Aditya Birla Lifestyle Brands Limited — Q1 FY26 earnings call

Call held 14 Aug 2025

Management summary

Aditya Birla Lifestyle Brands Limited reported a resilient Q1 FY26, with its Lifestyle Brands segment growing 6% year-on-year to INR1,570 crores, driven by a strong 15% retail like-to-like growth. Absolute EBITDA increased to INR286 crores, and PAT grew 5% to INR24 crores, despite a sluggish consumption environment and higher marketing spend of 5.5% of revenue. The company's debt increased by INR200 crores due to festive inventory build-up, but management reiterated its commitment to annual debt reduction and accelerated store expansion.

Highlights

  • Lifestyle Brands grew at 6%, powered by 15% like-to-like growth in its retail channel.

  • Absolute EBITDA was higher year-on-year at INR286 crores versus INR283 crores in quarter one last year.

  • PAT came in at INR24 crores, up by 5% year-on-year.

  • Profitability improved meaningfully, with margins expanding by 170 bps year-on-year for Youth brands and Innerwear portfolio.

  • ABLBL maintained its strong growth momentum with industry-leading, strong double-digit same-store sales growth.

Concerns

  • Consumption environment remains sluggish with apparel market displaying selective pockets of growth.

  • Emerging businesses grew slower primarily due to closure of Forever 21.

  • Overall EBITDA margin at 15.5% versus last year's 15.9%.

  • E-commerce showed declining trends in the last three quarters.

  • Marketing spend was higher at around 5.5% of revenue this quarter versus 3.3% for FY25.

  • Debt went up by about INR200 crores this quarter due to inventory build-up for festive period.

Key financials

  1. Revenue Growth 6%
  2. EBITDA ₹286 Cr +1.1%YoY
  3. EBITDA Margin 15.5%
  4. PAT ₹24 Cr +5%YoY
  5. Retail LTL Growth 15%
  6. Marketing Spend % 5.5%

What they filed

Q1 FY27: revenue up 11.4%, net profit up 47.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,962 2,130 1,942 1,840 2,037 +4%2,341 +10%2,154 +11%2,049 +11%
EBITDA282 332 307 260 312 +11%405 +22%311 +1%307 +18%
Net profit-56 61 43 21 23 +141%66 +8%24 −44%31 +48%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Lifestyle Brands
    ₹1,570 Cr Revenue17.9% EBITDA Margin15% Retail LTL Growth
  • Youth brands and Innerwear
    10% Like-to-like growth170 bps Margin Expansion

Capital allocation

high confidence
  • Capex ₹250 Cr
    • Retail (new stores, refurbishment)
    • Warehouse infrastructure
    • Manufacturing
    • Technology
    around INR250 crores of annual capex and that's the number that we'll stay with. At this point of time, it will consist of retail capex. There is capex that the brands put in department store or shopping shops wherever they create that presence. Once in a while, like we have currently completed, we have a factory operation, which I don't see in next two years, two and a half years. But once in three years, four years, there is a small bit of manufacturing increase and little bit of manufacturing sort of refurbishment that comes in. And some part of capex, not very small, but some part of the capex also goes in refurbishment of stores. So mostly in retail, either opening new stores or refurbishment, but a small path towards warehouse infrastructure, little bit in manufacturing, and as we're going forward, little bit in technology.
  • Debt Gross ₹900 Cr
    • New borrowing Debt increased by INR200 crores due to inventory build-up for festive period. ₹200 Cr
    So our debt went up by about INR200 crores as we build up inventory in this quarter for festive period. So that's up by about INR200 crores end of this quarter, over March period.

Guidance & targets

Revenue Growth

  • Lifestyle Brands Revenue Growth Revenue Growth · future · Medium confidence early double digits
    We expect the newer business to grow anything between 18% to 20%, while Lifestyle Brands business will grow in early double digits.

    — Ashish Dikshit

  • Newer Businesses (Youth, Innerwear, Reebok) Revenue Growth Revenue Growth · future · Medium confidence 18% to 20%

    — Ashish Dikshit

  • Overall portfolio (Reebok, Youth, Innerwear) Revenue Growth Revenue Growth · future · Medium confidence in excess of 20%
    a longer term in our investor presentation that we had talked about in a meeting a couple of months back, we had looked to grow at in excess of 20% as far as this part of the portfolio is concerned.

    — Ashish Dikshit

Debt

  • Annual Debt Reduction Debt · each year · High confidence INR200 crores to INR300 crores
    we expect between INR200 crores to INR300 crores reduction each year. And that's why we had indicated an overall debt-free status in two and a half years to three years.

    — Ashish Dikshit

  • Debt-free status Debt · two and a half years to three years · High confidence debt-free

    — Ashish Dikshit

Capex

  • Annual Capex Capex · annual · High confidence INR250 crores
    around INR250 crores of annual capex and that's the number that we'll stay with.

    — Ashish Dikshit

Profitability

  • Innerwear Segment Break-even Profitability · FY27 · High confidence break-even
    On a full year basis, you're asking? Full year basis will be FY '27.

    — Ashish Dikshit

Working Capital

  • Working Capital Cycle as % of Sales Working Capital · future · Medium confidence 13% to 15%
    the working capital cycle, which is between 13% to 15% is where we will mostly operate.

    — Ashish Dikshit

E-commerce

  • E-commerce Trajectory E-commerce · after Q2 · Medium confidence positive trajectory
    But after that, we should be able to see a positive trajectory on e-commerce as well.

    — Vishak Kumar

Marketing Spend

  • Marketing Spend Shift Marketing Spend · Q2 onwards · Medium confidence less dramatic shift
    Yes. Yes. It won't be as dramatic a shift as we saw in Q1. While we do want to spend a little more on advertising, it won't be as dramatic as you saw in Q1.

    — Vishak Kumar

Store Expansion

  • Pace of Store Additions Store Expansion · next three quarters · High confidence accelerated pace
    We are now well positioned to accelerate our growth trajectory driven by accelerated pace of store additions over the next three quarters.

    — ABLBL Management

What to watch in Q2 FY26

E-commerce positive trajectory

Q2 FY26
Current Declining trends in last three quarters
Target Positive trajectory in e-commerce

Why it matters

E-commerce is a key growth channel, and its recovery is crucial for overall performance.

But after that, we should be able to see a positive trajectory on e-commerce as well.

Risks & concerns

  • Sluggish consumption environment

    medium

    Consumption environment remains sluggish with apparel market displaying selective pockets of growth.

    Management acknowledged

  • E-commerce declining trends

    medium

    E-commerce has shown declining trends in the last three quarters, though management expects a positive trajectory from Q2.

    Analyst acknowledged

  • Increased debt due to inventory build-up

    low

    Debt increased by INR200 crores in Q1 FY26 due to inventory build-up for the festive period, which is a seasonal activity.

    Analyst acknowledged

Q&A highlights

8 direct
Channel mix and e-commerce declining trends Direct
I think a large part of the corrections around e-commerce are more or less done. We expect not lot in the rest of the year, maybe a little bit more in Q2. But after that, we should be able to see a positive trajectory on e-commerce as well.

Addresses concerns about e-commerce performance and provides a forward-looking view on its recovery, indicating that the worst of the decline is likely over.

Asked by Archana Menon

Increase in marketing spend in Q1 FY26 Direct
So, that -- there is also a very large media event which gets created in the first quarter, which is around IPL. And we took on the position of an associate sponsor, which gave us significant gains in terms of brand equity, brand visibility, etcetera. But, yes, it does come with a significant outlay in one -- just one quarter.

Explains the reason for the higher marketing spend as a strategic, one-off investment for Q1, implying a normalization in subsequent quarters.

Asked by Archana Menon

Discrepancy between strong LTL growth and lower net revenue growth Direct
Yes. Yes. So that's a function of the store closures that have happened over last 12 months, which is in the Q1 of this one and Q1 of this year. So that's a nine-month incremental. So not about this quarter's closure, but that's about 12-month store closures.

Clarifies that the difference is due to historical store closures impacting the base, rather than current operational underperformance masking LTL growth.

Asked by Gaurav Jogani

Profitability improvement for Youthwear and Innerwear segments, specifically Innerwear break-even target Direct
Innerwear losses were not substantive, but then this quarter they have reduced further. It's half of what we had last year. So it's coming into a very manageable trajectory now... On a full year basis, you're asking? Full year basis will be FY '27.

Provides a specific timeline (FY27) for the Innerwear segment to achieve break-even, indicating a clear path to profitability for this segment.

Asked by Gaurav Jogani

Debt level at Q1 end and future reduction plans Direct
So our debt went up by about INR200 crores as we build up inventory in this quarter for festive period. So that's up by about INR200 crores end of this quarter, over March period... we expect between INR200 crores to INR300 crores reduction each year. And that's why we had indicated an overall debt-free status in two and a half years to three years.

Quantifies the current quarter's debt increase and reiterates the long-term strategy and timeline for significant debt reduction, aiming for a debt-free status.

Asked by Devanshu Bansal

Reebok's growth, channel mix, and historical challenges Direct
So, it was a difficult transition, Vishak, maybe you can throw a little bit of color on the network that we sort of inherited... I think in summary, transition, we lost both time, network, and some of the challenges that business was facing at that stage. So, almost a year, year and a half, we took to both clean up the network inventory and some of the operating model issues.

Explains the historical operational and network challenges that impacted Reebok's growth, suggesting these issues have largely been addressed, paving the way for future growth.

Asked by Sameer Gupta

Cash utilization post-demerger and differential growth targets for segments Direct
The cash generated by this business in the past has was used to actually kick start or acquire multiple new businesses. And the whole purpose of demerger was actually to need the cash for this business to grow faster. So, the first use of cash would be to accelerate the growth in the businesses that we have... We expect the newer business to grow anything between 18% to 20%, while Lifestyle Brands business will grow in early double digits.

Clarifies the capital allocation strategy post-demerger, focusing on accelerating growth in existing businesses, and provides specific, differentiated growth targets for Lifestyle Brands and newer segments.

Asked by Niharika Karnani

Brand recognition and product strategy for Van Heusen and Louis Philippe Direct
So Devanshu, the best way to answer this would be to take you to some of our stores. I think the kind of products that, the best way to measure this is consumer scores. As you know, we do a net promoter score, both during the time of the shopping, as well as one month after they finish shopping and we measure their scores. That net promoter score, we have a program called Mission Happiness, has been steadily rising.

Highlights the company's focus on product quality, consumer experience, and brand salience through internal metrics like Net Promoter Score, indicating a data-driven approach to brand building.

Asked by Devanshu Bansal

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Aditya Birla Lifestyle Brands Limited reported a resilient Q1 FY26, with its Lifestyle Brands segment growing 6% year-on-year to INR1,570 crores. Absolute EBITDA increased to INR286 crores from INR283 crores in Q1 last year, despite amplified marketing investments. PAT grew 5% year-on-year to INR24 crores, with an adjusted PAT of INR54 crores. The overall EBITDA margin stood at 15.5%, slightly down from 15.9% last year, reflecting a sluggish consumption environment.

Channel Performance and Strategy

The company achieved a strong 15% like-to-like growth in its retail channel, which is expected to be the primary growth driver. E-commerce, however, experienced declining trends in the last three quarters, though management anticipates a positive trajectory from Q2 FY26 after necessary corrections. The wholesale channel, comprising roughly 60% department stores and 40% MBOs, continues to grow steadily, contributing to the overall business continuity and readiness for future growth.

Brand-Specific Performance

The Lifestyle Brands segment demonstrated exceptional momentum with a 15% retail like-to-like growth across 2,900+ stores and an EBITDA margin of 17.9%. The Youth brands and Innerwear portfolio, including Reebok, American Eagle, and Van Heusen Innerwear, delivered a robust 10% like-to-like growth, with margins expanding by 170 bps year-on-year. The overall revenue of this segment was marginally impacted by the closure of Forever 21 last year, but profitability improved meaningfully.

Marketing and Profitability

Marketing spend for Q1 FY26 was notably higher at approximately 5.5% of revenue, compared to 3.3% in FY25. This increase was a strategic decision, primarily attributed to being an associate sponsor for a large media event (IPL), aimed at gaining significant brand equity and visibility. Management expects marketing spend to be less dramatic in subsequent quarters, indicating a return towards previous levels and supporting future profitability.

Capital Allocation and Debt Management

The company's debt increased by INR200 crores in Q1 FY26 to approximately INR900 crores, primarily due to inventory build-up for the festive period. Management reiterated its target to reduce debt by INR200-300 crores annually, aiming for a debt-free status within two and a half to three years. Annual capex is projected at INR250 crores, with investments focused on retail expansion, refurbishment, warehouse infrastructure, manufacturing, and technology.

Growth Outlook and Demerger Impact

Post-demerger, the cash generated by the business will be strategically utilized to accelerate growth in existing businesses. Lifestyle Brands are expected to grow in early double digits, while newer businesses (Youth, Innerwear, Reebok) are targeted for 18-20% growth. The company plans to accelerate store additions over the next three quarters and anticipates the Innerwear segment to achieve break-even by FY27, reinforcing its leadership in the western fashion and lifestyle landscape.

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