Please stand by. Good day, welcome to Metro Brands Limited Q4 FY 2024 earnings conference call hosted by Avendus Spark. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. If you need assistance during the conference call, please signal an operator by pressing star 70 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tejas Shah. Thank you, over to you. Thank you, Shashri. Good afternoon, everyone. On behalf of Avendus Spark, I welcome you all to Metro Brands' Q4 FY 2024 earnings conference call. From the management side, we have with us Mr. Alisha Malik, Managing Director, Mr. Nissan Joseph, CEO, and Mr. Kaushal, CFO. I would now like to hand over the call to Mr. Nissan for his opening remarks for the Q&A session. Over to you, Nissan. Great. Thank you, Tejas. Good afternoon, everyone. Thank you for joining and welcome to our Q4 FY 2024 earnings call. As you're aware, for Q4, we reported an 11% standalone year-on-year growth, which resulted in a 17% growth in our PAT. Additionally, for the full year of our standalone Metro Brands business, we grew revenues by 11% year-on-year with a 5% growth in our PAT. I'm pleased to report that we were able to grow our business in double digits while going against aggressive comparable sales from last year from the post-COVID comp. The Q4 year-on-year growth and profitability is attributable to our improved gross margins of 80 BPS and improved expense controls over last year. In Q4, we de-merged the Fila business from its subsidiary company and merged it with Metro Brands Limited. To ensure transparency, we have shared additional information that shows our comparable standalone numbers, the go-forward business with Fila and MBL, consolidated numbers. In our business, we continue to see the premiumization of the consumer as our sale of the product over INR 3,000 now represents half our business. In the quarter, we opened a total of 21 new stores while also exiting 11 stores, giving us a net addition of 10 new stores that made it 97 net new stores for fiscal 2024. We closed the year with a total of 836 stores. By the end of Q1, we'll have exited all but two of the Fila stores, which we do plan to retain in our go-forward initiative. Going forward, we target to open a total of 225 stores over the next two fiscal years. Our e-commerce business continues to be on track as we grew 33% for the year while improving key metrics profitability. I would like to switch gears for a moment and share the results of one of our key sustainability initiatives. In FY 2024, we were able to recycle 50% of the shoes we sold. To give some clarity on that, we have set up an ecosystem of partners to collect used and discarded footwear to recycle it for other uses rather than take up space in the garbage landfills. This is one of the many initiatives implemented by our ESG team, and I am excited to share that we have set a goal of recycling one pair of shoes for every pair that Metro Brands sells within the next two years. It is an ambitious goal, but one that we are committed to achieve. On the technology front, we are making significant investments to update and upgrade our tech platforms, while also setting us up to adapt with the power and efficiency of Generative AI and robotic process automation in multiple departments in the organization. It is a revolutionary time from a tech standpoint, as always, Metro Brands remains focused on being relevant and up-to-date on the tech that enhances stakeholder value. FY 2024 was an unusual year for like-to-like comparisons, I am proud of the team for achieving our key metrics in line with our previous guidance. We do see this coming year to finally normalize in demand trends, though we anticipate Q1 to be affected with the lack of marriage dates in May and June of this year compared to over 20 dates for the same period last year, also store closures for a day spread over these four weeks to accommodate and support the national elections. In closing, as with any retail operation, while there will be fluctuations and shifts in holidays and special occasions, we continue to guide to deliver EBITDA around the 30% range and our PAT to deliver at 15%-17% range while adding new stores and formats such as Foot Locker to the Metro Brands organization. I would like to reiterate that the operational rigor and focus of the team continues to position Metro Brands firmly to take advantage of the immense opportunity of the Indian economy. With that, I would like to turn it back to the operator to open it up for questions. Thank you very much. We will now begin the question and answer session. For participants present on the audio bridge who wish to ask a question, please press star and one on your touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Ladies and gentlemen, we will wait for a moment for any questions to assemble. We'll take our first question from the line of Avnish Roy from Nomura. Please go ahead. Yeah, thanks. I wanted to check on your key format, what is the plan in terms of store opening for FY 2025? We are seeing some of the retailers expand quite aggressively, while some of the players have also taken a more cautious call, given the current overall growth slowdown. If you could comment on the growth aspects in FY 2025 and format-wise, what's the store opening plan? Avnish, thank you for your question. We see opportunities in each one of our banners to grow stores. We don't see any diminished opportunities in any one of the banners that we have, albeit some are a little bit more penetrative than others, especially when you compare Crocs to FitFlop. Crocs has been around for 10 years plus in our organization, and then FitFlop is relatively new. Having said that, though, how we would like to look at our business is we will open as many stores that make sense. We're not here to hit a target, albeit we guided. Reached just in my opening comments, we're opening 225 over the next two years as a directional position. We will capitalize on every opportunity there is out there. Unfortunately, real estate availability is not totally predictable, and neither is it something that you want to do on a certain pace and scale quickly, because then you'll end up planning for leases that you probably shouldn't have planned. Don't forget, these are long leases of nine plus years, so we're not in any hurry to open them, but we will open all the right stores that come our way. Right. In terms of Fila, I think the turnaround is taking a bit more time. In second half of FY 2025, should we expect that store addition will start a bit more aggressively? Yeah. It's important to note that the turnaround is only taking a little bit more time because of the BIS issues we had. We just wanted to pause to see where that went. We knew that it would be good for us to have those requirements in place, at the same time, we needed some clarity on what that looked like and how that looked like before we went ahead. We're pretty much on pace. I wouldn't say we're tremendously behind pace. We're pretty much on pace. We're down to 3 stores in Fila, out of which 2 of them we plan on continuing. As far as the new store growth, sometime late Q3, early Q4 is when we would say that we would start to grow the Fila stores specifically. Thanks. That's all from my side. Thank you. Thank you. We have our next question from the line of Shirish Kureshi from Centrum Broking. Please go ahead. Hi, Nissan. Thanks for the Thanks for the opportunity, congratulations for a remarkable company. Two questions in the beginning. For FY 2020, then specifically FY 2024, would you be able to share number of pairs or some volumetric numbers across formats or overall? On an overall for the full financial year, we sold approximately 15 million products. If you take footwear, it was around 10 million. I'm just giving you broad numbers over the year. Which particular format has seen a higher growth? Because I think now we are seeing that 50% growth is coming from INR 3,000 plus. Any particular format you will see the growth is much higher or ahead of competition? I think what we see is really as the demand cycles come through or the seasonal cycles come through. For example, there was lots of weddings the previous year, the wedding business did as well. To say that there was a pent-up demand for weddings that also resulted in pent-up demand for wedding shoes. When you see that flatten out a little, it's not necessarily indicative of a consumer demand, it's more a cyclical thing. What we are seeing, though, is that people still want premium products. They have aspirations in mind that they like to shop in stores in the organized sector. All those indicators look favorable to all our businesses. When you say, who had the bigger growth, in units, they all have different numbers of stores out there. It's the base. Overall, we're seeing the trends of casualization of footwear continue. If I were to pick on trends, that's continuing definitely. We are also seeing the shift to athleisure and athletic-inspired products. We're seeing those two shifts happening, but it's not necessarily coming at the cost of a particular segment of business. We're just seeing some categories grow slightly better. Okay. That's helpful. On slide 14, you mentioned the revenue per square feet. Lastly, we have remained in the range of what, INR 5,000, INR 5,100. This quarter we have about INR 4,800. If you build saying that now the contribution from INR 3,000 plus is going to go up, what this number will look like in FY 2025? I think let me give you some historical points of references on this one. Sure. If you go back to FY 2019, I know you're going, "Why are we going back that far?" That was the first year without COVID. When you go back to that year, we ran at INR 17,500 for the entire year. Last year, we ran at INR 18,700 for the year. Correct? When you look at that growth over that period of time for square footage, it's considerable. Now, what you have to remember is I'm trying to take out and flatten out the COVID dips and the COVID bump. But when you look at this growth, I think it's quite remarkable when you look at the fact that during the last few years, we've accelerated our growth of Metro and Mochi stores as compared to the previous years, where we were very reliant on growing just the Crocs stores. Crocs stores come at a much higher sales per square foot, whereas Metro and Mochi, while they do much more volume per unit store as a banner, they don't have the same per square foot metrics as Crocs does. A lot of it has to do with the mix, and then all your new stores don't always come up to your average performance in year one. We've opened well over 200 stores in the last two years. When you look at all those factors, that's an admirable record of growth to maintain from 17.5 to 18.7 this year, right? There's no reason for us to believe that on a long-term basis, you may not look at it and see it quarter to quarter, but on a sustainable long-term basis, that we should be able to continue that growth. Mind you, we have one of the highest realization per square foot in the industry, right? When you're playing at the edge of the atmosphere, it's not like we're going to have a rocket ship take off from there. We're confident that we're not going to see much erosion in that front. If you look over the five-year period, that is a pretty reasonable growth trajectory to assume for the next few years. Wonderful. That's really helpful. One last question on the margins. You maintained in the beginning, saying that we will especially maintain the margin at 30%. The question here is that with BIS being settled maybe another one quarter, do you think the inventory correction will happen and then we will normalize with that inventory? It's all boiled down to the top-line growth. If we build the top-line growth above budget, do you think this margin guidance is less preserved? I think as retailers, we're very conservative in how we approach our business with a lot of discipline. I would say it would take us probably two quarters to where we'd feel comfortable with all the BIS regulations and I am in a position to get it in line to where we'd want it to be. At which time we would see that maybe start to help EBITDA. Equally, what I found, Shireesh, is when one lever comes up, the other one goes down. This is retail. There's many five levers that we're watching at the same time. For me to say that one lever is now going to be 100% accretive to our EBITDA, I think that's just putting too much on one lever. That's really helpful. Thanks, Nissan and team. All the best. Thank you. We'll take our next question from the line of Umang Mittal from Kotak Securities. Please go ahead. Hi. Thank you for the opportunity. I just wanted to try to understand how the underlying business on an ongoing basis has done. Would you say, able to share on an annual basis what are the sales or EBITDA of Metro Brands? Sure. Umang, we have shown numbers without Fila and then after giving effect of Fila demerger. If you basically subtract the numbers, it's basically Fila performance that you can sort of identify. For the year, this is not representative of what to expect going forward because obviously, as we have clarified earlier, we are in the phase of liquidating excess inventory that we had with Fila at the time of acquisition. The numbers are there, but it's not representative of what you will see going forward. Another important point, till last year, growth channels were a few large format stores, e-commerce, and SOR sales directly to the marketplace. We are coming out of some channels, and we'll be predominantly focusing on EBOs selling via Metro, Mochi, and.com directly. You will see change in the sales mix and the margin mix as we move ahead over the next two years. Understood. Thank you. The second question was on Crocs. This new agreement to find out what was the rationale for Crocs not giving right of first refusal in north and east? Will this by any chance hamper your store opening plans in that time? I think the rationale is very simply this. First right of refusal is not as good as an exclusive right? It means that if we turn something down in any territory, somebody else could take it on because it might make more sense to them. From that same point, it's much more attractive to have an exclusive territory than just the first right of refusal. That's number 1. Number 2, equally, I think Crocs also wants to mitigate some of their exposure, and just have some more partners run the business. They were able to retain what we believe are the best two growth areas, which is the south and the west of India for Crocs. As you know, it's summer year-round in both those territories. We think it's a great win. You must remember that it's a great partnership to not only get all that, but they also extended it by an additional three years. We have a 12-year agreement with them, albeit with dates in between. Understood. That's okay. Good. Then one last, if I can ask a quick question. What is the delta GM for similar item EBITDA margin? The delta would be around 8.5, 9%. Okay. Thank you so much. Good luck for the rest of the day. Thank you. We have our next question from the line of Abhishek Gita from Alpha Investco. Please go ahead. Hi, thank you for the opportunity, sir. My first question was on Walkway. I've seen the presentation that end this quarter with those around six stores completed four. Just wanted to understand what has been the update on Walkway. I see also that most of the stores are concentrated in west and south. Any strategy to expand in north or east into Walkway? Just to give you an overall perspective on Walkway. We believe that Walkway has tremendous growth potential in India with the formatted offer. That's the first thing. The second thing is, we wanted to get the concept totally right, and make sure that it is set for growth. We've taken the last 18 months to reset the business. That reset involves two significant aspects. One of them is to exit almost all our franchise stores, which is why you're seeing the store count go down, and also maybe even rationalize a couple of stores that we believe didn't have the right location/precinct for Walkway. Having said that, though, I think that's fundamentally what you saw there. What was the second part of the question there, Abhishek? Abhishek, another point, for Walkway, since it's a brand with 65 stores, we would want to follow cluster strategy, we are focusing on west and south to start with. Obviously, west and south are areas where even currently our presence is slightly better as compared to north and east. That's the strategy, obviously it's a long journey, right? We would first want to strengthen in west and south and over a period then cover north and east part of India. Okay. Understood. Understood. I was coming to a question in the sense that, are we strategizing Walkway openings in the sense that we maintain the overall ASP of the company or Walkway strategy is completely different or is non-reliable on what Metro is doing at the overall level? It has nothing to do with Metro level, right? It'll be considerably different than the Metro level in a lot of metrics, including that of ASP, and which is why we've been ensuring that we understand that model fully well before we start expanding it. It's not going to be accretive in any way to our ASPs at all. Understood. Another question was, in the opening remarks, you did mention the impact of elections. If you could go more detail on what has been the impact you are seeing in Q1 because of elections and heat wave combined. Well, the only impact I'm referring to is the fact that our stores closed for the day while there's elections. Some of them closed for the full day, some of them open up late in the evening. That's the only impact I'm referring to. Okay. Are you not seeing any delays because of such things in those areas or anything because of heat wave in North? Sales not coming out? Elections are nationwide. I don't see any difference anywhere else. It's just the fact that I wanted to call out that we will lose 836 shopping days in our company because we have to support it, right? It's a national thing that we want to support, and stores will be closed somewhere up to a day. No more than a day, though, but up to a day, they might close to support it. Understood. Just some last question. Earlier, when having a conversation with Parth, when you mentioned that until FY 2019, we were sort of opening a lot of Crocs stores, and now the openings are failed on mostly and Metro side. Even in that case also, we've been able to grow our first purchase realization. I just wanted to know, now going ahead, we'll be opening a couple of Fila stores and also Foot Locker stores. That should also give impetus to first purchase realization, right? In FY 2026 or 2027 sort of. Correct. We see Foot Locker and Fila being accretive to certain metrics, especially that of ASP in both those cases to the rest of our business. There's other metrics that may not be as accretive, but overall, we see them as great additions to the Metro Brands portfolio. To answer your question, we actually, as I said earlier on in the call today, we see growth opportunity for each of our banners. It's not like we feel that some of them have limited opening strategies or the other. Don't forget, every banner has a different reach in India, right? Foot Locker is not going to be in 500 cities. It's just not the way that works. Neither is Foot Locker. Metro is going to be more than 500 cities someday. Understood. Thank you, sir. Thank you. We have our next question from the line of Vidisha Sheikh from Qube Capital. Please go ahead. Hi. Thank you for the opportunity. My first question was on the omnichannel. Last quarter you had mentioned that online sales growth was impacted due to some transition key issues related to the warehouse and order management system. I wanted to understand the reasons for further reduction in online sales contribution from 8%, 8.5% to 7% in Q1. Just as a follow-up to this question, is this lower mix from online in any way contributing to improvement in gross margin? Okay. First of all, when you look at FY 2023, the omnichannel business and the e-com business was 7.9% of our business. When you look at last year, it had grown to 9.5% of the business. When you look at it over a period of a year, right? We did have a tough quarter three because of these issues that we've nowThrough Q4 have been able to get past most stuff. Let me remind you, we were up 25% in e-commerce in Q4 and 33% up on the year. These are strong numbers on e-commerce, on a business where we've invested in it. Just as a point of reference also, 20.5% makes it the highest year of e-com business higher than that of the COVID year. I just don't see what you're quite seeing, Vidisha. To answer your other question, we do want to continue to improve our margins slash reduce our discounts and improve our operating efficiencies. I think that everybody that's in the e-com space should be trying to do that, shouldn't be unique to us. Going forward, the mix from this channel would largely be the existing range of 20%, we won't see further improvements in this? For two reasons. I think there's a couple reasons for this. First of all, you can wear a shirt a little bit loose, but it's very hard for you to wear a shoe a little bit loose or a little bit tight, right? The need to go to the store and try on shoes is quite high in our business. The second point is that we are growing the rest of our business as well. If the rest of the business was stagnant, I think you'd see e-commerce starting to take a bigger piece of the pie. The rest of the business is as robust and growing. Overall, we think it's going to tick along at that rate. To be quite honest with you, we're quite happy with that rate. As Kaushal mentioned earlier on, for Fila, we might look at how we go about it, overall, that's about the range you can kind of forecast for us going forward. Understood. The second question was on excess inventory of Fila. Our last earnings call you'd mentioned that there was approximately INR 30 crores worth of inventory pertaining to Fila. What would the value be as of now? Do you believe any kind of provisioning would be required for the same in the future? Vidisha, that number is around INR 17 crore, we have made all the provisions that is needed to ensure that we are carrying that inventory at the right value. We expect to realize more than the value at which we are carrying the inventory in our books. Okay. Lastly, what would be the revenue share of industry sales of Fila in FY 2024? For the full year, it's around 7.9%-8%, whereas our long-term range is around 9%-9.5%. Okay. For Q4, it would be higher than 8%. Yeah. Because obviously, E.O.S.S. comes in Q2 and Q4. Q4, it was around 12%. Understood. That's all from my end. Thank you. Thank you. We have the next question from the line of Saurabh Kundan from Goldman Sachs. Please go ahead. Hello, can you hear me? Yes. Yes. Yeah. My question was around Fila. Could you please provide just any updates on that business, on store set view actually, what kind of team you have put together? Since you're opening some stores towards the second half of this financial year, would you give us an idea of what the store size is, merchandise mix, and maybe the kind of locations that you're opening? The second part of the question is, has there been any learnings yet on the acceptance of the brand? I'm asking because I believe there has been some new merchandise also launched, at least online. How are the consumers reacting to it? Okay. That's it. Okay, thanks, Saurabh. Let me answer the two questions you asked. We put together an outstanding team for Fila. I don't know if we've announced this before. Specifically, Alisha Malik, one of our promoters, now is president of our sports division and is responsible directly for the Fila business and has been for the last seven to 10 months in that business. Behind that, we have a team for Fila already in place. That's number one. As far as acceptance of the brand, what we liked about Fila is the awareness of Fila in India is very high. What we knew to be a challenge was the relevance of Fila, right? What you will see with the new product, I don't want to make a blanket comment yet, but it's on pace with how we want to test products. You want to test and see what resonates, what doesn't resonate. All I can tell you is the little that we've tested, we believe it's getting us on track to do the repositioning for Fila this year. Right. Thank you. The last question is actually around the base. Last quarter, you were on a high base for your overall business. Do you think you have lapped that now in 11% growth that you had this quarter? Is it despite the high base or is it the kind of growth that's expected in the market right now? Yeah, no, it's really despite the high base. We could tell when I looked at the FY 2024 numbers on growth, any week where we had a high growth last year, we had muted growth this year. That's number 1. We are able to track it literally by categories. As I alluded to it, if we see any base issues, it'll be shifts of holidays and wedding dates. May had 0 wedding dates compared to, I believe there were 11 wedding dates last year, and June had an additional 11 or 13 wedding dates. This year we have 0 again. You will see that shift in that business. Overall, we are seeing, as I mentioned earlier, the growth of our athleisure, the growth of casual footwear. That continues to be right on pace as we'd expect for an economy that's growing the way we are. It continues to be right on pace when it comes to the selection of premium products versus not so premium products. All of those indicators stay intact, but we have to read through the little fluctuations of the cyclicality or the seasonality of our business. Sure. Thank you for the call. Thanks, Gaurav. Thank you. Our next question is from the line of Gaurav Jani from Axis Capital. Please go ahead. Thank you for the opportunity. My first question is related to the discounting that was around 7%-8%, and definitely higher versus I think the 5%-6% between the last couple of fiscal years. Do you think some of the premium contribution actually is also getting masked because of the higher ASP discount this year? Gaurav, can you please repeat your question? The second half of it, sorry, it was just broken in the middle. What I was trying to ask is, given that the discounting approximately was higher versus the 5%-6% we have seen in the prior two years, and the contribution from the premium segment is now 8%. Do you think the discounting is for now because of U.S. history? Let me give you some historical data there, Gaurav. First of all, in FY 2019, the number was 6.68%, right? You can't look at just one year. We're not seeing that it's because it's a premium product, right? We've also hedged a lot of inventory from time to time. If we've had just price hikes on raw materials, sometimes our costs go up, you have to take increases. That's not a reason that we are seeing the discount. I hate to tell you this, but most retailers would give their right arm to run that kind of a discount rate. When you're operating on very thin numbers, I think you might be trying to read too much into a fluctuation in that number. No. What I was trying to ask is, given your premium contribution is increased, say, the size of INR 2,000, INR 3,000 and above, that contribution has increased. That should benefit the gross margin. I'm seeing the entire picture of that is not reflecting, maybe because of the development you've seen recently, U.S. and year-over-year. I think the way to measure that, Gaurav, is to look at the gross margins, right? Our gross margins Q4, 58%, right? Compared to 67.2% last year. If you look at overall, we stay in the range. That's what I'm trying to say. In that range, there's a mix of because we improved gross margins and you take a couple more in discount. That's not necessarily related to the premiumization of product is what I'm trying to say, right? It's a mix. Then again, it's very hard to just pull one lever and say, "Is this the lever that drove it, or is this the cause of it, the reason?" It's seldom is that. I can tell you that I would not look at our data from last year and say it was because we sell premium products that our discount rate slipped up a little bit last quarter. It's a combination of many factors. The way we work is the gross margin doesn't significantly change with MRP. On certain products it may be high, on certain products it may be low. It's a mix change as well that impacts the overall gross margin that you see. Okay, sure. I think the last question is with regards to if you look at the business itself, growth has on a year-over-year basis been lower despite we have seen good expansion. We don't see any impact on the net margins. What do you attribute this? Is this more the visibility feature of your model, or is this more operational efficiency that you're driving here? There's three things that I would say. First of all is the mix of stores, right? Like I keep saying, it just depends on the mix of stores you open. If you open a high number of stores one year and not so many the following year, you're going to see a degradation. That doesn't mean you're less productive in the format that you open. That's number 1, right? We also open new stores, and our new stores a lot of times don't come to the full average revenue per square foot at that rate. They take a while to become mature. That would be the second driver when you look at it fundamentally. The third, but not the least also, was the year you're comparing it to was the COVID bump year, right? If you compare it to the COVID dip year, it would look amazing. If you compare it to the COVID bump year, it doesn't look as amazing. You've got to look at it over a period of time, which is why at the start of the call, I made it a point to point out that we've grown at a good rate from 2019, despite opening a number of new stores, despite opening a lot of stores that were not Crocs in that period of time. You've got to look at things a little bit broader range like we do at Metro. We look at things the next five years as opposed to the next five weeks. Yeah. Gaurav, just adding to what Nissan said, which he had mentioned in his opening remarks. Better flow through EBITDA is also an account of slightly better gross margin around 8 basis points. Improvement in overall efficiency in cost management, which is around 0.5%-0.6%. Basis points, sorry. Sure. Thanks, Nissan and Shreyans, for all the answers. Thanks, Gaurav. Thank you. Before we take the next question, we would like to remind participants to press star and one to ask a question. The next question is from the line of Tejas Shah from Avendus Spark. Please go ahead. Hi. Nissan, in most retail acquisitions, inventory-led surprises are common. Would you say that the delay in liquidating Fila's inventory is a kind of indication of what we encountered on inventory quality versus what we anticipated during the due diligence? You always need to leave enough provisions for that. To your point, there's always a little bit I think everyone is a little more optimistic, and then the truth is not always very optimistic. I would say the larger part of that is because we decided that we were going to exit some channels of business sooner than later because they were extremely unprofitable to do it. That slowed down our liquidations. At the same time, had we continued that, it would have come at a much higher cost of profit than it would be to bring that product and take another quarter to liquidate it, as also mentioned earlier on, at a price higher than your cost price on your books, right? I think that was the primary driver to it. Sure. These channels that you're referring to are large format stores? No, we don't like to call out any channels in particular, there are some channels that we know are less profitable than others. Going forward, we want to focus on our own EBO dealer stores and, of course, our Metro Mochi multi-branded stores and the e-commerce channel, our own.com site. As anybody will tell you, those tend to be your most profitable channels. Everybody else comes under various grades of not as profitable. Sure. This time you spoke about how this quarter is devoid of any marriage dates. Just for me to understand, we had Eid also in this quarter, and we had perhaps 11 days prior to Eid also in Q1 and so on. How does Eid play out, and does it relate it to some extent loss of marriage season, marriage season not being there in this quarter? Yeah. First of all, Eid was very early in the quarter. The impact of Eid might have gone more into the biggest quarter for those stores that do get a lift from it, right? The lack of marriage season I'm really speaking to is in Q1 of this fiscal year. We're not going to see the uptick from Eid because I think it was 11 days off, slightly earlier. The flow of it, if anything, would have gone a little bit more in favor of Q4 as opposed to being in favor of Q1. Thanks. I appreciate it. We'll take our next question from the line of Yasmin Surana from ICICI Securities. Please go ahead. Hi. Congratulations on good quarter numbers. When we speak to other company in the footwear sector, they mention that they are seeing some revival in the rural sector with open footwear picking up. This quarter you're not playing in that segment. Do you see any changes in the premium end of footwear segment? Are there any changes in customer spending behavior or trend which are visible? Yeah. You know what? We're not seeing anything. As you said, Yasmin, we don't play in the rural sector. When it comes to open footwear, we are seeing the customers being more discerning. When you look at my stores that are in tier 3 cities, 15% of the stores do 9% of the business. If you look at it from a year-on-year comparison, it's up 100 basis points in terms of percentage of business. It is also up 100 basis points in terms of share of store count, right? I wouldn't say that I would be reading that as there's been growth happening there. For us, at least. Sure. Thank you. That you. That answers my question. Thank you. Next question is from the line of Saurabh Kundan from Goldman Sachs. Please go ahead. Mr. Kundan, can you please unmute your line? Yeah, thanks. Thank you for giving me the opportunity again. I think I missed one question earlier on Fila, which is, I wanted to know the two stores which were retained, what made you decide to retain those two stores? Is it location? Is it something else? Also, I think the second question earlier was stores that you're going to open, could you give us an idea of the size and merchandise in terms of the footwear and non-footwear in those stores? The two stores that we are going to retain are in the Mumbai area. They become your test platforms. You have two babies right close to you. You're able to test products. They also have a variety of consumers between the two malls, so we're able to see which consumer is resonating with which product. What we want to do there is test our footwear and apparel. Because we don't sell apparel in Metro Brands stores, we needed the lab of two stores to be able to test apparel and see how it does with consumers. That's to answer why those two stores and why we want the lab stores to exist and why they exist the way they do. As far as the store size for these kind of EBOs, the ideal size is somewhere between 1,200 and 1,800 sq ft because it carries footwear and apparel. That's about the range. Like with any brand, you want to start off with your tier 1 metro cities and then work your way through the country. country. The good news is, when we look at people in the same space, they have upwards of 300 stores across tier 1, 2, and 3 cities. At some point, that would be something we would want to do for Fila as well. Thank you. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone. Next question from the line of Tejas Shah from Axis Finance. Please go ahead. Yeah. A couple of follow-ups from my side. Nissan, on BIS, how should we think about growth or profitability getting impacted, and more importantly, inventory levels getting impacted in a different way from this? From a profitability standpoint, it's not impacting at all, right? Because as much as people think it's going to add more complexity to it really doesn't, right? It's just a matter of ensuring that you're following certain processes and concerned testing as well, right? We don't see that impacting profitability or costs or into costs of the product, right? That's number 1. Number 2, I don't think it's going to clear out in total for the next 12 months in the sense that there will still be some remnants, some loose ends to be tied up. It's a massive project that the government has undertaken, and it's a massive project with massive benefits. It's not going to be done and dusted in a matter of X amount of weeks. I think it's evolutionary phases, and we just need to watch where it goes. I would like to tell you that, as I mentioned earlier, that two quarters from now, it would be mastered. At the same time, we're monitoring closely because what we need to ensure is that we have the right product in our system to make the sale. We keep monitoring it, because there are additions to this BIS. Well, I shouldn't say additions. Clarification is probably the better word to BIS every so often. We just watch the next one, and we base our decisions based on what we see there. Sure. The last one from my side. When you look at the inventory at the system level, not only with us, but at a very broader industry level basis, do you worry that we might enter into a very hyper accounting year if the growth does not turn out to be the way anticipated in the beginning? I think we've seen that in the past, right, with a lot of retailers that are overstretched. The reason why retailers do that is you are overstretched in inventory and you're short on cash, right? We try not to do either of those, right? Anytime we hedge our inventory for BIS or for raw material hikes, we do that very carefully, and it's reflective on our gross margins, that we've been able to maintain our gross margins in the sales of the business. I don't foresee that to be an issue for us. We just got to continue to keep monitoring it. Thanks a lot. Okay. We'll take the next question from the line of Anushka Acharya from Swiss. Please go ahead. Hello. Thank you for the opportunity. I have two questions. One, I wanted to know the reason for 10 store openings in Q4, which is relatively lower than our past record of 30 store openings. The 225 store guidance that we have, does that include Foot Locker? The easy one first, or the simpler one to explain first. The 225 does not include Fila, but it does include Foot Locker. Okay? That's part B. Part A, I do want to put in perspective that number. I opened actually 21 new stores in the quarter, right? We guided to 100 stores for the year. It was right in line with our guidance. That's number one. Unfortunately, as timing would happen, we closed 11 stores in the quarter. That is an unusual number of stores to close, because the whole year we only closed 21 stores. Closed or relocated 21 stores, right? Out of 21 stores, we did most of the close, over 50% of that, in Q4. That's why you're seeing the net 10 store growth. I would like to still point out, though, that for the year, we opened 97 stores. We were aware of these store closures. It's not that we were unaware of it, but you don't predict all the new store openings. We would have exceeded it, except we had a couple of malls that have still not opened on time that were scheduled to open on February. We had a few malls that will now only open in Q1, and some of them have made it Q2. It's really a timing issue. It is not a matter of us trying to, in any way, look at store openings differently at all. Okay. Thank you. I have just one more question on the BIS issue. We hear that companies are unable to import certain high-end international brands as well. Will that pose any difficulty for us in acquiring inventory for Foot Locker? You did hear correctly, and that is one of the reasons that even our Fila repositioning is taking a little bit longer. Yes, that is an issue. I think it's an issue that we can resolve at some point, some way, shape, or form as it's not that that's going to be the permanent position on it. What it requires is some steps for that to happen, and those steps are taking time. It's not a permanent outcome of BIS. It is one of those things that will be rectified when all the parts of the BIS, including factory inspections, are being done as scheduled. As the schedule demands, I should say. Yes, and that could potentially, in some way, have a little bit of an issue with Foot Locker openings, but there's plenty of opportunity for us to grow that business. Okay. Any timeline for the close to 6 months, 12 months? How much time it may take for the issues to clear? I think optimistically, I would say in this fiscal year sometime it should be cleared. As I mentioned before, it's a huge project that has been undertaken with huge benefits. Huge projects that involve multiple levels of the supply chain take a while to execute, especially where everyone's trying to do it the best way possible. Okay. Thank you so much. Just one more follow-up question on Foot Locker. We will finally, we will have Nike products in our Foot Locker stores? That's correct. Okay. Thank you. Okay. Okay. Thank you so much, and good day. One other thing, Anushka, I also wanted to add. Yes, Anushka, I just wanted to add to what Nissan said. This non-clarity on BIS to a certain extent is also one of the reason for Fila repositioning, the delay of around two quarters that we have seen because of confusion in terms of vendors need to get registered under BIS, and it's taking longer. Initially it was implemented on the 1st, and now the implementation is deferred till 1st of August. Okay. Thank you so much. Thank you. We'll take our next question from the line of Vidisha Sheikh from Qube Capital. Please go ahead. My question has been asked. Thank you. Next question is from the line of Rajiv Bathija from DAM Capital. Please go ahead. Good afternoon, sir. Thanks for the opportunity. Just regarding this, some footwear parks being set up in Southern India and we do import some of these stuffs. In case of, let's say, instead of importing, you in-source it from basic things, eventually, land price, I mean, effective price for us will it reduce? Yes and no. In some cases, yes, it might get reduced, but some cases you're still buying raw materials and then other pieces from abroad. Now all of a sudden you have a supply chain that has a much longer lead time, a much longer issue. It's up and down. The fundamental thing, Rajiv, is yes, you're right. There's a lot of shoe manufacturing and CLRI sole shoe manufacturing happening in Southern India. The fundamental thing is something is significant that we can say today in terms of cost, either way up or down. Purely for example, for Crocs, does it accrue to us or since it's Crocs, their effective price for us remains the same. The effective price for us is the same as Crocs, but with almost all of the brand. Obviously in our own brand, it flows directly through to us, or certain license brands. All the Fila-licensed products we make will flow through to us. Yeah, just one other thing, Rajiv, just to add. The reason why I'm not in any way thinking that there'll be spikes in profitability or spikes in pricing, because the footwear ecosystem takes a long time to set up. Before you're able to get efficiencies of scale. While you might pay want some duties on imports, you're still importing a lot, and you're double-touching things because you're buying from 10 different sources because the ecosystem has not been set up and it takes a while to set up. The duty arbitrage is not good enough. For example, purely a form of pricing, it more should be in India. I mean, is there a case for that? No, it isn't it. It's really about ensuring that we have the capabilities to do it right. Because if you don't have the capabilities to do it, you're importing it. It's not like we're making luxury cars cheaper in India because of duty arbitrage. By the time you bring it all in, I'm not in the car business. You get my point. It's not as simple as that. The duty arbitrage from China is significant. The duty arbitrage from Vietnam is not at all significant. It's quite different. It's mainly the cost of freight. Sure. Actually, with regards to that discounting thing, which you mentioned, those 20%. This is for all your brands barring your main brand plus Skechers, Crocs, FitfFlop, because everything else is SOR. Yeah. When you say everything else is SOR, almost 85% of everything I sell in the ecosystem of Metro Brands is not SOR, it's my business. Even Crocs, though it's an international brand, is not SOR. I have to take care of the discounts. FitFlop, same thing. Fila, same thing. Metro, Mochi, Walkway, same thing. I think what you would see is that number is reflective of the discipline of our business. Sure. That's all from my side. Thanks a lot. Thanks. Thank you. We'll take our next question from the line of Sunny, an individual investor. Please go ahead. Am I audible? Yes. Yes. Just maybe a second question. When do you expect to return to your normal long-term revenue growth rate of around 18%? By FY 2024 or even later? I think if you aggregate, first of all, Sunny, thank you for that question. If you aggregate the last couple of years, we are there, including this year. Now, just because this year, that one year we didn't, what we've always guided to is on a long-term basis, we are confident that we can grow to 18%. This year, as we get past the COVID hump, as we get past some of the fluctuations of business, we should be able to get right back on track with that revenue growth of 14%-18%. Okay, sir. Lastly, when do you plan to open your first Foot Locker store in India? We're targeting, if all things go well, to open in late October, early November. Okay, sir. That's it. Thank you. All the best. Thank you, Sunny. Thank you. Ladies and gentlemen, that was the last question for today. On behalf of Avendus Spark, that concludes this conference. Thank you for joining us. 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