Metro Brands, a Mumbai-based footwear retail company, is on track to open 225 stores over the next two financial years, supported by its regular cash accruals, and expects strong sales in the second half of this fiscal.
“We anticipate sales growth of 10-15% and are guiding a long-term CAGR of 15-18%,” Kaushal Parekh, CFO of Metro Brands Limited, told ETCFO at the Retail CFO Summit held in Mumbai.
Q1 was muted due to heatwaves, elections, and fewer weddings, he said.
Metro Brands reported a 3 percent decline in net profit to Rs 92 crore for the April-June quarter, compared to Rs 95 crore in the same quarter last year.
Parekh discussed Metro Brands’ strategy to stand out in the sports and athleisure segment.
We’re leveraging proven strategies to ensure success rather than starting from scratch. The insights from this partnership will be invaluable in training our staff to better meet customer needs. We anticipate launching our first showroom in the second half of this fiscal yearKaushal Parekh elaborated.
Metro Brands recently partnered with the American brand Foot Locker, known for its expertise in sports and athleisure. Initially focused on formal footwear, Metro Brands has since expanded its collection to cater to a broader market.“India is still in the early stages of the sportswear market, which saw significant growth post-pandemic,” said Parekh.
What is Metro Brands’ inventory management strategy?
Consumer trends have become more unpredictable, and businesses that adapt to the fluctuating demand-supply dynamics are the ones that thrive. Effective inventory management is crucial to staying ahead.
“Our product replenishment system is fully automated, using AI and ML. Whenever a product sells out in a specific region, it’s quickly restocked,” explained Parekh.
The company is also focusing on predicting the decline in sales of specific products, identifying gaps that need filling.
Any product over 1.5 years old is tagged for End of Season Sale (EOSS) between 15-18 months. Liquidating products before they hit a particular age threshold is key.stated the Metro Brands’ CFO
What are Metro Brands’ capital allocation priorities?
“As a debt-free entity, we can fund store expansions through our yearly cash generation. We’ve maintained a policy of distributing at least 25% of our PAT to shareholders for the past 15-20 years,” Parekh noted.
The company is on track to open 225 stores over the next two financial years, supported by its regular cash accruals. Parekh also discussed the acquisition of CBL, which gave Metro Brands the rights to Fila and Proline, as a strategic use of their cash.
He emphasised the company’s thorough due diligence process in ensuring that any inorganic expansion aligns with their guided Return on Capital (ROC) targets.
