Spencer's Retail Limited

Spencer's Retail reported a 7% QoQ consolidated revenue growth, reaching INR 445 crores in Q2 FY26, despite September being impacted by GST-related supply chain issues and unseasonal rains. Consolidated gross margin improved to INR 93 crores from INR 90 crores in Q2 FY25, while operating expenses were significantly reduced to less than INR 100 crores from over INR 130 crores in the prior year. However, consolidated EBITDA remained flat at 0 crores, primarily due to a INR 7 crores reduction in other income.

The Jiffy online platform demonstrated strong momentum, achieving 30% QoQ growth to INR 52.5 crores in Q2 FY26, and over 50% YoY growth. The platform boasts over 100,000 monthly transacting users, averaging 8,000 orders per day with an average order value (AOV) exceeding INR 750. Notably, Jiffy achieved positive unit economics for its fulfillment costs (below INR 100) in August and September, with customer acquisition costs at INR 330. The company aims for 10,000 orders per day, translating to INR 21-22 crores in monthly turnover.

The offline Spencer's business grew 6% QoQ to INR 376 crores, with margins improving by 50 bps compared to the previous quarter. The company is focusing on optimizing existing stores rather than aggressive expansion. A key initiative is the 'My Spencer Rewards' loyalty program, which has enrolled over 50,000 members by October. These members, representing 8-9% of the active customer base, contribute 20% of sales, with average monthly spends 5x higher than non-members and a return rate of approximately 80%.

Nature's Basket reported flat QoQ revenues at INR 68 crores and a slight negative EBITDA, impacted by the broader consumer shift to online and disruptions in international supply chains (e.g., Davidoff coffee, UK/Southeast Asian products). To counter this, the company has migrated its app to a more agile platform and is building a consumer-resonant online proposition. Its 'Elysium' membership program has 6,500 members, contributing 15% of the overall business, with 55% returning month-on-month.

Management emphasized that cost optimization and percentage margin expansion have reached a ceiling, with consolidated margins around 21% (19.5% for Spencer's). The strategy now focuses on driving top-line growth through increased sales per square foot (SPSF) to absorb fixed costs and improve absolute gross margin. The company targets a consolidated SPSF of INR 2,000 by FY26 and INR 2,200-2,300 by FY27, aiming for 7-7.5% store-level EBITDA for Spencer's offline.

Spencer's Retail plans to continue using similar arrangements, largely debt, to access capital, while also exploring alternate fundraising options. For the online business, the company estimates that monthly revenues of INR 25 crores could reduce losses to INR 1.5 crores, with breakeven achievable at over INR 30 crores per month. The management did not provide specific details on H1 investment spend for online or a concrete balance sheet deleveraging plan, stating that details would be shared later.