those metrics that matters the most.

[00:31:43]>> Okay so we continue to guide to 8 to 10% SSG for the future.

[00:31:47]>> Yes.

[00:31:49]>> And secondly one bookkeeping question that depreciation has increased materially sequentially while our stores increased sequentially by 11 12%.

[00:31:58]So depreciation has taken a drastic increase so any is it a one time somewhere or something like that?

[00:32:04]>> Yeah it is a one time accounting change so a lot of small items like yards, hot tags, hangers what we used to capitalize earlier now we depreciated them because we want to expense it off.

[00:32:19]>> Okay so what was the quantum of that one time hit that we have taken this quarter?

[00:32:24]>> About I think it would be about 6 to 7 crores.

[00:32:27]>> Okay okay that was helpful I'll get back with you.

[00:32:31]>> Thank you.

[00:32:33]>> Thank you. The next question is from the line of Deepak Kruti from Wealth with Wisdom, please go ahead.

[00:32:41]>> Hi Akash, great set of numbers. Just wanted to understand what was our marketing spend in financial year 26?

[00:32:51]>> It was about 0.3%.

[00:32:54]>> Okay, 0.3. And what what is the marketing budget for the coming year, financial year 27?

[00:33:01]>> Uh it's similar numbers. And most of that marketing happens for newer stores.

[00:33:06]For older stores, uh you know, I think our product is the biggest marketing ambassador for us and a lot of word-of-mouth marketing has been working for us. So, in fact, uh you know, we've been more targeted in terms of marketing and more efficient. But, going forward, it'll be less than 0.5%.

[00:33:25]>> Okay. Okay. Just one last question. What do you do with the off-season inventory?

[00:33:29]Let's say, you know, if you are left with some winter season inventory, how do you dispose it off?

[00:33:36]Uh I mean, so what do you do with it?

[00:33:38]>> So, about 15% of every season's inventory is left with us. We sell it the next season. We don't dispose of any inventory.

[00:33:45]Because winter season is so short, it's only 3 months, we get it back to our warehouse. Uh we reprocess it, we repack it, and we send it in the next season.

[00:33:55]>> Okay. Thank you. Those were the questions. Thanks. Thanks Akash. All the best.

[00:33:59]>> Thank you.

[00:34:02]>> Thank you. The next question is from the line of Nupa from Ratnatray Capital.

[00:34:07]Please go ahead.

[00:34:09]>> Uh yeah. So, I just wanted to ask a question like what is the kind of expectation on the SSG growth for next year considering the number of stores they're opening?

[00:34:20]>> Uh so, SSG has no relation to the number of stores that we're opening because SSG will only that we declare is for the older stores. And we guide for a 8 to 10% SSG going forward.

[00:34:32]>> Okay. And you said that the new stores open at 750 revenue per square feet. Uh How many months or years does it take to reach a matured revenue per square feet of 11 1100?

[00:34:48]>> It takes about 3 to 4 years.

[00:34:51]>> 3 to 4 years.

[00:34:52]Okay. Yeah, thank you.

[00:34:55]>> Thank you.

[00:34:57]>> Thank you. The next question is from the line of Subanu from Subanu Bangal from Three Head Capital.

[00:35:04]Please go ahead.

[00:35:06]>> Hello. Good afternoon, team.

[00:35:08]I have just one question on operating leverage.

[00:35:12]I I think as you mentioned our margin will not increase and second, our old store PSF around stabilize around 8% to 10%. Then, how can we will get the operating leverage going forward?

[00:35:30]>> Uh sorry, I did not understand your question.

[00:35:33]>> I have I I have got one one question on operating leverage.

[00:35:37]Do you Can you hear me?

[00:35:39]>> Yeah, yeah, I can hear you now.

[00:35:42]>> Uh as you mentioned, our margin will be stable at the as you as you guided level and our PSF goes around 8% to 10%.

[00:35:51]Then, how can we will get the operating leverage going forward?

[00:35:56]>> Because we are opening so many newer stores, we are adding almost 50% to 60% new area and they start at about 70% of old store PSF. So, that's why we cannot get an operating leverage at the company level because old stores EBITDA is around 11% to 12% and new stores EBITDA is around 5% to 6%. So, the blended EBITDA remains the same. But, if you look at only old stores in isolation, then of course there's an operating leverage because the per square feet costs come down and with an SSSG of 8.5% you know the store level a beta also increases but it's only because we are adding so much new area at the company level it will take a few years to see.

[00:36:39]>> And that means that FY27 holding leverage in console level?

[00:36:45]>> Yes, so FY27 you will see similar EBITDA margins and similar company PSF numbers.

[00:36:54]>> Just thank you.

[00:36:55]Best thank you. Good luck.

[00:36:59]>> Thank you.

[00:37:00]A reminder to all participants that you may press star and one to ask question.

[00:37:04]The next question is from the line of Vidisha from C.R. Kothari and Sons Stock Broking. Please go ahead.

[00:37:18]Mr. Vidisha, could you please go ahead?

[00:37:23]As there's no response from Vidisha, the next question is from the line of Arvind Arora for Squad Capital. Please go ahead.

[00:37:31]>> Hello, am I audible?

[00:37:33]>> Yes, sir.

[00:37:34]>> Yes.

[00:37:35]Yeah. So, hi Akash. First of all, congratulations. So, Akash, is it like our in the current quarter our sales were good from new stores if I compare the previous year quarter four sales number from new stores?

[00:37:50]Because if I see my SSG and like SSG growth in the current year is 7.7% like in the current quarter and if I compare previous year quarter then it was 24% then still we are able to like accelerate our GP margin by 270 bps.

[00:38:07]Is my understanding correct?

[00:38:11]>> No, but GP margin is not related to new or old stores. The gross margin expansion was because you know we did less discounting during the winter season and a better product mix and we did a lot of inter store transfers.

[00:38:25]>> So quarter four and quarter four is compatible, correct? Previous year quarter And then if my SSG growth was not so great like if I compare with the previous year quarter four which was like 24% still my margin is expanded.

[00:38:43]>> Because of again a better product mix and more full price sale. So the gross margin across old and new stores was higher.

[00:38:50]So because the gross margin was higher, the EBITDA margin was higher.

[00:38:55]>> Okay, understood. Understood. And I got Is there any like plan where we are venturing into another segment other than this retail space and because I have seen some advertisement where we are asking for vendor to publish the product or something like that in the media, social media or something like that.

[00:39:15]>> No, we don't have any other model or no plans for any other model. We're completely focused on this model and trying to make this better and better and reach our next target of 1200 rupees per square feet at company level.

[00:39:29]>> Understood. Okay, thank you. All the best.

[00:39:32]>> Thank you.

[00:39:36]>> Thank you. The next question is from the line of Kushal Kasliwal from Invest Research. Please go ahead.

[00:39:43]>> Hi, thanks for taking my question. Uh Akash, just wanted to understand our expansion for next two years in terms of store addition. How many stores are we planning to add and what is the strategy around store additions? Will will these stores be within our existing locations or are we also entering into new like locations? And just wanted to understand how do we evaluate uh when we kind of set up a store in a new place, uh what are some of the let's say top three, top five points which are most important for us to set up a store in a locality?

[00:40:16]>> Yeah, so we want to open 50 to 60% new area every year. So this year we want to open at least 170 180 new stores. And again next year the same. If we end the year at around 500 stores, so we want we would want to open 250 stores next year.

[00:40:31]But again this is all conditional that we're not compromising on any of our profitability or operating numbers and metrics. So if the momentum continues and if we keep performing well and both old and new stores keep performing well, then we will go ahead with this expansion.

[00:40:48]And to answer your second question, so we have I would say a scorecard for every location which has at least 70 to 80 different metrics.

[00:40:57]That includes how far is it from the metro station, how far is it from the train station, bus station, floor plate, parking, frontage, the access road width, how many cars are passing every 10 minutes during different times of the day. So there are different metrics that we put for a location that gives us a you know confidence score as to how that store would perform. And of course it includes population density, per capita income, and we do sales benchmarking from the unorganized and organized players in that particular city. And that's how we take a decision to enter a city.

[00:41:41]>> Is it possible to give a you know based on whatever data we collect, what is the percentage of stores where we go wrong? I mean there are obviously new store openings and you know with new store openings there's obviously growth, but there's obviously a risk if the store opens at a wrong location. So do you have data around you know if how many times do we go wrong in terms of our new store openings and how quick are we to kind of reverse that decision or close that one.

[00:42:13]>> So, see I think uh that that is a very uh subjective uh number because uh 4 years back that number used to be around 10% because the company base PSF used to be 650 rupees per square feet. So, about 10 to 12% of the locations used to go wrong because some new stores started from 300 rupees per square feet.

[00:42:34]But now because the company base level has increased to 950 rupees per square feet and 1,000 rupees per square feet, newer stores are starting at 750. So, that percentage from 10 to 12% has come down to 2 to 3%.

[00:42:48]So, what we have understood is it's not about usually not about location being wrong, but it's more about your product and you as a brand because I think it was just 2 years back that we had identified about 22 stores that we wanted to shut down.

[00:43:05]And all of those stores are profitable now.

[00:43:08]Like 21 of them are profitable now. We just had to shut down one.

[00:43:12]So, that that tells you that you know, more than location it's about the product.

[00:43:20]>> Got it. Thank you. Thanks for answering my question.

[00:43:23]>> Thank you.

[00:43:26]Thank you. The next question is from the line of Nikshit CV from KVN and Associates. Please go ahead.

[00:43:33]>> Okay. Hello.

[00:43:36]>> Yes, sir. We can hear you.

[00:43:38]>> Uh sir, is there is any planning to open store in uh outside India while your competitor also entering their segment?

[00:43:46]>> I think so. That India is big enough for us uh to feed us for the next uh 5 years uh at least because we want to have 2,500 stores. So, we are not looking at any other geographies.

[00:44:00]>> Okay. Okay, sir. That's one more question.

[00:44:03]Thanks.

[00:44:08]>> Thank you.

[00:44:09]The next question is from the line of Amish Ghani from No Ice Investment Managers. Please go ahead.

[00:44:22]>> And sir, you've given to the previous participant in terms of entering new, you know, area.

[00:44:28]But one, you know, if you can a bit more elaborate, you did also mention that you enter first with some four five store in a state and then you expand depending on, you know, your understanding of that area and geography.

[00:44:41]So one, you know, where and and I did have observed that in few of the states we have, you know, four five seven stores and few we have well penetrated well in terms of, you know, 35 to 50 stores each state. So one, the question is, sir, how how have we, you know, expanded state by state in last two years and how do we see that in next two years? If you can give us some flavor of, you know, how we are approaching, you know, state by state or cluster wise and you know, how are we, you know, presenting ourselves with some, say, you know, the warehouses and stuff like that. That's question number one. And sir, second, you know, I I've observed that 90% of our sales, you say it is normal pricing.

[00:45:25]So we are not resorting to discount sales and stuff like that. We being a value format. The question there is, sir, how do we ensure that, you know, we keep you know, our regular customers calling back. So if you can give us some sense of what is working for us, you know, given we have a very healthy same store sales growth. If you can give us some sense, we'll be able to we'll be able to appreciate the the model better.

[00:45:50]Thanks.

[00:45:52]>> So so along to your first question, so we are already present in 25 states now and we are we used to have one central warehouse. We We opened one zonal warehouse in Kolkata and now we are finalizing one in the south. So we'll have three zonal warehouses and we already have about 18 hubs specially in all the states there where we are densely populated densely located in.

[00:46:16]So that's about supply chain and going forward I think I already answered this question that now it all completely depends on the performance of the stores in each state. Looking at you know given example we had entered West Bengal and Karnataka a few a few years back with a couple of stores and now we have 20 stores in Karnataka and we have 15 stores in West Bengal.

[00:46:36]And similarly so we have entered I think nine new states. So we have entered Andhra Pradesh, Telangana, Maharashtra, Gujarat, Rajasthan, Punjab, Haryana.

[00:46:46]So we we we will see the performance we'll judge the performance we'll make the optimal model and we'll expand wherever you know we see that we're getting the best traction. And going forward we want to be present in every state in the country. And we've seen you know a good response and a good performance of new stores in all the new geographies so that gives us tremendous amount of confidence. To actually expand further in these states and to answer your second question about why the customer keeps coming back I think value fashion anywhere around the world it's it's about creating an ecosystem where the designs that you're turning out of the assortment that you're turning out and what the customer sees at the store.

[00:47:30]It's it's something that he thinks is fashion forward affordable and you know good quality in terms of fabric in terms of colors in terms of fits. So it's about creating that brand identity in the minds of the consumers.

[00:47:47]So once you have that trust in the minds of the consumer that okay if you go to V2 you'll find the latest fashion you will find you know the most affordable price and you will always find availability and a good customer experience. So I think a mix of all this gets them back to the store and we do not want to be a discount store. That's why you know we selling more than 90% at full price.

[00:48:15]>> Thanks. Thanks. That helps and all the best.

[00:48:20]>> Thank you. The next question is from the line of Avinash from Karu.

[00:48:25]from MOSL. Please go ahead.

[00:48:30]>> Thank you for the opportunity again. So my question is regarding the rate of these liabilities on the balance sheet.

[00:48:36]If I see look at them the the percentage increase was not equivalent to what the area growth looked like.

[00:48:41]So does this mean that we are signing leases for the shorter terms or how should we look at it?

[00:48:46]We changed the policy.

[00:48:47]>> We changed the policy last quarter. So what we decided was we look at at least two to three years of performance of a new store before deciding whether we want to continue operating it or not because our lock-ins and all the leases are about one year and the vendor lock-in is 11 years. So we changed that accounting policy last year in line with all the retailers in the country because that also helps us reduce the gap between pre-India and India.

[00:49:17]>> Okay.

[00:49:18]Thank you.

[00:49:19]>> Thank you.

[00:49:21]>> Thank you. A reminder to all participants that you may press 1 to ask question. The next question is from the line of Omkar Godgare.

[00:49:30]from Shree Investment. Please go ahead.

[00:49:33]>> Good afternoon. My question is regarding the cash flow. So in the current year you will be opening around 175 to 200 stores as you just stated. So is it can you give us like is it possible to be cash flow positive even after being even after opening around 175 to 200 stores.

[00:49:54]That's the first question.

[00:49:55]>> as as I talked to you about operating cash flow, of course that can be positive.

[00:49:59]But when we reinvest it, so the net cash from operating activities can be positive even after opening 175 stores, yes. And we saw that last year also when we had opened 74 stores.

[00:50:11]This year because we had prepaid a lot of vendors, so if you look at the creditors that has come down by almost 10 days.

[00:50:17]So that that shows a little increase in a little bit of working capital. But as and when we need the money for opening the newer stores, we can stop the prepayment program.

[00:50:29]>> So you are saying that wouldn't be the case this year. So you will be cash flow operating positive this year.

[00:50:34]>> Yes.

[00:50:36]>> Okay.

[00:50:37]So another question is like you mentioned that maybe in couple of years or maybe 5 7 years you plan to open around like total store count should be 2500 and your aim is to have a 1200 rupees square feet. So like how does this both align in your long-term vision?

[00:51:01]>> So both periods are different again.

[00:51:04]Like I already mentioned, till we keep adding 50% new area, we won't be able to increase the company per square feet sale.

[00:51:12]But there will be a time when you know we reach when when we reach 2000 stores, then we would only happen to open 500 new stores. So that year we will be able to expand operating leverage, EBITDA, per square feet sale of the company as well.

[00:51:25]So again, we are talking about two different timelines here.

[00:51:28]>> Correct. But this 2000 like store count of 2000 like what is the timeline for that? And after that, so this is like a 5-year time period or what you are talking about?

[00:51:41]>> It is completely conditional to performance and it's just about building a model. We are looking to grow at at least 50% if we keep performing well.

[00:51:49]So, you know, you can just build the model and see like what year we reach 2,500 if we keep growing at 50%.

[00:51:57]>> Correct, because you had earlier like said that uh you would want to grow at least 50% for the next 10 years. So, that's why this question arises.

[00:52:09]>> So, again, the capacity of number of stores of V2 in India, today we think it's 2,500. So, we can only grow at 50% till we reach that number.

[00:52:19]For beyond that to grow at 50%, we would need a different model or a to enter a different country.

[00:52:26]>> Okay, but till 2,500, you still feel confident that even after the base keeps keeps increasing, you can still deliver 50% growth?

[00:52:37]>> That's the idea, and that's what we want to target.

[00:52:40]Uh conditional to good performance and continued momentum.

[00:52:45]>> Correct. Another question is like on the EBITDA margin front, like for FY '27, you have said that we'll be maintaining the margins, but like what can be the margin level? Can it go to like pre-India Ind-AS double early double-digit or low double-digit margins in next 2-3 years?

[00:53:04]>> So, there are three levers to this. One is of course consolidate consolidating and purchasing fabrics because still we are only nominating about 20% of our purchases. And vendors are buying those raw materials in silos.

[00:53:18]So, we have the potential to save at least 3 to 5% there by centralizing and nominating fabrics.

[00:53:26]The second operating leverage is of course per square feet expenses. So, we've already been able to reduce it from around 200 rupees per square feet of sale to around 190.

[00:53:38]And going forward, it should go down to I think 175. So, percent uh percent and a half comes from there. And the third one is of course SSG that increases your per square feet sale. But because we are adding, you know, 50% 60% new area, it offsets all these uh three levers.

[00:53:59]So, that is why you're able to maintain uh such a high EBITDA percentage even after adding so much new area.

[00:54:06]>> Okay, so basically for near-term like uh similar growth on the top line as well as similar growth on the bottom line.

[00:54:13]Correct? At least for the near-term.

[00:54:15]>> Yes.

[00:54:16]>> Okay, just the last thing. Uh just wanted to know uh after all these long-term questions, just wanted to know like almost 2 months of this quarter current quarter is gone.

[00:54:25]You have said that May has been a little bit slow as compared to like what you are guiding for or what you have delivered. So, what can we expect because like only a month is remaining for this current quarter? So, it should be with the Yeah.

[00:54:41]>> So, again, I think it's too early to say. Like I said, April was very good for us and May has been a little slow and June is supposed to be one of the biggest months for us. So, that will define the quarter going forward, but it all looks good. And whatever is happening around the world, like I said, it's I think hopefully short-term and uh we can we can end those animosities and, you know, uh have peace.

[00:55:02]>> Yeah. Even if there is a little bit here and there for the quarter, so for the year as well as for the next 2 3 years, you are guiding for 50%, right?

[00:55:10]>> Yes.

[00:55:11]>> Okay. All right. Thank you very much.

[00:55:14]>> Thank you.

[00:55:17]>> Thank you.

[00:55:20]Due to time constraint, we take this as a last question. I now hand the conference over to Mr. Akash Agarwal for closing comments.

[00:55:30]>> Thank you 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.

[00:55:52]>> Thank you.

[00:55:53]On behalf of V2 Retail Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.