Stanley Lifestyles Limited

Stanley Lifestyles reported a revenue from operations of ₹108.7 crores for Q1 FY26, marking a 7.9% year-on-year increase from ₹100.7 crores in Q1 FY25. Gross profit grew by 16.6% YoY to ₹62.4 crores, with gross margins expanding by 428 basis points to 57.4%. EBITDA for the quarter stood at ₹22.5 crores, an 11.9% increase YoY, reflecting a 20.7% margin. Net profit (PAT) more than doubled to ₹7.8 crores, achieving a 7.2% margin for the quarter.

The Retail business, primarily COCO stores, was a significant growth driver, contributing ₹64 crores and growing 25.2% year-on-year from ₹51 crores in Q1 FY25. This growth was notably led by Stanley Level Next, which grew 20%, and Sofas & More, which saw a 50.7% increase. The B2B and OEM segment also demonstrated strong performance, with revenue increasing 27% YoY to ₹28.3 crores from ₹22 crores in Q1 FY25. However, the Franchisee and Accessories business experienced a 40.7% decline, with revenue dropping to ₹16 crores from ₹27 crores in Q1 FY25, primarily due to the exit of the D8 brand which contributed ₹9.6 crores in the previous year.

Stanley Retail Limited acquired complete ownership of Shrasta Decor Private Limited, a strategic move to strengthen its presence in Hyderabad. Management highlighted Hyderabad as a crucial growth market for luxury furniture due to the demand from large homes and villas. The company plans to open three additional stores in Hyderabad within the next two quarters, with all stores in key cities like Delhi, Mumbai, Chennai, Bangalore, Pune, and Hyderabad transitioning to the Company-Owned, Company-Operated (COCO) model.

The company's focus on localization and improving manufacturing efficiency contributed to optimizing production costs and broadening the product mix, leading to the significant gross margin expansion. Management expressed confidence in achieving further efficiency improvements and margin expansion as the business scales. EBITDA margins, calculated at 20.7%, reflect the company's operational leverage, with overall company-level rental expenses estimated at 6-8% of revenue.

As of June 30, 2025, Stanley Lifestyles operates 68 stores, comprising 43 COCO stores and 25 FOFO stores, with COCO stores accounting for 60% of Q1 FY26 revenue. All new stores opened in FY25 have achieved breakeven, validating the company's location selection and execution strategy. Management provided a detailed ramp-up trajectory for new COCO stores, expecting them to reach 55-60% of their true potential in the first year, 65-70% in the second, 80-85% in the third, and 95-100% by the fourth year.

Despite a cautious consumer environment influenced by global trade developments and US tariff policies, management does not anticipate a material impact on its business, as B2B contracts are primarily for domestic and Middle East requirements. Delays in property handovers continue to defer purchase decisions for premium home interiors. However, regulatory actions like DRI raids on under-invoicing luxury furniture importers and the gazette for QCO on import furniture are viewed as positive tailwinds for compliant domestic manufacturers like Stanley.