Metro Brands is treading on soft demand track after dull Q4
₹17 crore, which the company aims to clear by the end-of-season sale in the September quarter (Q2FY25). Metro is optimistic about realizing higher-than-carrying value from this inventory. As such, Metro has been trimming the fat, shutting down many Fila stores with just three exclusive brand outlets (EBOs) operational as on March-end.
It expects to close one more Fila EBO in Q1FY25 and reintroduce the brand through the existing Metro/Mochi network. Amid this, it is not encouraging that the management anticipates demand softness in Q1FY25 thanks to fewer wedding dates compared to last year and store closures due to the general elections. Remember, the base is relatively high now.
Metro’s FY23 was categorized by strong consolidated revenue growth of 58% year-on-year led by solid pent-up post pandemic demand. In FY24, revenue growth dropped to 10.8%. To be sure, these issues haven’t dissuaded Metro from store expansion.
After a net addition of 97 stores in FY24, taking the total count to 836, Metro is gearing up to launch 225 stores over the next two years across brands. Leveraging its exclusive rights for operating Foot Locker stores in India, the company plans to begin store additions from Q3FY25, with a view to capture the growing athleisure and athletic market. To some extent, store additions aided the modest 7% growth seen in the recent March quarter (Q4FY24) given that standalone revenue per square foot continued to fall, down 5% year-on-year to Rs4,800 (Q3FY24: down 9.5% year-on-year to Rs5,200).
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