Spencer's Retail Q1 FY27 earnings call

Spencer's Retail Limited delivered a strong Q1 FY27, with consolidated revenues reaching ₹469 crores, marking a 13% year-on-year growth and an 8% quarter-on-quarter growth. This performance was driven by robust growth across both offline and online channels. Gross margins remained stable at 19%, contributing to a significant 2x improvement in consolidated EBITDA, which stood at ₹9.4 crores (2% of sales) compared to ₹4.7 crores (1% of sales) in Q1 last year. The company emphasized good growth coupled with tight cost control as key to this improvement.

The Spencer's format continued its positive momentum, achieving 8% growth, marking the eighth consecutive month of growth. This was fueled by a 14% growth in the offline business and a 50% (actually 49%) growth in the online channel. Store EBITDA has significantly improved from 2.5% to a level much higher, moving towards a short-term aspiration of 7.5-8%. Sales per square foot reached ₹1,850, with a target to hit ₹2,000 in the festive quarter. The membership program, with over 125,000 members, now contributes one-third of monthly sales, demonstrating higher retention and average spend.

Nature's Basket experienced a muted performance with sales at ₹59 crores, reflecting a 13% year-on-year degrowth, although it saw an 8% quarter-on-quarter recovery from Q4 FY26. The financial EBITDA remained negative at ₹2.5 crores. Management acknowledged internal issues related to inventory and execution, initiating a complete reset plan. The focus is on disciplined execution, optimizing assortment for core strengths like fresh produce, meat, and imported goods, and improving sales per square foot and rupee gross margins to drive profitability.

The online business, Jiffy, demonstrated strong growth of 49% year-on-year. Crucially, it achieved positive unit order economics, making ₹18 per order compared to losing ₹18 per order last year. This improvement was driven by increased orders, high average bill values (₹780+), and enhanced productivity. The company maintains a calibrated approach to customer acquisition to preserve unit economics. Repeat rates are high at 67%, and NPS scores are 85+, indicating strong customer satisfaction and loyalty.

The company's consolidated debt stands at ₹1,266 crores, with Spencer's Retail Limited (SRL) accounting for ₹1,019 crores and Nature's Basket Limited (NBL) for ₹237 crores. A significant portion of this debt is undergoing refinancing, with the process initiated and expected to conclude within the current month. For the current fiscal year (FY27), the company plans limited capital expenditure, primarily focused on renovating Nature's Basket stores and making calibrated additions within existing Spencer's clusters rather than aggressive new store rollouts. A more calibrated expansion plan for Spencer's is anticipated in FY28.