Q1 2027 V2 Retail Ltd Earnings Call Transcript
Key Points
- V2 Retail Ltd (BOM:532867) delivered a robust 58% year-on-year revenue growth in Q1 FY27, reaching INR997 crores, driven by strong volume growth of 56%.
- The company's EBITDA grew 60% year-on-year to INR139.5 crores, with the EBITDA margin improving to 14% from 13.8% in the corresponding quarter last year.
- V2 Retail Ltd (BOM:532867) continued its disciplined store expansion, adding 56 net new stores in Q1 FY27 to reach a total of 381 stores, and subsequently crossed the 400-store milestone.
- The company's repeat customer rate has improved significantly, with the percentage of customers returning within the first year rising from 40% to 55% over the last three years.
- Management maintains a strong growth outlook, reaffirming its guidance for at least 50% revenue growth and 8-10% same-store sales growth for the full year FY27.
- The company is investing in technology and analytics, including AI-enabled platforms and CCTV-based queue management, to improve operational efficiency and customer experience.
- V2 Retail Ltd (BOM:532867) has a strong balance sheet with low debt-to-equity ratio and is generating sufficient internal accruals to fund its expansion plans without needing additional capital.
- New stores are performing well, with the new store cohort achieving sales of approximately INR730-740 per square foot, and are breaking even and profitable from the first month of operation.
- Gross margin contracted slightly year-on-year to 28.6% in Q1 FY27 from 29.5%, impacted by a 30-day period of Adhik Maas which led to lower full-price sales (90% vs 92% last year).
- The company is facing rising raw material costs due to geopolitical tensions, which will lead to a 4-5% increase in garment costs that will need to be passed on to consumers starting in Q3 FY27.
- Inventory levels are currently elevated due to increased safety stock in the warehouse to ensure seamless availability amid geopolitical tensions, which has inflated the working capital cycle.
- Same-store sales growth (SSSG) moderated to 7.5% in Q1 FY27, slightly below the company's long-term guidance of 8-10%, partly due to the impact of Adhik Maas and fewer wedding dates.
- New stores are operating at a significantly lower productivity level, with sales per square foot approximately 34% less than mature stores, which could pressure overall profitability in the near term.
- Capital expenditure per new store has increased by about 10% to INR1.2-1.22 crores due to inflationary pressures on construction and fit-out costs.
- The company faces operational challenges related to customer experience, with negative reviews highlighting issues such as rude staff behavior and long billing queues due to understaffing at some stores.
- Management noted that while the demand environment is stable, it is too early to call the full-year outlook, as the bulk of sales will depend on the festive season performance in Q3 FY27.
Ladies and gentlemen, good day, and welcome to V2 Retail Limited Q1 FY27 conference call. (Operator Instructions) Before we begin, a brief disclaimer. The presentation which V2 Retail Limited has uploaded on the stock exchange and their website, including the discussion during this call contain or may contain certain forward-looking statements concerning V2 Retail Limited business prospects and profitability, which are subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. (Operator Instructions)
I now hand the conference over to Mr. Akash Agarwal, Director and CEO, V2 Retail. Thank you, and over to you, sir.
Good afternoon, everyone, and a very warm welcome to V2 Retail Limited's quarter-one FY27 Earnings Conference Call. We trust you've had the opportunity to review our financial results. The earnings presentation and press release are available on the stock exchanges and on the company's
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