Aditya Birla Lifestyle Brands Limited — Q2 FY26 earnings call

Call held 5 Nov 2025

Management summary

Aditya Birla Lifestyle Brands Limited reported a steady Q2 FY26 with 4% YoY revenue growth to INR2,038 crores and a 12% increase in EBITDA to INR338 crores, leading to a 125 bps margin expansion to 16.6%. The company achieved a PAT of INR23 crores, recovering from a previous quarter's loss. Strong retail like-to-like growth across Lifestyle Brands and Emerging Businesses was noted, though overall momentum was moderated by GST transition and the exit of Forever 21.

Highlights

  • Revenue grew 4% Y-o-Y to INR2,038 crores, driven by strong retail performance.

  • Consolidated EBITDA registered a healthy growth of 12% to INR338 crores, up from INR301 crores last year.

  • EBITDA margin expanded by 125 bps, moving up from 15.3% to 16.6% Y-o-Y, reflecting improved operating efficiency.

  • Consolidated PAT stood at INR23 crores, a significant turnaround from a loss of INR59 crores in the previous quarter.

  • Lifestyle Brands achieved a strong retail like-to-like growth of 12% during the quarter.

Concerns

  • Emerging Businesses segments saw a decline in revenue, mainly due to the closure of Forever 21.

  • GST transition and localised issues in the East moderated overall momentum to some extent.

  • Pipeline inventory issues in Reebok impacted revenue recognition in the system.

  • Overall market consumption is 'not yet visible' despite festive season, indicating a soft consumer environment.

Key financials

2 periods

Headline

  • Revenue
    ₹2,038 Cr
    YoY +4%
  • EBITDA
    ₹338 Cr
    YoY +12%
  • EBITDA Margin
    16.6%
    YoY +1.3%
  • PAT
    ₹23 Cr
  • PBT
    ₹31 Cr

H1

  • Revenue
    ₹3,878 Cr
    YoY +3%
  • EBITDA
    ₹624 Cr
    YoY +7%
  • EBITDA Margin
    16.1%
    YoY +0.5%
  • PAT
    ₹48 Cr

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
    ₹1,754 Cr Revenue19.3% EBITDA Margin12% Retail Like-to-Like Growth60 stores Store Additions
  • Emerging Businesses
    — Revenue Growth11% Like-to-Like Growth150 bps Van Heusen Innerwear Profitability Improvement9% Reebok Retail Like-to-Like Growth9% American Eagle Like-to-Like Growth

Capital allocation

medium confidence
  • Capex Capex disclosed
    • New store additions (overall) 75 stores
    • Store renovations (company-owned) 65 stores
    During the quarter, we continued to expand our retail presence, adding 75-plus new stores in this quarter. ... we did 65 store renovations in just the last quarter.
  • Debt Debt disclosed
    finance cost has come down because we effectively manage our borrowings supported by the interest rate reduction.

Guidance & targets

Growth

  • Overall double-digit growth Growth · medium-term · Medium confidence double-digit growth
    I think double-digit growth is something that we should expect from these brands in the medium-term.

    — Vishak Kumar

Store Network

  • Steady net addition of stores Store Network · going forward · Medium confidence steady net addition
    we expect to see a steady net addition of stores going forward.

    — Dharmendra Lodha

Debt

  • Debt level reduction Debt · by end of FY '26 · Medium confidence go down
    yes, definitely by end of FY '26, debt level should go down from this number.

    — Dharmendra Lodha

Profitability

  • Emerging Businesses profitability Profitability · coming quarters · Medium confidence keep improving
    profitability will keep improving. So, directionally, you should start seeing that.

    — Vishak Kumar

Innerwear Segment

  • Aggressive growth Innerwear Segment · Medium confidence grow very aggressively
    at least in the innerwear side of business, we will continue to invest for growth. And that is something which is going to be a very important part of our overall play in the portfolio. And we will grow very aggressively.

    — Vishak Kumar

What to watch in Q3 FY26

Consumer response to GST-revised prices

next few quarters
Current Uncertain, especially for wedding season products
Target Positive acceptance and demand growth

Why it matters

This will determine the long-term impact of GST changes on sales and profitability, particularly for higher-value items.

So, it now remains to be seen how consumers respond to this. A good test of that would be in the wedding season now, where a lot of our suits and blazers and all are at play right now. So, you'll have to see that part playing out in the next few quarters.

Risks & concerns

  • GST Transition Impact

    medium

    The GST transition led to reconfiguring purchase order systems for wholesale partners and required repricing, temporarily moderating overall momentum, especially for higher-value items like suits/blazers.

    Management acknowledged

  • Soft Consumer Environment

    medium

    The overall market continues to be soft, and a broad increase in consumer consumption is 'not yet visible' despite the festive season.

    Management acknowledged

  • Forever 21 Closure

    low

    The closure of Forever 21 contributed to a decline in Emerging Businesses revenue, though its impact is expected to be insignificant by Q4 FY26.

    Management acknowledged

  • Reebok Pipeline Inventory Issues

    low

    Reduced inventory in some exclusive Reebok stores due to pipeline inventory issues impacted revenue recognition, though streamlining is underway.

    Management acknowledged

  • Supply Chain Uncertainty

    low

    Uncertainty in supplies from Bangladesh led to early inventory build-up, contributing to increased working capital.

    Management acknowledged

  • Store Renovations Impact on Short-Term Growth

    low

    Aggressive store renovations (65 stores in Q2) resulted in 130 store months of disruption, impacting overall growth in the short term.

    Management acknowledged

Q&A highlights

7 direct
Impact of Forever 21 exit on emerging business growth Direct
Maybe the overall growth would have been better by 1% if the Forever 21 business was not considered. Of course, the EBITDA impact is also there and that is also there in both the base and in this year, that loss is not there.

Quantifies the drag from the Forever 21 exit on overall growth and clarifies its diminishing impact in future quarters.

Asked by Gaurav Jogani

GST transition impact on wholesale business and pricing Direct
One is, of course, the immediate impact, which you saw in Q2, which was more to do with the wholesale businesses, etcetera, the transition impact, waiting for IT configurations, purchase orders, et cetera. That is behind us. So, now it's more about how consumer takes on the revised prices.

Highlights the temporary disruption caused by GST changes on wholesale operations and sets the expectation for monitoring consumer response to new pricing.

Asked by Archana Menon

Drivers of EBITDA margin expansion Direct
it was a combination of multiple things, a lot of cost reduction initiatives, Shreya, which went through. Also, as you know, when you have strong like-for-likes, you get rent leverage. So, you would see that also impacting because most of our rent is with fixed costs... Plus, there have been multiple cost reduction program initiatives, which have also helped to improve the margins, both in the emerging business, as well as in the lifestyle business.

Provides a comprehensive explanation for the 125 bps margin expansion, attributing it to both operational efficiencies and strong sales leverage.

Asked by Shreya Baheti

Performance of small-town markets Direct
one clear indicator in the last couple of quarters is very strong growth in small-town India. And that is something which is -- which we saw in Q1 and we also saw that, in fact, it was a stronger like-to-like in small-town than even our very good like-to-like in urban centers.

Indicates a positive demand trend in non-metro markets, suggesting a broader recovery beyond urban centers.

Asked by Tejas Shah

Reduction in rent expense and its causes Direct
In one or two brands of ours, which Vishak explained to you in last quarter, we changed the model and now we are coming back. So, I think our business model continues to be franchisee-driven growth, except a few COCO stores also. But whatever actions we have taken, that is the impact of the variable rent, which you are seeing in the published result.

Clarifies the reasons behind the INR13 crores QoQ reduction in rent expense, linking it to strategic model changes (franchisee to COCO) and accounting for depreciation.

Asked by Devanshu Bansal

Profitability path for the innerwear segment Direct
this is a business which we are playing for a very large stake. So this is something that we want to be very large and meaningful. So there are deeper investments into making this happen. You're right. It's a sharp margin business. And I think we'll have to recognize that. It's also a business where the components of the business change significantly.

Explains the strategic importance of the innerwear business, acknowledging its sharp margin nature and the need for deeper investments despite current challenges.

Asked by Sameer Gupta

Impact of store renovations on growth Direct
we did 65 store renovations in just the last quarter. A typical renovation takes about 45 days to 60 days. So, it is almost like some 130 store months which are not there during the quarter. And that also has as you can do the calculation, that also has an impact on your overall growth.

Provides context for short-term growth moderation, attributing it to aggressive store renovation activities which temporarily take stores out of operation.

Asked by Devanshu Bansal

Overall market consumption and pain points Partial
I wouldn't call it pain point. You would want more consumption in the market. That is something which everybody in the industry would seek by. I wouldn't call it a pain point, but that is something which everybody would want, more consumption.

Reveals management's cautious view on the broader market, indicating that while internal efforts are strong, a significant increase in overall consumer consumption is still awaited.

Asked by Kunal Bhatia

2 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Aditya Birla Lifestyle Brands Limited reported a steady performance in Q2 FY26, with revenue growing 4% year-on-year to INR2,038 crores. Consolidated EBITDA increased by 12% to INR338 crores, up from INR301 crores in the same quarter last year. This led to an EBITDA margin expansion of 125 basis points, reaching 16.6% from 15.3% year-on-year, reflecting improved operating efficiency. The company also achieved a PAT of INR23 crores, a significant turnaround from a loss of INR59 crores in the previous quarter.

Segmental Growth and Strategic Shifts

Lifestyle Brands demonstrated strong growth, with revenue rising 7% year-on-year to INR1,754 crores and achieving a 12% retail like-to-like growth. The Emerging Businesses segment experienced a revenue decline, primarily due to the closure of Forever 21, which impacted overall growth by 1%. However, this segment still delivered a robust 11% like-to-like growth, with Van Heusen Innerwear retail sales growing over 20% and American Eagle like-to-like sales at 9-10%.

Operational Efficiency and Profitability Drivers

The expansion in EBITDA margin was attributed to a combination of factors, including cost reduction initiatives and rent leverage gained from strong like-for-like sales. The company noted that fixed costs, particularly rent for company-owned stores, were spread across a larger sales base. Additionally, multiple cost reduction programs contributed to margin improvement across both lifestyle and emerging businesses, with Van Heusen Innerwear's profitability improving by 150 bps due to lower losses.

Retail Expansion and Store Network Strategy

ABLBL continued to expand its retail footprint, adding over 75 new stores in Q2 FY26, including 60+ for Lifestyle Brands and 20+ for Reebok, bringing the total network to 3,250 stores across 4.7 million square feet. The company also undertook aggressive store renovations, completing 65 company-owned store upgrades in the quarter. These renovations, while causing temporary disruption equivalent to 130 store months, are part of a strategy to upgrade and expand store formats, enhancing consumer experience.

Impact of GST Transition and Market Dynamics

The GST transition, particularly the shift from 5% to 18% for items above INR2,625, caused temporary moderation in overall momentum, especially affecting wholesale businesses due to reconfiguring purchase order systems. Management highlighted strong double-digit like-to-like growth in small-town India (Tier 4 towns), indicating a recovery in these markets. However, despite the early onset of the Pujo season and a decent Diwali, a broader increase in market consumption is 'not yet visible,' and the full impact of the wedding season is still unfolding.

Capital Allocation and Debt Management

The company's finance costs decreased due to effective management of borrowings and interest rate reductions. Working capital increased this quarter, primarily due to an early inventory build-up for the festive and wedding seasons, coupled with supply chain uncertainties from Bangladesh. Management expects debt levels to reduce by the end of FY26, and clarified that a QoQ reduction in rent expense (INR13 crores from INR163 crores to INR150 crores) was due to changes in business models (franchisee to COCO conversions) and front-loaded depreciation.

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