Shoppers Stop

Shoppers Stop reported a strong Q3 FY25, with non-GAAP sales growing by 7% and EBITDA increasing by 20%. The company achieved a 4% like-for-like (LFL) growth for its departmental stores, with the average selling price (ASP) also rising by approximately 4%. Despite a 6% decline in customer entry in Q3, primarily in November, the company's strategic initiatives helped mitigate broader market slowness.

The premiumization journey continues to yield results, with premium products now accounting for 64% of total revenue, up from 55% two years prior. The share of premium non-apparel brands increased from 64% to 72%. New premium brands like Dockers, True Religion, Armani Exchange, and Tom Ford were launched. Initiatives such as personal shoppers, whose contribution increased from 15% to 28% with 3x higher average transaction value (ATV), further supported this strategy.

The beauty segment remains a strategic pillar. Global SS Beauty, the 100% subsidiary, nearly doubled its sales to INR77 crores in Q3 FY25 from INR39 crores last year, and its EBITDA grew 4x. Year-to-date sales for Global SS Beauty reached INR168 crores, with a full-year revenue expectation of INR240-250 crores (distributor price) or over INR400 crores (customer price). The company aims to be the top beauty distributor in India within the next two years. Beauty's contribution within departmental stores also increased from 9.5% to 11%.

The INTUNE value fashion format recorded INR63 crores in Q3 FY25 revenue, bringing the year-to-date total to INR138 crores. The format is close to breakeven at the store EBITDA level, with full breakeven (including SO cost) targeted for Q3/Q4 FY26 at a revenue run rate of INR350-400 crores. Sales productivity for mature INTUNE stores hovers around INR11,000 per square foot, compared to an average of INR9,000. The company plans to open 26 more INTUNE stores in Q4 FY25, bringing the total to 85 stores for FY25, with a target of 90-100 stores in FY26. The average store size is 5,000 square feet, with a payback period of slightly over 3 years.

Shoppers Stop has focused on rationalizing its store portfolio, closing 7 departmental stores and resizing 3 others during the year to improve productivity. The company expects minimal closures in FY26 (2-3 at most) and plans to open 12-15 new departmental stores. Additionally, 52 stores across all formats were opened in the first 9 months, with 32 more planned for Q4 FY25. The Malad store renovation was successfully completed, showing a 50% increase in productivity, and 6 other stores were renovated during the year, with plans for 10 more in the next fiscal year.

The company migrated to a new Magento platform for ShoppersStop.com, with further improvisations expected. Digital conversions have increased with the new ss.com app, and same-day beauty delivery has been launched from two stores as an experiment. The First Citizen Club continues to be a strong loyalty driver, contributing 83% of sales, with repeat customers at 69% (up 9% YoY). Premium Black Card customers showed a 28% growth YoY and contributed 17% to the mix.

Capital allocation remains prudent, with investments primarily in departmental stores, Beauty, and INTUNE. The company spent INR53 crores on capex and deposits in Q3, bringing the YTD total to INR141 crores, with an additional INR90 crores planned for Q4. Total FY25 capex is projected at INR230 crores, and INTUNE working capital at INR50-60 crores. Short-term borrowings increased to INR177 crores, primarily to fund expansion and working capital needs, with management confident in managing this from FY26 onwards.