Shoppers Stop Limited — Q1 FY27 earnings call

Thank you, Manav and Deepali. Good morning, all. I'm joined with Biju and Mahesh in addition to our colleagues from finance team; Pankaj, our CFO; JP and Rohit. We have uploaded the investor presentation on our corporate and stock exchange website. Let me start with talking about the current operating environment. We have seen a pickup in demand from mid-February and it sustained through Q1, and the momentum continues in July as well. While geopolitical uncertainties persist, consumer demand trends remain encouraging and resilient. When we spoke last time, we had anticipated a more significant supply chain disruption in Q3. However, I'm happy to share that it looks better than what we had initially thought. All our key brand partners are well secured with their supplies and providing confidence in inventory availability and readiness for the festive season, which I think is a very, very important and significant development for us. We'll now move to the key highlights for the quarter and then talk about the way forward. I'm pleased to report that the consolidated top line for Q1 FY27 grew by 10%. The EBITDA grew by 40% and most importantly, PAT turned positive at Rs 5 crores versus a loss of Rs 4 crores in Q1 FY26. Our last year results, basis GAAP included one-off gain of Rs 5 crores in other income on account of reversal of ROU liability attributed to store closures. Excluding this, the loss reduced by Rs 7 crores Y-o-Y. Let me talk about the individual verticals, starting with update on departmental store business. The LFL business for departmental stores grew by a healthy 6% this quarter with a total growth of 7% in spite of uncertain macroeconomic scenario. Our focus on executing the constant messaging of premiumization and experiential retailing has started striking a chord in consumers' mind. Our customer entry grew by 3% for like-for- like stores and overall growth of 8.5%. Shoppers Stop Limited July 23, 2026 Confidential Page 3 of 23 We had the highest ever additions to our First Citizen loyalty program with 2.4 lakh new recruitment. The premium end of our loyalty, which is our Black Card program has reported the highest ever enrolment, 18,000 new recruitments and highest ever renewals of 21,000, which is a renewal rate of around 69% demonstrating deep value proposition from a consumer perspective besides personalized service standards. The total loyalty membership base grew to 13.8 million. The total contribution the first quarter was 85%, which is the highest ever with a repeat rate of 69%. Noticeably, our numbers across the loyalty program metrics have grown over last quarter. With constant focus, the premium portfolio contribution in stores improved by 490 basis points, and they stand now at 72%. And the ATV for the quarter has gone up by 10%, which now stands at Rs 5,704, showing core operational strength. Our personal shopper program, which is central to our experiential retail strategy is now contributing 26% to our revenue. Sales generated through personal shoppers grew by 12% with total sales reaching Rs 321 crores. As a part of our premiumization strategy, we have always talked about the 5 power categories. The top 5 power non-apparel categories continue to outperform. Watches grew by 24% Y-o-Y, handbags grew by 18%, fragrances by 17%, sunglasses by 12% and footwear by 9%. We opened 2 departmental stores during the quarter: Inorbit Vizag and Pavilion Mall. And we have had one more store opening in July, which is at Sindhu Bhavan in Ahmedabad, taking the YTD store openings to 3. In line with our strategy, these are upmarket stores with elevated designs, modern ambience and premium assortment. Now let me talk about the private brand business. Private Brands continues to be a strategic key pillar for us in terms of offering differentiated range and covering the gap for a set of categories. We shall continue to focus on driving productivity and improving profitability through premiumization and rationalizing discounts. In my earlier quarter speeches, I had spoken about launching of FRATINI Girl as a premium private brand. The success of the same has now encouraged us to drive premiumization in brands like Kashish and Bandeya, and we'll see a positive impact of the same in coming festive season. Shoppers Stop Limited July 23, 2026 Confidential Page 4 of 23 We have launched Premium Bandeya 2.0 collection in 25 stores, and initial results are very encouraging. Interestingly, we'll also be announcing a major collab with one of the leading fashion houses for one of our private brands. We will be talking about it in the coming quarter. During the quarter, we also optimized our private brand inventory by 11% vis-a-vis last year. Let me talk about the Beauty business now. The company's Beauty business, including Global SS Beauty, delivered revenue of Rs 327 crores during the quarter, registering a healthy year-on-year growth of 15% led by fragrances, which grew by 34%. With consistent efforts and new initiatives, including MAC loyalty program and pushing exclusive services, we saw a turnaround in Estée Lauder business with a 4.3% like-for- like after 5 consecutive quarters of LFL decline. Our Beauty distribution business continued its strong growth trajectory, generating revenue of Rs 129 crores, which is equivalent to Rs 200 crores of GMV with a stellar 53% growth Y-o-Y. During the quarter, we launched 1 boutique each of NARS and Shiseido, taking the total number of premium boutiques to 9. We right now have 4 Armani, 3 NARS, 1 Prada and 1 Shiseido stores. The performance underscores Beauty as a strategic pillar for Shoppers Stop, aiming high growth through strategic partnerships, digital acceleration and store expansion. With all these concentrated efforts across verticals, the core business delivered an EBITDA of Rs 48 crores, which is showing an increase of 18% Y-o-Y. Now let me talk about the new initiatives, starting with INTUNE business. Our continuous commentary last year on INTUNE was that we need to stabilize the operations, improve the unit economics and liquidate the old inventory before we start seeing the growth in business. I'm happy to share that the execution of the business has started showing initial pickup. We recorded revenue of Rs 82 crores with a Y-o-Y growth of 21%, while the like- for-like growth was at 10% after 4 consecutive quarters of decline. Relentless focus on inventory freshness through in-season clearance and online accessibility helped us in reducing inventory by Rs 34 crores Y-o-Y and a further reduction of Rs 11 crores vs March '26. Business is currently operating at an optimal inventory level Shoppers Stop Limited July 23, 2026 Confidential Page 5 of 23 of 13 weeks cover. We are confident of having a similar discipline in coming months, driven by improved full price sell-through, robust supply chain and more frequent drops. The structured CRM outreach drove improvement in key KPIs. Repeat customer mix improved to 45% and items per ticket sustained at 3.8. I'm also happy to share that Mahesh Nagadev has joined us as Head of INTUNE business, with extensive experience at Trent and Max, he brings deep retail expertise and I'm confident he will lead INTUNE through its next phase of growth, scale and profitability. Let me talk about the E-comm business. Our investments and efforts over the last year on improving the UI/UX and integrating the site have started showing initial results. We grew by 58% over Q1 last year. Interestingly, we are seeing the impact of premiumization online as well. Our average bill value grew by 6% and power categories like watches led growth, reflecting the premium behaviour of our consumers across channels, both offline and online. As planned, we have completed the integration of SSBeauty.in with ss.com platform, which will deliver significant cost savings and operating leverage in the coming quarters. Now I will talk about the store expansion and financial discipline. We maintained a disciplined and prudent capital allocation approach during the quarter with a strong focus on driving returns and strengthening the balance sheet. During the quarter, we opened 8 stores, 2 departmental stores, 4 Beauty and 2 INTUNE alongside, 2 M.A.C shop- in-shops. Total inventory was optimized by Rs 80 crores Y-o-Y and by Rs 36 crores vs March '26. As stated before, we are on track to be debt-free by end of FY27. Let me throw some light on the usage of AI. Over the past couple of years as an organization, we have been working a lot on both machine learning language and AI in various parts of our business. Within Shoppers Stop, we look at AI with 2 perspectives: Revenue generation and Cost. Under revenue generation, our focus is on personalization and targeting the customer activation. Usage of camera vision to improve conversions and store layouts and recommendations and focusing on the personal shopper app. Under cost mitigation, our focus is on sharpening the back-end systems and processes. And lastly, the inventory planning and optimization through demand forecasting. We'll Shoppers Stop Limited July 23, 2026 Confidential Page 6 of 23 keep on discussing the impact of AI and how it is improving our efficiencies as we go forward in the coming calls. In the last, let me talk about the way forward for business. First is we'll continue to double down on premiumization as a strategy. Premiumization as a strategy has started delivering results on ground for us. As we see, we have become the first port of call for almost any premium brand coming to India, and we are using this strength to work with strategic partners to drive efficiency. We'll be launching 2 exclusive Swiss watch brands within Shoppers Stop in the coming quarter, which is quarter 2, which demonstrates our commitment to the strategy. Focus on growing consumer walk-ins. We have built on this in Q1 and past quarters, and we'll continue to work on the same. To make Shoppers Stop brand aspirational and stand out for experience innovation is something which we'll continue to work on with all our GTMs, which we keep on talking about. Drive expansion of the brand in key markets in premium malls. I'm delighted to share that our repositioning efforts have started yielding results, and we are increasingly becoming a department store of choice with some of the leading mall developers. We are on track to reduce losses in INTUNE business substantially. The same will be reflecting from Q2 onwards. And finally, we remain committed to inventory optimization and operational rigor. Our commitment to become debt-free by end of FY27 remains in place, and we are 100% sure to achieve that. With this, I would like to open the floor for an interesting Q&A session. Thank you.

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.

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.

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.

So, I think, Sameer, there is some I mean, maybe there's some misunderstanding there. The Estée Lauder stores actually and especially for the Estée Lauder business, the stand- alone doors always had a 50-50 kind of contribution.

No. So it is, a, shifting towards department; we are also within the department store building the non-Estée Lauder business. So, while the Estée Lauder continues to be an important partner for us, and we are growing that business. As I said that we are not seeing a like-for-like growth there. We are also building the non-Estée Lauder portfolio to balance the whole mix.

So, it will be around 60% would be non-Estée Laude and around 40% would be Estée Lauder.

Across departmental stores, across stand-alone doors. So, what's happening now is that the non- Estée Lauder piece anyway is growing very fast. The Estée Lauder business within departmental store is growing, but we are also seeing a turnaround in the Estée Lauder stand-alone doors.

Yes, of course.

Like other partnership with any other fashion player, for example, right?

Yes, please ask.

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.

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

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.

So, I mean, we spoke about -- I did speak about or I touched upon the AI impact. I think the most important one, again, would be on the one which we are piloting on camera vision because what it does is it tells us about the hot areas of the store, which part of the stores are doing well, where the conversions are lower. Shoppers Stop Limited July 23, 2026 Confidential Page 16 of 23 So, the way we are doing our lay outing and all. So, a lot of work is happening on that piece, Ankit. And obviously, on back-end systems and processes, we are now using it across the board, whether it's in our cataloguing, whether it's in the way we are creating the our ads and all, it's working across the board.

So, there might be some impact of that in Q2, but between Q2 and Q3. So, Ankit, our baseline when we started this year, we were talking about a 5% for this year. I think the LFL growth, my sense is after the way that after Q1 has happened, that number should be around 6% and not lower. So even if there is some impact on Q2, between Q2 and Q3, we will do really well. That's the confidence.

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.

Okay. I think the question is on INTUNE profitability, and how the losses have come down, right?

Understood. So, the losses primarily have come down on the account of higher productivity. As I answered in the previous one of the previous questions that we needed to grow at least by 20% to 25% for us to expand the base. We had a throughput or increase of 10%. So, we believe that there is still further scope on productivity. While the mall stores are something which are now close to that 10,000 number, which we wanted to be, the stand-alone stores are still much lower, and I think there is a scope there to go up. So yes, I mean, that's where we are in this journey right now.

So, Rehan, if we are around 10,000, that's a very good number. That not only takes care of the store level productivity, but at a business level productivity as a stand-alone unit for us.

Yes, yes, Omkar.

Yes, better. Thanks. Shoppers Stop Limited July 23, 2026 Confidential Page 21 of 23

Broadly, Omkar, that number would be around anywhere between 3.5 million to 4 million active members for the year.

Out of that 13.8 million, which we discussed as a number, like around 3.5 million to 4 million would be clearly customers would be coming.

Yes. So, Omkar, the approach for us is not looking it as online or offline but as omni. So that's one. But we expect the online part of that omni business to be in the next couple of years to move up to around 8% to 9% of the business

Sunny Yes, so these would be exclusive in India. They are entering India for the first time. And the mean or the median pricing for them would be anywhere between Rs 1 lakh to Rs 1.5 lakhs.

No, we'll launch these in this quarter, Sunny.

No, no, we will launch it. In Q2, we will launch. So, in the next 2 months, you will hear the announcement.

I just wanted to thank everybody for the listeners, the participants to join us for this conference and look forward to interacting with you next quarter. Thank you so much.