Metro Brands reported stable June Quarter 2023 numbers. The company is one of the largest Indian footwear & accessories specialty retailers. Metro Brands is one of the leading aspirational Indian brands in the Indian footwear industry. The company manufactures footwear and other accessories for the entire family with focus on mid and premium segments. As on June 30, 2023, the company operates through 766 stores in 182 cities across 31 Indian states and union territories. The Metro Brands stock price is near its 52-week high.
Stable June Quarter results
Revenues came in at Rs 582 crore, up 15% YoY supported by higher realizations and robust store additions in Q1FY24.
Operating margins stood at 32% in June Quarter 2023 contracting four percentage points due to loss realized in liquidation of Cravatex’s excess inventory. Net profit stood at Rs 93 crore in Q1FY24 falling 11% YoY. Speaking on June quarterly results, Nissan Joseph, CEO, Metro Brands said, “We were up against some record-breaking sales, EBITDA and PAT numbers. This was driven last year by a few factors which included pent-up buying, wardrobe refreshes, and a healthy number of auspicious wedding dates, and an overall return to the brick-and-mortar stores to a fully open restriction free environment.” He further added that stable revenue growth was supported by robust growth of 63% YoY in its e-commerce segment and premiumization. Highest ever quarterly ecommerce sales (including omni-channel) of Rs 61 crore in Q1FY24. Over the last four years online sales CAGR is 71%.
Premium customer continues to shop
Metro Brands focuses on the affordable premium segment of the Indian consumer. While other players are seeing slowdown in the premium segment, Metro Brands is witnessing strong growth in its premium product segment. The company targets mid and premium segments through five different brand outlets namely Walkway, Mochi, Metro, Crocs and Flitflop. Speaking on premium segment growth, Joseph said, “Crocs had some significant price increases, and we’re not seeing any slowdown there.” He further added that the company caters to the same premium consumer even in Tier-2 cities. Thus the premiumization mantra is working well for Metro Brands. According to the management, stable growth is driven by understanding regional tastes and festive culture of consumers, keeping constant freshness in inventory and assortment, and working directly with vendors to bring out styles that resonate strongly with consumers.
Aggressive store expansion planned
Metro Brand’s asset light business with an efficient operating model has led to sustained profitable growth. There was a net addition of 27 stores in eight new cities across all formats during the quarter. The company aims to open 100 stores in FY24 and another 100 in FY25. Most of the new openings are in Tier 2 and Tier 3 cities. Speaking on store expansion Joseph said, “every new city is going to be a Tier-2, Tier-3 fundamentally because we’ve already penetrated all the metro cities and Tier-1 cities.” According to the management, the Tier 2 and Tier 3 cities also have a much lower operating cost structure, right from capex to rentals.
