Metro Brands , a prominent footwear retailer, has announced its decision to fully pass on the benefits of the recent GST reduction to customers, potentially stimulating demand in the footwear market. The company's CEO, Nissan Joseph, revealed this strategy in light of the upcoming change in GST rates for footwear priced below Rs 2,500.00.

GST Reduction and Its Impact

The Goods and Services Tax (GST) rate for footwear priced below Rs 2,500.00 is set to decrease from 12% to 5%, effective September 22. This significant 7% reduction is expected to have a notable impact on the footwear industry, particularly for Metro Brands, which sees a substantial portion of its sales from this price segment.

Metro Brands' Strategy

Nissan Joseph, CEO of Metro Brands, stated that the company will transfer the entire benefit of the GST reduction to its customers. This move is expected to make footwear more affordable and potentially drive up demand. Key points from the announcement include:

• The company's margins will remain unchanged as they are calculated net of GST.
• Metro Brands is targeting 30% EBITDA margins by FY26.
• Approximately 44% of Metro Brands' sales come from products under Rs 3,000.00, with 40% below Rs 2,500.00.

Market Dynamics

The GST reduction is set to reshape pricing strategies in the footwear market:

• The Rs 2,500.00-2,700.00 price point is expected to become redundant.
• Retailers are likely to prefer selling at Rs 2,499.00 to capture the GST benefits.

Growth Expectations

Joseph expressed cautious optimism about the company's growth trajectory:

• The price reduction is expected to spur demand.
• Metro Brands may potentially achieve its long-term guidance of 15% sales CAGR faster due to this development.

Market Response

The market has responded positively to this news, with Metro Brands' shares closing 4.38% higher at Rs 1,247.00.

Conclusion

As the footwear industry adapts to the new GST structure, Metro Brands' decision to pass on the full benefit to consumers could potentially strengthen its market position and drive growth. The coming months will be crucial in determining the actual impact of this pricing strategy on the company's performance and the broader footwear market.

Metro Brands , one of India's largest footwear specialty retailers, has reported a steady performance for the first quarter, demonstrating resilience in the face of market challenges and advancing its strategic initiatives.

Financial Highlights

Metro Brands posted consolidated revenue from operations of ₹618.24 crores, marking a 9.1% increase from ₹576.08 crores in the same quarter last year. The company's standalone revenue grew by 9.2% to ₹615.09 crores.

Profit after tax (PAT) on a consolidated basis rose to ₹98.80 crores, up 7.1% from ₹92.27 crores in the previous year's corresponding quarter. The standalone PAT increased by 4.6% to ₹96.62 crores.

Metro Brands maintained a robust EBITDA margin of 31.0% on a consolidated basis, slightly lower than the 31.3% reported in the same quarter of the previous year. The company attributed this marginal decline to increased marketing expenditures focused on brand building and positioning.

Operational Performance

The quarter saw Metro Brands expand its retail footprint with the addition of 20 new stores across various formats, bringing its total store count to 928 across 206 cities in India. This expansion strategy aligns with the company's goal of enhancing its market presence and accessibility to customers.

E-commerce continued to be a strong growth driver for Metro Brands. The company reported a 45% year-on-year growth in e-commerce sales, including omni-channel operations. This segment now contributes 13.7% to the overall revenue, up from 10.4% in the same quarter of the previous year, reflecting the company's successful digital transformation efforts.

Strategic Developments

In a significant move, Metro Brands announced a long-term strategic partnership with Clarks, the renowned British footwear manufacturer. This exclusive licensing agreement grants Metro Brands the rights to distribute Clarks products across India, Bangladesh, Nepal, Bhutan, Maldives, and Sri Lanka. The partnership encompasses all channels of trade, including exclusive brand outlets, multi-brand outlets, e-commerce platforms, and distribution networks. Metro Brands plans to launch Clarks in India during the third quarter of the current fiscal year.

The company also revealed plans to open three new Foot Locker stores ahead of the festive season, furthering its expansion in the premium sportswear segment. Additionally, Metro Brands is set to open new exclusive brand outlets for FILA in the second half of the fiscal year, strengthening its multi-brand portfolio.

Management Commentary

Nissan Joseph, CEO of Metro Brands Limited, commented on the results: "This quarter was a period of stable growth for the business, supported by strong consumer sentiment and consistent execution across channels. While external factors such as the preponement of Eid to March, an early onset of monsoons, and ongoing global geopolitical tensions posed minor challenges, we remained focused on delivering a seamless customer experience both online and offline."

Future Outlook

Metro Brands remains committed to its growth strategy, focusing on expanding its store network, enhancing its e-commerce capabilities, and leveraging strategic partnerships to strengthen its market position. The company's diverse brand portfolio, including both in-house and international brands, positions it well to cater to various customer segments and preferences in the evolving Indian footwear market.

As Metro Brands continues to navigate the dynamic retail landscape, its focus on omni-channel presence, premium brand associations, and strategic expansions is expected to drive sustainable growth in the coming quarters.