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Shoppers Stop Limited

Shoppers Stop Limited — Q1 FY27 earnings call

28 Jul 2026

ResultsPresentationInvitationRecordingTranscript

Sucrit Patil · competition

I have 2 questions. The first question to Mr. Mishra. Just to understand the forward guidance, what is Shoppers Stop's strategic road map for balancing its premium brand positioning with the need to attract younger audience, value-conscious customers, especially given the challenge of rising competition from online platforms and changing consumer habits? That's my first question. I'll have the second question after this.

Kavindra Mishra · Customer Care Associate Managing Director

Sucrit,if I understand correctly, the question was how are we balancing our premiumization strategy with competition online? Is that the question -- if that's the question, as I correctly understand, then our stated intention is to be the aspirational Shoppers Stop Limited July 23, 2026 Confidential Page 7 of 23 bridge to luxury departmental store, omnichannel store for the young Indian family, right, which means that we'll continue to premiumize. We will continue to bring more and more exclusive brands within the ambit of Shoppers Stop. So, I don't see where we are actually directly competing with the e-com players because a lot of consumer behaviour is very different from what we are trying to drive. We are looking at a little bit more mature customer, maybe the age which is around 30- ish year of age, and that's the young family we are targeting as a strategic thing. For our younger customers, we want to be relevant. So, our current association with HYBE, which is one of the -- which is the leading group, which has created brands like BTS and yes, like leading Korean brands. So, we obviously are working with them to create that particular consumer and be attractive to them. But fundamentally, as a business, we want our customers to come to us to satisfy the aspiration which are rising and which are more towards the premium side of business rather than only a value or around that piece as well.

Sucrit Patil · capex

My second question to Mr. Pankaj is again, a forward-looking one. With store expansion, omnichannel investment and rising operating costs, what are the key financial levers you are using to sustain profitability while funding growth?

No answer was attributed to this question in the transcript.

Pankaj Chaturvedi · capex

Sameer Gupta · other

First of all, congrats on a good set of numbers. First question, sir, is on Beauty. Now if I exclude the distribution revenues, the beauty sales is flat. And if I even look at the last year or a few years before that, the contribution has actually not increased. In fact, if I look at 2 years back, it was slightly higher than what it is today. So, I just wanted to understand, I mean, this is a category where premiumization as a lever probably is higher. We have had a head start in this category creating it. Is it like online -- the large bulk of the audience has now shifted online and the online players like Nykaa, they are able to market it better with influencers or how to use categories, etcetera, where we are lacking? Or is it just Estée Lauder an issue? I heard you said that it has finally come to LTL growth after 4-5 quarters. So, is it a brand- specific issue or something lacking in our proposition? Any turnaround that you can basically guide towards will be helpful.

Kavindra Mishra · Customer Care Associate Managing Director

Thank you, Sameer, for the question. So, I think there are 2 or 3 parts of this, how I would like to address it. So obviously, let's assume that we are keeping the GSSB business aside for a minute, and we're only talking about the retail business, right? Now if I look at the retail business, which basically means the departmental store business and then the business which is there in our stand-alone Estée Lauder doors, so the departmental store business continues to grow. In fact, the non-ELCA business for us is growing by around 10%. So, we see a healthy growth there. When you look at the base of Estée Lauder stand-alone doors, there are 2 parts of it. One is we have shut around 14-odd stores over the last year or so, which sits in the base and where you don't see a growth. But if I look about stores which are existing, we are actually growing by 4% like-for-like. So, in our minds, the challenges are more towards -- or we have taken out the nonperforming stores of Estée Lauder focusing on what we have and growing that business, that's one. The non-ELCA business actually is growing really, really well. So, we Shoppers Stop Limited July 23, 2026 Confidential Page 9 of 23 spoke about the fragrances business, the overall growth there. I think in the departmental stores -- the non-ELCA business is growing around 10%. So, we see strong growth there.

Kavindra Mishra · Customer Care Associate Managing Director

Yes. So, the department stores are doing well. The non-Estée Lauder business is growing well by 10% or so. Estée Lauder business has also turned around and now is growing. The reason why you see there is no growth or the numbers look flattish is because we have shut around 14 stores over last year, which are sitting in the base.

Sameer Gupta · other

So, second is on INTUNE. So last quarter, we had said that we need a sales throughput to go up by around 25% to 30% for us to be back in terms of store additions spree. And first half, probably we would not see any store addition. Now this quarter is 10% healthy LFL. Is there any change in the strategy here? Or are we still saying that it's still a wait and watch in terms of store additions and you probably would want to look at this full year before committing any store additions here? Or like is there any change? I mean, that's the question.

Kavindra Mishra · Customer Care Associate Managing Director

Okay. So, 2 parts to that, Sameer. As you rightly said, we have grown by 10% like-for-like, right, in Q1. We had said that we should be doing around 20%. So, there are parts of it. So, the mall stores for us and the like-for-like stores actually are very close to what we wanted. It is the high street where we need to still see that pickup happening to the extent which we want. My sense is, as we initially guided in the last call is that we will take the first 6 months to stabilize and see the operational pieces are in place before we take a call on this. I think the guidance remains same on that. We are focusing on improving the productivity. And with Mahesh coming also, I think there's a lot of action happening there. We would be in Shoppers Stop Limited July 23, 2026 Confidential Page 11 of 23 a much better space to answer this question in the next call, but we are in the right direction. So, the problems which INTUNE had over the last year, which was the inventory specifically the inventory and then operational issues, I think we have been able to link those. The inventory is much fresher. The operational strength has come in place. We are seeing that the KPIs, which are an important reflection on whether you are running the business well or not are all in a much more positive sense. So, we are in a good direction. I think we have got a good set of sourcing. We have got around 90 stores right now. That's a good number to fix these things. And we will see this business is important, and it will see a big growth from our side. We just need one more quarter to demonstrate internally that what we are doing is right and that we are there. Once all those problems are fixed, which my sense is where we are, but we want to wait for another quarter or so before giving a guidance on store openings in INTUNE.

Kavindra Mishra · Customer Care Associate Managing Director

No, no, I think it's a good thought. I don't think even if we have to open 5 to 10 stores in Q4 of FY27, that should not be a problem for us. Because there are cost reductions and productivity happening across the board in the organization. So, if we have to invest also maybe of 5 or 10 stores with the investments which are there in INTUNE, it's a much lesser. Opening 10 INTUNE stores is equivalent to opening 1 Shoppers Stop. So, one more Shoppers Stop. So, I don't see that as an issue, Sameer. I don't see that as an issue. Obviously, it will not open in Q3, but we already have identified the spaces and all. We are just waiting for our internal numbers to improve little more before we move into the next one. Shoppers Stop Limited July 23, 2026 Confidential Page 12 of 23

Ankit Kedia · margins

My second question is for Kavi. Kavi, can you share some cost-saving measures for this year, which you have undertaken? One is the SSBeauty cost savings, which could come in dot com, which could come in. At the store level, I see a lot of the retail area has increased versus the back-end area in some of the stores. So how does that help in profitability with higher retail space, productivity improvement vs profitability?

Kavindra Mishra · Customer Care Associate Managing Director

Thanks, Ankit. This is the favourite topic, which we keep on discussing continuously within the system because for us, space is the resource and how we optimize it is something that is super important. So, if I just go 2 years back and when we started talking about private brands and the role which each of the categories play, we said for us, the GMROF is the most important criteria. So, we actually went through with a toothcomb and we looked at all our portfolio and said there are certain categories, certain brands which are not adding value to us. For example, menswear, private brands is something except Bandeya, which does really well. We figured out that menswear is something where we need to optimize. So, we have actually converted a lot of those spaces into brands. In fact, I just hinted upon a partnership also we'll be announcing in the coming month or so with one of the leading fashion houses who will start working in our brand as a collab. So, I think a lot of that is happening. And how it helps us is, Ankit, it takes the productivity more or less the space -- the productivity for that space goes up by double. So, I think that's something which really is working well. And we will start seeing the impact of all of those. So, all of these changes between H1 is what we are targeting to execute. So, we will see the full benefit of this in festive. So, I think that's something very, very important for us. The second thing what we are doing is we have also seen that around 35 or 40 stores, we had smaller Home areas, which were around 500 square feet, which were actually delivering 25% of the GMROF of the box of that particular store. Shoppers Stop Limited July 23, 2026 Confidential Page 15 of 23 So that's also somewhere we have actually converted those spaces to national brands. So, we will see at least a doubling of the productivity, if not more. So, all these things are happening as we speak. Finally, as a project, what we have said is we looked at our spaces and said, can we actually reduce the areas which are non-productive and increase the spaces. So, we believe that all these measured initiatives put together over the next year or so have a potential to increase the like-for-like for 3% to 4%. So, I think that is one thing. So, it will -- on base case, it is accretive at that level. So that's one. Second is at the opex, obviously, there is a lot of work happening around that and taking care of that. Electricity, I think all our stores are now moving into IOT. So that is also working out. For the new stores which we are opening, we have moved into a journey where we are moving into --for first 6 to 12 months, we are focusing more on the pure rev share. So, I think the productivity increases and the optimization is happening across the categories. And I foresee that H2 is something where we will -- it gives me a lot of confidence on the base level execution, which is happening. Lastly, I think in terms of marketing, smarter use of CRM and smarter use of the personalization engine, and we see the result of that in the loyalty revenue increase. So, I think that's working well. And I mean, there's other income, which is now growing. So, we have seen around a 20% increase. And when I say other income, I'm talking about non-GAAP, may you see it in a stronger way that, that income is also growing strongly. So, I think a lot of initiatives on cost and other streams are happening. And especially as a team, we are very, very focused and excited about the space productivity project, and you will see the benefit of that in H2.

Avinash Karumanchi · margins

Congrats on a good set of numbers. My question is regarding the gross margin. I mean the rest of the metrics are all tracking well and seeing a kind of improvement, but gross margin is the only one which is seeing a continuous decline. Is it because the premium brands offer an absolute higher rupee gross margin, but a lower percentage point? Or how should we see this going forward?

Kavindra Mishra · Customer Care Associate Managing Director

Thanks, Avinash. Great question. I was waiting for this question to come. As we change our journey towards premiumization and as we -- and I think it's a stated strategy that we will work more and more on premium brands, non-apparel. So, what will happen there is that the margins -- the gross margins might not be as a percentage point be seen as a high, but the rupee flowing, which happens because the productivity is going higher, is much higher for us. So, you will there will always be an impact of mix, which will help us. I spoke about and Ankit had spoken about the -- what are we doing around, and I was answering about private brands and home, for example, private brand men's would have a higher margin upfront, but the productivity is much lower. Shoppers Stop Limited July 23, 2026 Confidential Page 17 of 23 So, when you are making these changes of premiumizing and putting higher -- more higher throughput brands, the margins might not appear to be percentage-wise the same, but the flowing in terms of the growth. So, for example, from a 4.7% full last year, Q1, we ended at 6%. And I believe that we should be at 6% for the entire year. So gross margin percentage is more than enough met by the productivity increase. And I think that's the journey in which we are on. So, I would urge everybody to look at the overall flow of EBITDA rather than only focusing on this because we are doing a transition in the strategy. And that -- and it's not that something we have just thought about it. It's something which we have been stating quarter-on-quarter in our calls of this is the way we want to take things forward. I remember in my first call with the entire group where we said, private brands, there's a place where we'll premiumize for women and kids and men's is something where we don't see a future. So, I think that's what we are executing. Similarly, we always said that there are 5 power categories, which is the basis of how we are going to premiumize, and that's what we are doing. So, while the percentages might be lower, the resultant throughputs are far higher, Avinash.

Biju Kassim · capex

Okay. So basically, as you know, and as I said earlier, we have a certain set of brands that are moving into the Stage 2 of accelerated growth. We also have a set of brands that are new that is adding up to the current base. So, what is also happening is that the POS is quite well diversified between multiple players in the beauty segment. Shoppers Stop Limited July 23, 2026 Confidential Page 18 of 23 So, if I have to name a few, for example, Shoppers Stop, Lifestyle, etcetera, in the department store, Nykaa, Tira, Sephora in the specialty retail store and obviously, Myntra, Amazon, Tata CLIQ, etc, on the e-commerce play. So, I think what is helping is also with the marketing element kicking in because technically, when you have the brand, there is -- sometimes it's a relaunch, sometimes it's a new launch. Once the marketing monies and marketing campaigns kick in, naturally, the goodness is seen on the productivity of the brand. And that is normally, let's say, between multiple quarters and depending on the new launches. So, it's a combination of things. But for you to know, the existing brand business, which is already reaching maybe 24 months, or 36 months of business is still growing at a healthy 35% when the market is around 20% or 22% at the best. So, I think we are doing ahead of the market, which also means that the ranking of these brands in the country is growing up and the market share also, we are growing on the market share, and we are also growing on the rankings. So, it is also simple because we are reaching out to all the white spaces that exist because we are quite focused on the push on our support in terms of infrastructure, whether it's people, which is capex, which is Tier 2, Tier 3 cities, etc. So, I think we are starting to see a very, very strong and healthy growth for all these existing brands as well as the new brands.

No answer was attributed to this question in the transcript.