Morning, thank you for joining us on the Shoppers Stop Q4 FY 2022 Earnings Conference Call. Today we have with us the senior management represented by Mr. Venugopal Nair, Managing Director and Chief Executive Officer, Mr. Karunakaran Mohanasundaram, Chief Financial Officer, Mr. Jaiprakash Maheshwari, Vice President Finance and Accounts. We will begin the call with opening remarks from the management, after which we will have the floor open for the interactive Q&A session.
I must remind you that the discussion in today's earnings call may include certain forward-looking statements and must be viewed therefore in conjunction with the risks that the company faces. Please restrict your questions to the quarter and yearly performance and to the strategic questions only. Housekeeping questions can be dealt with separately by the IR team. I will now request Mr. Venugopal Nair for the opening remarks. Over to you, sir.
Thank you, Mamta. Good morning, friends. Thanks for joining us today to discuss the Shoppers Stop financial results for the fourth quarter and the full year of fiscal year 2022 that ended on 31st of March, 2022. Along with me, I have our CFO, Karuna, and Jaiprakash, our FP&A lead. We had shared our Q4 results, the investor deck and press release with you, and I'm sure you would have gone through the same. I will now walk you through on our Q4 performance, progress on the strategic pillars and the way forward. Q4 was a story of two halves due to the third wave of COVID. Sales improved dramatically in the second half, March being particularly good, witnessing double-digit growth across all channels. While the most of January and half of February had been impacted by COVID.
Fortunately, the impact on people was almost negligible, which helped in increasing consumer confidence. I must add that the strong momentum from March had continued into April. We had a reasonably strong quarter post-COVID, and the highlights are as below. Sales grew by 8% versus last year. It doesn't convey the strong momentum that we have now. To give you the perspective, our sales declined by 16% in January, grew by 7% in February and 40% in March. As you are aware, January is the second highest month for us, and due to the festive and seasonal sale, it has a very high sensitivity overall for us. Any impact in January is felt over the entire quarter, and that's what happened, camouflaging our growth and impacting the profitability for Q4.
To illustrate this in numbers, we would have had a 28% growth in Q4 sales if January sales had been the same as last year. Our ASP, that's the average selling price, and the average transaction value grew by 17%, further substantiating the strong consumer demand, particularly in the premium and virtual luxury categories that outperformed during the quarter. Our digital sales continue to be robust with a growth of 5% on a significantly higher base. For the full year, our digital sales grew by 60%. In my last speech, I had spoken about wardrobe reboot. Customers making choices on apparel, our assortment of clothing wherein we bring the latest tastes and preferences. We continue to curate depending upon the seasons.
With offices, schools and social life opening, we are now witnessing an office reboot, which is also the campaign that we ran in our stores and online at the end of March and beginning of April. We curate our ranges to the latest fashion trends and bring this within our stores and offering the latest trend to our customers, helping them to build their wardrobe with confidence and feel good is what we do. That curation is an important role that we play. We believe the focus and attention that we have given to this area is leading to substantial results for us. On the operational costs, we saved INR 47 crores, out of which we invested a substantial portion for our future investments such as new stores and e-com.
Before I move on to the EBITDA, I need to discuss the one-time costs which we had to incur, and that significantly impacted our profits for the quarter. We had implemented SAP last year, which was a massive change in the IT application from the earlier Oracle RMS. This was done in June 2020, at the height of COVID, and that was a call we took to use that downtime to make this transition. As you know, COVID has surged and ebbed over the last two years. We have a perpetual inventory control system called PICS, and we have a complete inventory verification once in a quarter. While PICS was done partially in the earlier quarters due to COVID closures and festive season, a complete wall-to-wall inventory check was possible only in Q4 of this year.
This led to a significant increase in inventory shortage of INR 9 crore. We have revisited the process, strengthened the same significantly, and put a separate team in place to monitor this on a weekly and monthly basis to ensure that our pick process continues to be as robust as before. I must call out that this is an area where Shoppers Stop has been particularly strong in, and over the last many years our shrinkage or picks has been consistently 0.3% or lower and which is what we believe we will be able to achieve going forward as well.
We have now got an external agency as well to verify our revised process to confirm that it is in order. Our eCom operations also had sales returns higher than offline. While recompiling our stocks, we took cognizance of the sales returns which were damaged in transit. As a prudent and conservative policy, we decided to provide INR 6 crore for the same. Last but not the least, for some of the stores, we delayed our opening from the earlier quarters to this quarter due to COVID.
We negotiated with the landlord and agreed for a one-time settlement of INR 1 crore for this delay, that these expenses during the closure period. INR 6 crore is the amount there. That explains the one-time expenses that we have provided for this quarter. Moving on to operational costs. We continue to save over FY 2020. In Q4, we saved INR 47 crore. We are nearly debt-free from January, and partly February was impacted by COVID. With the sales and tight control on costs, we reported EBITDA of INR 97 crore as per GAAP financials and a small loss of INR 13 crore as per non-GAAP reporting.
We continue to invest in our business. The investments are to grow our digital commerce capabilities and to expand into new stores, along with refurbishment of some of our older stores. We have invested INR 69 crores in Q4 and INR 154 crores in FY 2022. At this stage, 40% of our entire store estate is now less than three years old, either as new or refurbished, and this number will continue to grow over the coming four quarters. We are expanding rapidly. We opened five department stores, 12 beauty stores and two airport stores aggregating to 18 stores, the highest in the last several years. We also invested INR 46 crores as CapEx in the last quarter and cumulatively INR 101 crores for the full year. CapEx has been funded through our internal resources only.
We have also significantly reduced our working capital by INR 100 crores despite the growth of 45% in the last one year. From operations, I will now move on to the performance of our strategic pillars. Our First Citizens continue to contribute at a healthy share of 79% in offline and 37% in online. We have been witnessing a steady increase in the First Citizen share over the year, particularly in the last quarter. Our new enrollments increased from 7% - 16% and has led to an overall improvement in our First Citizen contribution. I'm extremely happy to say that our First Citizen Black Card enrollments recorded a 173% growth in the last one quarter. In our online business, First Citizen online sales grew by 19% over last year at 37% contribution.
On repeat online shopping, it has increased by 37% again over last year. This is still a small percentage of our total online spend and hence a huge opportunity for us to grow our sales to our First Citizen customers. As always, our personal shopper contribution has been consistent and has contributed to 10% of our sales. The personal shoppers is a unique offering that Shoppers Stop has for its customers across stores and online, where they offer personalized service and engage with customers at a far higher level than normal.
This is illustrated by the average ticket size continuing to be three times higher than the normal ticket size. We have done several local events to spread the awareness of the personal shopper. Our other initiatives such as White Glove, WhatsApp calling, et cetera, continue to have contribution in our overall sales. While our initiatives are continuing, I would like to call out the landmark event that happened in March 2022. HDFC Bank, India's largest private sector bank, and we joined hands to launch co-branded credit cards.
These credit cards will be available to over 9 million First Citizen customers, along with HDFC Bank customers, with an endeavor to provide an elevated and rewarding shopping experience. The partnership draws on HDFC's strength as India's issuer of credit cards and our position as a reputed retail brand. I should say that this is the first time HDFC has associated with a retail company to launch a co-branded credit card. This will also give us the benefit of being able to reach out to a larger universe and also getting significant insights into our customers' shopping habits. Our co-branded cards with HDFC will bring unmatched benefits to our First Citizens.
They will be able to avail discounts and offers provided by the bank and redeem points at our stores. This is a win-win proposition for both HDFC and for our customers. The credit cards will be available in two categories, Shoppers Stop HDFC Bank Credit Card, and Shoppers Stop BLACK HDFC Bank Credit Card. The reward points will differ depending upon the card, with BLACK Card ensuring higher loyalty points. Moving on to the next strategic pillar of private brands. During the quarter, private brands grew by 9%. Private brands continued to outperform the other brands and increase the overall share. The average selling price increased by 6% during the quarter. Mix continues to grow within private brands by 40% versus last year.
Our private brand contribution is at a healthy 19% at an overall level, and within apparel it is at 19%. Our online contribution of private brands increased to 20%. I must add that, in Q4, the private brand contribution was impacted by the sales in January, where, most of, I mean, sales were significantly muted, and it tends to be the second highest month for private brand particularly. Hence, the overall percentage and contribution to stores did not grow as it has done in the previous quarters, and it was muted. We have been focusing on women's ethnic and leisure wear, and these have had a healthy growth in our lead brands with Kashish and Intune leading at 50% and 80% respectively.
Our occasion wear for men's, Bandeya, has been received well with an annual run rate of INR 25 crore now. Our D2C brand, Infuse, has also been growing steadily. Moving to a third strategic pillar of beauty. Our beauty grew by 9%, with the mix at 16.5% to our total sales. During the quarter, we launched 24 brands and close to 100 brands during the year. Our own private brand, Arcelia, launched 85 new options. Arcelia is in the top 10 brands within fragrances in our stores and continues to be within the top three in bath, body, and accessories. There were global supply chain issues during the quarter, especially from international brands due to the disruption caused by COVID and the Ukraine crisis. This is getting streamlined now.
We have opened 12 beauty stores during the quarter, and this is an area we are focusing on to grow our presence in the beauty segment to offer our beauty customers a great experience. Within those 12 were four standalone beauty stores, with three of them being of SS Beauty, which is our standalone beauty format that we are continuing to invest into. With masks now going away, we expect sales on beauty to get even stronger. As you are aware, beauty is a key strategic pillar for us. We have taken higher targets in beauty and have aggressive strategic plans for the next three years. To achieve this, we need to offer best in class experience for our customers, particularly the digitally native ones. For this, content plays a crucial role in driving site traffic, building brand authority and improving conversions.
This is an area we are investing in to improve the experience for our customers. At this juncture, I am pleased to share that we have a new Chief of Content and Webcomm Officer, Ms. Madhavi Irani, who joined us a few weeks back. Madhavi has over 25 years of great experience in content and website management. Madhavi has worked in Nykaa from its inception, and has also worked in the Times of India Group in the past. Her expertise lies in content to commerce, omni-channel strategies, user experience and engagement, all of which will drive growth. This is a big addition to our team and helps us to focus in improving the customer experience, especially for the digitally native and also the experience for our customers across online and offline. Moving on to our fourth strategic pillar of omni-channel.
Digital sales continue to be robust and grew by 5% on Q4 FY 2021, which had a large base due to the beginning of the second wave in March 2021. We are now recognized as an omni-channel retailer with shoppersstop.com firmly established as a shopping destination. Last time when I spoke to you, I had mentioned to you about the improvements on our app for customer service, the UI/UX of shoppersstop.com. The first phase had just been rolled out in December. I'm pleased to share that in the last quarter, the second and third phase of the UI/UX has now been rolled out, and this has further improved the customer experience. This is illustrated by the improvement in our sales conversions on the app. As you would appreciate, omni-channel is an area we are investing in.
In the last quarter, we invested INR 13 crore and in total INR 53 crore for the full year. Generating customer insights and using the same for better customer targeting is now a regular practice for the business team. The data lake that we had invested into earlier is now starting to bear fruit, aiding us in personalizing our communication to our First Citizen customers, and again, improve our sales conversions into that. Finally, moving on to expansion, and this is specific to brick and mortar. We opened five department stores, 12 beauty stores and two airport stores. Overall, we opened eight department stores in the financial year, and our pipeline of new stores is strong for the coming year, where we expect to open between 12-15 department stores in FY 2023.
In summary, we have grown last quarter in the last four quarters, and as I speak, we have seen a strong April. While we have taken aggressive targets for this fiscal, and we have a strong team now in place with resources and plans to achieve this, we continue to fire on all cylinders on our strategic pillars. We are confident that it will contribute significantly to our overall growth. Thank you, and we will open up for questions.
Thank you very much.
We have already received a few questions. Mamta, I would suggest that we will start with those questions first. I'll read out the question and then, also give the answers to the same. The first one that we got is can you explain the inventory loss of INR 9 crore in details not clear on change in IT application part? I think I've clarified that during my speech in detail. I assume that's now clear. The second one is understanding on INR 21 crore one-off and INR 40 crore EBITDA loss of January 2022. Plus operating PBT and reported PBT include the adjustment of both the points or only one off. Yes, it is. Can you explain the integration with Unicommerce and how it will benefit Shoppers Stop?
Unicommerce is a middleware, and we have now linked that up with our own system, and it helps us to integrate with other brands to grow our drop ship model substantially. What Unicommerce does is to get a real-time inventory of the brands that we associate with, and through that we are able to offer a much wider set of brands to our customers. This is an area where we expect to see significant growth in the number of brands that we work with. To aid that, we have actually put a separate team in place. Next one is on details about the acquisition plans of new D2C brands as seen in media. How many brands, when, and at what value, etcetera. Also mentioned about SSBeauty app. We already have maccosmetics.in and other ELC sites. How will it help?
On the acquisition, what I had said, and this was to a specific question on whether we are considering acquisitions and what I had my reply was that if there are good opportunities we will consider. We normally do not make any speculative statements, and there is nothing at this point that we would like to share on that. On the second part of that question about the SSBeauty app, this is to go with the SSBeauty stores that we have launched to offer an environment for the beauty customers of ours. The SSBeauty app will have all the brands that we would have in our stores and a significantly larger number as well, which will be online only. This app will be great on customer experience, driven through content, social commerce and extremely interactive with innovative features built into the app.
I will talk more about SSBeauty app in the next quarter, which will be around the time that we will be ready to go live with it. Even as we speak, the team internally are working extensively to bring this to life. It is different to MAC.in and the other ELC sites because MAC.in is specific to MAC. Similarly, the other ELC websites are specific to that brand only. Next question is on Shoppers Stop Beauty. If you can share more details here. How has been the performance so far? What is the special offering there versus the other beauty stores? We have recently opened three stores in addition to the three stores that are already existing in Hyderabad and Bangalore.
The performance of new stores is too early to comment, but the existing stores, the three that have opened earlier, have higher sales and profit, profitability. As far as the SS Beauty is concerned, we have three distinct features in our stores. First and foremost is the assortment, and we bring a slightly different assortment, and we intend to have a number of brands which would be available only in our stores. Further, the assortment would be tailored based on the location. There would be three, I wouldn't call it as format, but three different types of assortment that we would offer, which internally we call it as luxury, premium and hybrid. So that's really the on the assortment.
The second point of difference would be the customer engagement, such as makeover, skincare and also, digital engagement tools that would be there in the stores. The third is, of course, the look and feel of the store itself, which is significantly premium and inviting to our beauty aficionados that we cater to. Next question, athleisure demand trend. Remember last quarter you saw moderation probably on account of people gearing up for post-COVID life. Athleisure and active categories are continuing to show good growth, 150% growth as we are building the base on this category. Workwear related categories, formal and semi-formal, have shown a 10% growth over the business.
I must also add that, talking to one of our sportswear partners, who have a lot more insight and data into this area, while formal has grown, the growth on athleisure has not significantly slowed down. There's a slight shift of pure sportswear to more, casual wear so that people can use for both occasions along with sports. Overall, the casual part of the business is definitely continuing to be strong. Next question is on prices. Cotton prices are on an uptrend. How are we planning to respond to the situation? FMCG companies have highlighted stress on consumer wallets, therefore, will taking price hike in such situation lead to demand erosion? We have taken selective price increases in January on our products to retain the margin.
The price increases on raw material were substantial, which is why we had to take this increase. What we have seen is, and again, this is going by the past, when we look over the last many years, what our data tells us that whenever there have been increases in prices due to cost pressures, we have done well. Shoppers Stop has done well. The reasons we believe that this happens is because customers prefer to trade up and prefer with trusted brands like Shoppers Stop, and that's why we don't see demand erosion. I must say, in the three months we haven't seen a drop in overall demand due to the pricing increase. Next question. In the press release, it is mentioned the company will grow in line with retail industry at double-digit pace.
Can you share any guidance on margins for FY 2023? We don't normally give any margin guidance. However, we do expect it to be higher than the pre-COVID levels. Next question. We are spending a significant amount for renovating stores and plan to renovate eight stores in FY 2023. What is the incremental revenue that a renovated store brings in? Investment on store renovations was only INR 25 crore. Total CapEx for the year was INR 101 crore. Store renovations payback period tends to be around two years. Next question is on omnichannel. Omnichannel growth rate has moderated in Q4. Any reason for the same? As I mentioned in my opening statement, part of this was because of the rains.
The other reason that this has caused is also a shift in our category focus to more on apparels, where the return rates tend to be higher and has hence impact on the net sales. Online sales. Next question. Online sales grew only 5% year-on-year, with overall sales at only INR 200 million. What contribution as a percentage of sales can be expected by FY 2025, and what will be the levers for the same? For this fourth quarter it was on an increase pace, as I just said. For the full year, we achieved INR 226 crores, a growth of 59%. Next question is on Arcelia. Could you share revenue contribution of Arcelia to beauty segment? How has the brand fared over the last year?
Arcelia is still in its infancy and the entire assortment is not yet launched. So far we have launched bath and body, we have launched fragrance and children's, and we are just in the process of launching nails, which was to launch in Q4, got launched at the end of March. Further, we will be launching nails and finally face, and that's when the entire assortment would get mixed. I would say at this stage it's a bit early. The overall contribution is small, but we do expect this to go up considerably over the next year. Karuna will take the next question.
Thanks, Venu. There are a few more questions which has been given to us. What I thought I will answer that, then we will open a question answer session to the people who are waiting. The next question is, employee expenses have seen a 21% increase in Q4, while revenue has increased only by 6%. Any reasons for the same? You may remember we have opened eight new stores and 18 beauty stores that almost contributed INR 4 crore-INR 5 crore. In addition to that, we also strengthened beauty, Omni, and private brand for increased growth in the coming years. That we invested almost INR 3 crore on that. Last year, we had capitalized due to ACP, and that's almost INR 2 crore. More or less, plus we also had inflation this year.
These are all small items that contributed almost 21%. That's the reason for the employee expense increase. The next question is, CapEx for the new stores seems high at INR 148 crore for 12 departmental stores and 15 beauty stores. In FY 2022, the company added eight departmental stores and four beauty stores, and the CapEx was near INR 64 crore. Why such high CapEx for FY 2023 compared to FY 2022, assuming all new stores will be 25,000-30,000 sq ft? What we said is we will open 12 new stores, okay? Whereas the CapEx is considered for almost 20-23 stores because some of the stores will be on work in progress, and it will be opened in Q1 of FY 2024. That's the reason the CapEx is around about INR 148 crore.
The next question is, overall, the sales growth is 9%. Strategic pillars, beauty 9%, private, Omni. Private brand grew by 5%, beauty by 9%, and Omni grew by 5%. Personal shopper is on a decline. Ideally, strategic pillars growth should be higher than overall company growth given the investment behind these initiatives. What are we missing here? Venu just explained in detail about the private brand. Predominantly, what happened was our sales in January were very low, which impacted our private brand overall growth. Similarly, beauty, we just opened number of new stores in the month of March, and you will see a significantly higher growth in the coming months to come. Personal shopper is consistently at 10% and it has not changed at all.
The next question is, out of 8.7 million First Citizen customers, how many are active users and what is the average ticket size? Our active users are at about 25%-30%, who have actively shopped in the last 12 months. Of course, there are others who shop probably once or twice in the last one year. Our average ticket value is around about INR 4,500. It's significantly higher than the walk-in customers. Again, the next question, I will just read the question. Venu has already replied it. Contribution from private brand and beauty continue to remain steady at 13% and 18% of the sale. How the company is planning to increase sales contribution from these verticals? We have already replied that, PG had a higher impact due to January closures slowdown.
On beauty, again, I've said we have opened 12 new stores, signed up 100 new brands, and we are planning to open 10 new stores next year. We are also discussing with other international brands for a possible tie-up. The next question is on depreciation. Why it is higher in this quarter? Is this due to store renovations? What bit of quarterly run rate can we build here? See, depreciation, if you see the item, it has both ROU, that is right to use, asset depreciation, as well as a normal depreciation for fixed assets. I would suggest you should go through our non-GAAP income statement, which normally we publish on the left-hand side of the, income statement. If you see it, the depreciation is approximately INR 35 crore for this quarter, the depreciation for our fixed assets.
In the last three quarters, it was ranging between INR 30 crore-INR 35 crore. This quarter it is marginally higher by a few crore because we opened eight stores in the last six months, and that's the reason it is higher. The last question was employee other expenses has increased due to store additions on year-on-year basis. It still cannot explain some 20% and 12%. Well, we could not understand the question. Probably the question is asked why the employee and other expenses have increased. We have given a slide in the investor presentation. Our total expenses has increased by 10%, that is in cash terms around about INR 30 crore versus last year. This is primarily due to one-time expenses, which we spoke about almost INR 12 crore, and the normal cost for the new stores.
I mean, we almost spent INR 15 crore-INR 18 crore on the new stores. These are the two large make up for the increase in expenses. The last question is, please share Ind AS 116 rent expenses and EBITDA on GAAP reported basis. Again, we have given to the investor presentation. Our rent, including CAM and variable rent is around about INR 133 crores. Rent that is allocated in JFs for GAAP is at about INR 91 crores. In that calculation, we have also mentioned that. EBITDA on GAAP is INR 97 crores. We will now open to questions, Mamta.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, you press star and one on their telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nihal Jham from Edelweiss. Please go ahead.
Yes, sir. Thank you so much, and good morning to the management. Three questions from my side. Sorry to repeat, but just for the one-off that you've given, I just wanted to confirm that for, I assume, the inventory write-off that would have reflected in terms of higher costs, right? Is that the right understanding?
Yes, Nihal, that's the right understanding, and, thanks for your question.
Also the receivables write-off, where would that reflect in the P&L, just to be sure about it?
Other operating expenses.
Similarly for the lease run-off, that would have ideally shown up as a higher other income or it just shows. How does that show?
That is shown again. It's not an income, it's an expense. It would be the lease expense. It is included in other operating expenses.
Basically other operating expenses are higher by INR 12 crore than what they ideally should have been, and your COGS is higher by INR 9 crore. That is the way this has been accounted for the PNL.
Absolutely right. [audio distortion] , INR 21 crore. You are right.
That is absolutely clear. The second question was that, you know, in your presentation and in terms of your store openings also, we do see that, most of your stores that you opened last year are mainly in Tier 2 and 3 cities. Even for the pipeline ahead of the 12 stores, I think 10 you're planning in, the Tier 2 and Tier 3 city. Just wanted to get a sense that, you know, how has the, store economics for these stores, which I'm guessing are smaller than in terms of pick-up and are there any specific aspects which, you know, better or worse than the existing set of stores which are, say, more Tier 1 city focused?
On the store economics, these tend to be, you're right that a larger proportion of the total stores tend to be in the Tier one or Tier two. I'm separating out Metro and Tier one when I say that. The overall store mix tends to be similar, and we are now looking at between 25,000-30,000 sq ft in a Tier one or a Tier two store. Because of this, the trading density is very healthy and the lease cost is on a lower side. Further, we are also able to get CapEx contributions from the landlords, which again helps in our overall investment. In terms of sales, the productivity is at par or in many cases better than what we have seen in some of our larger stores. Overall, because of this, the payback tends to be around two to two and a half years.
Just to ask, how would the payback be, say, around four years for stores that we've traditionally opened in the key cities in metro and Tier 1 cities?
No, around two years.
Two years is for the stores you're currently opening in Tier 2 and 3 cities. I was asking for the legacy stores that would have ideally been opened in Metro and Tier 1 cities only.
That would be three to three and a half years.
Three to three and a half. That is helpful. Last question, I'm sorry I know you've highlighted about your digital sales obviously having a strong base. But you know, it's now been, say, 24 months since COVID has happened. You've seen the past two months whether they were as a part of lockdown or normalized, and there is a run rate that you would have seen just get established.
The sense that, you know, I wanted to get into that is this INR 100 crore or INR 50 crore that we saw for this quarter maybe would have been slightly higher or lower if January would have been normal. The normalized run rate, would you expect things would come to that? If not, then what are the initiatives that you can take this higher from here? Because the Shoppers Stop brand and the app has been well known in existence now since the last 18-20 months since we undertook the strategic initiatives.
When it comes to digital sales, while we classify digital sales where it is directly brought online, we do believe, and based on data that we have, that customers, specifically, our First Citizen customers would shop offline as well, even when they are looking online. One, Shoppers Stop platform definitely aids in driving customer traffic both ways. In terms of the absolute base itself, now while the overall number has been growing because the total sales has gone up in the year and hence the percentage looks not as robust as it would have been otherwise. Going forward, the improvements that we have done on the customer experience in Shoppers Stop, shoppersstop.com, and the SSBeauty app which we are planning are the initiatives which would help us to grow our sales digitally.
That is helpful, Venu. I will come back to you if I have a few further questions.
Thank you.
Thank you. The next question is from the line of [audio distortion] IIFL. Please go ahead.
Sir, I just wanted to understand how have you derived this number of INR 50 crore for the operating profit impact due to COVID?
You are talking about this January, right?
Yes. Yes.
January, ideally we do anywhere between INR 400 crore -INR 450 crores revenue. As the balance, what we did was close to INR 280 crore -INR 285 crores. The balance INR 120 crores, whatever is the profit that normally we get it because the fixed costs are fixed. I mean, nothing changes there. Every flow through, we got it around about INR 30 crores.
Sir, wouldn't there be some postponement of purchase if the purchase was not purchased in January? That sale is not lost from the quarter completely, right? It will filter through in February or March to a large extent. That's why you have seen also March being very strong. At least one of the reasons partially would be that the January sales has got postponed into March.
That's an interesting thought. Now what is different in the month of January? January tends to be an end of season sale month, and that is where brands go heavily on sale. A big chunk of that was completely missed out because of the closures or the slowdown, as one might put it. That is why, and as you would have seen, the sale didn't get extended beyond the 15th of February, which is normally when it closes. That's the reason a lot of what would have come through in January did not get postponed.
Okay. Secondly, I'm just trying to derive a very clean concept for you, excluding any one-offs. Basically you have done non-GAAP EBITDA of INR 13 crores. On that, if I add back the INR 50 crores of COVID impact, if I add back INR 15 crores of omnichannel investments, if I add back INR 21 crores of all the write-offs, one-offs that you've done, I get about INR 63 crores of profit. Now the INR 63 crores of profit as a percentage of your sale of INR 798 crores, that comes to about 7.6% EBITDA margin. I mean, this is normalized for any kind of one-off, any kind of COVID impact. Basically 7.8% is the kind of margin, that is, sort of in the business now. Is that understanding correct?
Firstly, one thing, Q4 is normally the lean quarter for us. See, Q4, if you have observed after January, February and March is relatively low. To answer your question, the INR 15 crore in Omni, I think in all probability will continue next year also, because as long as we have this Omni, we have to continue to invest in Omni. See, I would say the EBITDA margin at that level of sales, I would expect anywhere between 6%-7%, Percy.
I was like taking out Omni just to get a clean picture. Where I'm coming from, I'll just give you an idea. Before COVID, let's say FY 2018 or 2019, on average, we used to do about 6% EBITDA margins. Then you mentioned that around INR 200 crore of cost saving per year would come through, which are actually coming through this quarter. You did mention INR 27 crore, which is very close to annualized number of INR 200 crore. That INR 200 crore as a percentage of sales works out to about 5-6 percentage points. If my pre-COVID margin is 5%-6% and then I add another 5%-6% on this, we should be at a double-digit level before the omnichannel investments, which we are not yet there.
Yeah. Again, a very, very interesting thought. Without Omni, we will be around about 8 to close to 8%. Please understand that Omni also has a sale of INR 50 crore. So we are only taking the expenses and saying that this will be the number. So we should also remove the sales to get the ideal number. One thing, Percy, in the month, in Q4, we have a new Q4. The fixed expenses more or less it will January and half of February remains constant. So at that scale of around about INR 890 crore in non-GAAP, any percentage of EBITDA, like, it is slightly distorted. I would say take an ideal number of 1,000-1,100 crore, which should be the normal Q4, and then we should calculate the.
I understand where you're coming from. Only reason I ask this because historically speaking, I was just looking at your Q4 margins, and they were not very different from your full year margins. That's why I asked.
Yeah. Got it.
Okay. No more questions from me. Thanks and all the best.
Thank you. The next question is from the line of Varun Singh from IDBI Capital. Please go ahead.
Thanks for the opportunity. The first question first is on inflation. Sir, why do you think that Shoppers Stop business will not be impacted because of such a rapid rise in inflation, not just in the raw material of apparel, but also, I mean, the general inflation that we are seeing, so kind of 50 or 50-year worst inflation that everyone is facing? Beauty, both of them are discretionary basically. My question is twofold. Why you think that frequency of buying will not be impacted as well as shifts of customers from branded to private label products?
Because there is so much now competitive intensity has heated up that there is an easy access, more and more digital outlets are out there, and as well as private label retailers are, you know, so dominant in presence. Venu, if you can give me your view on this.
I think I'll take your question in two parts. One is the inflation and hence the cost through that we have already impacted. We now have about three months of history where we haven't seen a significant impact, which is the reason that in the current trade we believe it has been accepted. The second factor is our loyal First Citizen customer. You'll remember that between 75%-79% of our sales come from our First Citizen customers, and these are our loyal customers who have been with us for a long time and, hence, would prefer to shop with us, trust us.
In times like these, when the costs go up, they choose to go to brands that they trust, and that's where we benefit compared to a number of the others. The third probably factor, which is also that our target and we are in the premium segment, and this target segment of ours, especially on retail sales, is likely to be less impacted by the price rises compared to some of the other, lower segments.
Understood. That's very helpful. You are saying that stickiness of the premium customer will help you with regards to not losing market share to competition. Let's hope that.
Hopefully gaining market share.
Gain market share. Right. Sure. Second question, Venu, is on beauty. Please help me understand with regards to why we are switching about the aggression or discriminating more towards with regards to CapEx investments for the SSBeauty stores. I have just two questions on this. The first question is why we think that aggression towards beauty, so I mean, investment more towards beauty is more attractive to the company? Second is, what is the right to win that we are creating into this category?
We understand you talked about assortment and three different types of assortment that you want to create and exclusive brand sign up that will be available to your stores only, and you can see et cetera, which you are focusing. Still, I mean, I would dare to ask this question that compared to the other country competition which is already there into this category, what is the right win that you think we should be creating? Also, I wish to know that who are we idolizing? If you can name one or two countries that looks like which we are, at least we are very much inspired from. Yeah, that's it from my side.
Okay. If I take the question on beauty at an overall level, firstly, beauty is 16% of our overall sales. On an overall turnover of INR 4,500 crore, that's INR 750 crore that we do on beauty, and this was pre-COVID. That makes us the largest player in beauty, the largest retailer in beauty in the physical space. That is a position that we have established over a number of years now. We are a destination for beauty and have been over the years now. As the beauty space is starting to get more mature and customers are moving or adopting beauty, the market itself is growing, and that gives us the opportunity to get a larger share of the market as the market itself grows.
Specifically within that, our right to win comes from the fact that we are focused on the premium and digital luxury segments of beauty, and this is in a category that we hold, I mean, we are the largest player there. What has moved rapidly over the last two years is the advent of digital and online in beauty, and that is something which we have, we are adopting. Through both ssbeauty.in as well as ssbeauty.in, we would be, catering to the digitally native customers who are, adopting and, getting into beauty. I must point out that overall, online beauty players' contribution has been less than 10% from premium brands, and that is where we see a big opportunity.
At the same time, having SSBeauty standalone stores gives us the opportunity to create an environment where the customer engagement is a lot more personal, with specific focus on makeover, skin care. These are interactive engagements where the customer would walk into the store for the experience. That's the point of difference that we are creating for ourselves based on the strength that we have of the strong beauty stylists and artists that we already have within our stores. This is something which is quite, which is a big strength for us, again, because of the experience that we have in this area, and that's what we are leveraging as we go into the SSBeauty stores. The second factor is also with the smaller SSBeauty format, it helps us to grow faster because these are smaller stores and getting space is easier.
We will keep tweaking the mix of brands and improve on the mix to tune further to our customers' needs and requirements. I must also point out that while online has been growing, when it comes to premium and luxury brands, experience is very key, and that's something which comes only offline. That is what would help us to increase our reach due to the small format.
Thank you.
Sorry. [audio distortion].
Ladies and gentlemen, in order to ensure that the man-management is able to address questions from all participants, please limit your question to one per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Ankit Kedia from Phillip Capital. Please go ahead.
Sir, I have three questions, and I'll, you know, say all the questions together. First is on the beauty expansion for SSBeauty. Now, you have planned only 10 stores for SSBeauty in FY 2023. Do you think the number is, you know, not very aggressive, given the opportunity size you guys are targeting and, some of your competitors, even some of the startup brands are actually, you know, doing kiosks and expanding more aggressively. Given the 20 years we have invested in beauty and having, you know, one of the highest market share in offline, 10 stores for a brand would be less. Second question is on the A&P spend.
While we have just recruited a person for content, you know, a month back, and with the SSBeauty app coming in, do we plan to do more influencer marketing campaigns and our A&P spends in FY 2023-2024 could see a significant jump? My third question is on the throughput for, you know, the renovated stores. While the new stores will be 24,000 sq ft, you know, in the past we have seen they do 1.3x-1.4x of the regular stores. Do the renovated stores also have the same throughput, as the new small store format?
Okay. Let me take. I might have to ask you to remind me of the questions, but let me take the first one on SSBeauty. On SSBeauty, it's a fair point that 10 stores would look to be small, let me put it that way. I mean, that's what we have put into our numbers for now, but that's not a restrictive number. What is important for us to have is to create a sustainable, profitable model. That's why for the first year, we have taken a slightly lower number to help us get the brand mix right, the product mix right, and also the assortment mix right for ourselves. That's the reason that we have taken a softer number.
That's not to say that we cannot go faster or we will not go faster as we see success in this area. The second one was on,
A&P spend.
On the A&P spend. Now, yeah, I think it's a very fair point, and we have provided a slightly higher number for A&P for this year because of the importance of making sure that using content, using influencers, using celebrities, we are able to reach to the customers and communicate better. We do believe that this will also result in higher sales. The third point that you had or the third question you had was on renovations. Yes, we do see significant improvement in productivity post renovation, almost akin to the new stores. In fact, I will give you an example of Inorbit in Hyderabad, where we actually reduced the space.
We renovated the entire store, reduced the space, and from almost 30% less space, we are achieving the same level of sales that we had before the renovation was done. On an average, we do see double-digit growth after the renovation.
Very helpful, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Aliasgar Shakir from Motilal Oswal. Please go ahead.
Thanks for the opportunity. This is Aliasgar Shakir. I have a question on private label. Can you share what would be our target over the next five years for our private label share, you know, in our overall department store? You know, also would like to get some more insight in terms of, so our private label shelf space is, you know, certainly increasing from what used to be probably, you know, single digit to probably now 50% in particularly smaller stores. How is the customer reacting, you know, to this?
We've been a department store which largely provides a wide range of brands to customer. Now we are giving a very large proportion of private label to the customer. You know, if you could just share some insight in terms of, you know, how does a customer react to this? Is there any risk to, you know, customers' response in terms of average ticket size? I'll stop here. Thank you.
Thanks, Aliasgar . If I take the part of the question. The first part of the overall share of private brand, it's sort of 18%, and if you look at only apparel, it's 18% because you have a large proportion of non-apparel that's important. I can correct you. It's so right that as you point to tier two and affinity for the private label also equally from our side to give a higher portion of the space to-
I'm sorry to interrupt you, sir, but we cannot hear you clearly.
There is a bunch of, yeah. I hope it has gone away. I mean, I can-
Yes.
Promise you we haven't.
I can hear you clearly now.
Perfect. I'll just repeat the second part again. Yes, on the space provided to private brand, when we go into the tier two stores, it does seem to be higher and much because the acceptance of the private brands into the smaller stores is definitely high. That's something which we will continue to work on as we go forward.
Okay, got it. Sorry, I didn't hear you clearly. What is the target we mentioned over the five years for private label share?
Over the next five years, we aim to be around the 25% mark.
This is the overall detail. I'm sure apparel will be much higher.
Correct. Yeah.
Got it. Thank you. This is very helpful.
Thank you. The next question is from the line of Gaurav Jogani from Axis Capital. Please go ahead.
Thanks for the opportunity, sir. So I have two questions. One is with regards to the integration with the Unicommerce that you have done. If you can explain it a bit more in detail, you know, as to how it will help us in the overall sales on the online front. Second thing, a question to Karuna, sir. When you mentioned, you know, that the EBITDA margins would be like 6%-7%, so that would be on the non-GAAP basis or the reported sales? That's it from me.
Please, let me take the easier one. On the EBITDA margins, whatever I have said, you will see is on non-GAAP basis, Gaurav.
Okay. Sure.
Unicommerce, Gaurav. Unicommerce is a middleware that we use, and they have partnerships with number of brands. What it does is it makes the integration with our own inventory, our own front end on shoppersstop.com much easier and provides a real-time inventory sync on shoppersstop.com for all the brands that we work with. Without the Unicommerce, the inventory sync would have to be done manually at the end of the day or a few times a year or few times during the day, whereas this gives a real time sync.
What it also does because of that is that the inventory need not be in our stores or in our DC only. It can be in the DC or the stores of the associate partner brands that we work with. From there, through our logistics partner, we can still, once we get the order, pick up from wherever the inventory is and get it to our customer. It helps us to expand the number of brands that we work with.
If I understand it right, it will help you to not only increase your assortment to the customer, it also reduce on the working capital requirement as well. If I understand it right.
[audio distortion] number of brands that will be available on shoppersstop.com.
Sure, sir. Thank you so much.
That's the option.
Thank you. The next question is from the line of Yash Bajaj from Lucky Investment Managers. Please go ahead.
Hello. Hi, sir. Can you hear me?
Yes, very clearly, Yash. Good afternoon.
Good afternoon. I had just one question. Seeing how there's a rise in inflation, which is going on for the past two months. I've read a few reports which stated that the premium segment is performing comparatively better compared to the mass segment. How do you see that in Shoppers Stop since we are a premium segment store or a concept?
Yash, we are in the premium segment, and our overall sales numbers are satisfactory. To that extent, we are quietly confident of the coming months and quarters. While we have had to take an increase in our average selling price because of the increase in the input cost, we haven't seen a significant impact on the sales.
Okay.
Within our stores, one comparative which we do see is that the premium brands within our stores are growing faster than the rest. That's an indication.
What kind of price elasticity do we have in terms of our products which we offer?
Can you hear me, Yash? Because there is a lot of disturbance.
Okay. Yeah, sure.
In terms of price elasticity, we have taken an increase in our average selling price of roughly 8%-10%, and so far we are not seeing a volume drop.
Okay, sir. That's all from my side. Thank you so much.
Thank you. The next question is on the line of Kaustubh Pawaskar from Mirae Asset Sharekhan . Please go ahead.
Good afternoon, sir. Thanks for giving me this opportunity. My first question is on the, you know, working capital. We have seen, you know, reduction in working capital in this quarter despite the fact that there was disruption led by the Omicron. What led, you know, to this improvement in working capital and whether it is going to be sustainable? And related question to this is that, we have around INR 190 crore of debt on our books. Going ahead, since we're expecting FY 2023 to be, you know, one of the strongest years and profitability is expected to improve, you know, on this offsetting leverage. Considering that, and with improvement in cash flow, should we expect our debts to come down? You know, the debt would largely be done through internal approvals and debt would remain at similar levels.
Let me answer one by one, Kaustubh. One, yeah. See, we borrowed from three banks, HDFC, IDFC, and ICICI. From HDFC and IDFC, we borrowed INR 25 crores, and we have to pay a quarterly installment. We will pay this. Whatever is payable, we will pay. That should be around INR 70 crores for the entire full year, so that should come down. ICICI, we have two or three installments that is due this year, so that will also come down. The term loan one, by the end of the year, we'll be at about INR 105 crores, not more than that. That's one. Second, you also asked about the working capital. Overall, for this year, we had almost INR 120 crores invested in working capital.
If you ask me whether this is sustainable, because we are investing in private brands, this kind of working capital reduction, what we have this year, we may not have next year, but we will still stay negative working capital for next year. We also have a very tight control on inventory. We are planning to institute completely different process to ensure that our inventory is under control. Those things will have a negative working capital. On the last question, by the end of the year, we should have a net negative debt. When I say net negative debt, that means our investments will be higher than the debt, so that we will have a net negative debt at the end of the year.
Okay. Thank you. Thanks for the answer.
Thank you. Next question is from the line of Paresh Jain from Bajaj Allianz. Please go ahead.
Yeah. Hi, good afternoon. Can you just update us as to what is the potential dilution arising from ESOPs and an impact on the P&L?
Normally we don't give this, Paresh, but it's a very, very insignificant number, because if you're talking about the past ESOP, what we have given, it will be probably 0.1 or slightly lower than that, not more than that.
Which is in 2022 also which has been formed, right?
That's right. That has been again, all these things are over a period of three-four years. Nothing is in one year. Even ESOP 2022 probably may see a shareholder dilution of between 1.3%-1.8%, not more than that.
Okay. Impact on the P&L?
Will be four-five years. Okay?
Yeah. Impact to the P&L?
We are working on the contingency because it also depends on what you share with the employees. Because it is still not got approved by the shareholders right now, I would probably may not be able to share beyond this, Paresh. If it get approved by shareholders, then we can share probably in the next quarter.
Okay. Thanks.
Thank you.
Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Yeah. Thank you very much, sir, for the opportunity. I just wanted to understand, so is there any kind of a revenue growth that we are looking at in FY 2023? Some direction would be helpful.
Of course, we are looking for a revenue growth, Deepak. If all goes well, we should see a double-digit growth. In fact, at the beginning of the speech, Venu did mention that we will grow in line with the retail industry. We should have a decent double-digit growth for this fiscal, Deepak.
Okay. INR 7,000 crore in four-five years, that remains our growth rate?
That's our aim. We have to deliver.
Okay. That's it from my side. Thank you very much. All the best.
Thank you, Deepak.
Thank you. Our next person who wishes to ask a question press star and one . The next question is from the line of Shivaji Mehta, an individual investor. Please go ahead.
Hi. Thank you for this opportunity. Sir, if cotton prices continue to increase from the current INR 90,000 per candy, do you feel that you'll be able to take a price hike without really impacting demand? Or you feel that this increase in the cost, you know, will have to be borne by the entire textile supply chain?
Well, definitely there is no room for a constant price increase. It's not that elastic either. It is something which will need to be reined in. Even as we speak, I'm aware of a number of efforts that is being made, both by the industry associations as well as by the government to reduce the overall impact and improve the supply to have the prices come down. What we are hoping is that the overall prices will not go up, and if they do continue to stay up, we will have to work with our partners to see how we can mitigate some of that to be able to not pass it on with our customers.
Right. Thank you so much, sir. That's all from my side.
Thank you. The next question is from the line of Vinay Srivastava from Sunidhi Securities & Finance Limited. Please go ahead.
Yes, sir. Thank you for the opportunity. My question is on the omnichannel CapEx. [audio distortion] for FY 2023 is about INR 50 crore. I would like to know if this number is going to be recurring in nature or is there a sunset year?
Vinay, we don't have any CapEx for omni either for FY 2022 or for FY 2023.
No, I said OpEx.
Yeah, OpEx we have to have. This year we invested close to INR 60-odd crores. Next year also we'll invest close to that because we do expect a significant jump in omni.
Is this going to be a recurring year after year or there is a sunset year by which we will not have to invest behind omni or maybe we have to invest only marginal sum behind omni?
Vinay, I'll take that. At the moment, it is an investment, and I talked to you about the phase I, phase II, phase III on customer experience, and we did invest. It was something which was more of a one time. Going forward, we have, I would say the heavy lifting on customer experience at shoppersstop.com. However, we are moving on to SSBeauty, as I had mentioned before. [audio distortion] we won't expect it to be very big. That's the first point. Second point, at the same time, what I would say is that technology for omni will need upgradation every one and a half to two years because of the pace at which tech changes.
That's something which we will continue to do to ensure that the overall experience that we offer to our customers and our ability to personalize and communicate to them at a one-to-one level remains absolutely robust.
That's good. My next question is on the gross margin. We've seen gross margin hovering around 30 or 31, 32-odd levels. Is there scope to improve this gross margin? Because the thing is, premium player, we are at the lower end of the gross margin amongst the retailers. One or 100 basis points improvement in gross margins will be a big flow through to the bottom line.
Vinay, there's no doubt about it. We have 50% private brands and the balance 80%-85% is other brands where we have an agreed margin. As we increase the private brand because of the mix, the overall margin will increase.
There's no scope to renegotiate the margins that you have with the brand owners, right?
There is scope, and that is an ongoing activity, which is business as usual, which we keep. Also, when we introduce newer brands, they tend to be at higher margins, which would again help. That's a constant activity.
Okay. Where do you see your gross margins to be once you hit, let's say, a private label share of 35% in the next four-five years? Where do you think the gross margins should be?
That's something we wouldn't want to give a guidance on at this stage, Vinay .
Okay. My last question is on the CapEx. You know, we've shared that some of the CapEx is also shared by the landlord. How much of the CapEx is shared by the landlord? The 12 sister stores that we plan to open, how much would be on this shared model?
It varies quite significantly, Vinay, from a property to property basis and from a location to location basis. There is no one fixed number that I would be able to share on that. I mean, there are instances where the entire CapEx is borne by the landlord or the developer, as the case may be, and in some cases it is a percentage of the total. Obviously, our aim is to try and get as much investment from the developer as possible.
Understood. This will in turn also lead to a higher rental outflow, right? Because landlord would want to recover this amount somehow or the other, right?
May and may not be, Vinay. I mean, it all depends on what did they negotiate at the end of the lease period. Sometimes where we are going for a new city and Shoppers Stop being a premium store, it has its own advantages and we've been able to negotiate better with the landlord. I mean, there is, as Venu said, there is no fixed formula. It all depends on which city we are, what is our ability to negotiate, what is the landlord, what he's willing to offer, what is the competitors are offering. I mean, there are many factors which determine that.
Okay. Thanks so much.
Thank you. The next question is from the line of Pawan Parakh from Renaissance Investment Managers. Please go ahead.
Hi, sir. Just one clarification. This 6% margin that was stated in the call, that is, that is like the adjusted margin for this quarter adjusted for these one-off expenses and, one-time related costs and everything. I'm just wondering what was that number actually, 6% margin?
Well, Percy's question was, if I take all the one-offs and if I have a normalized January sale, and if I exclude the fixed investments of Omni, still our margins will be incrementally 8%. Yeah, I mean, if I exclude all those things, we have to exclude the sales of Omni and so many other factors. That's what he said. I mean, in a normalized environment, our margins, particularly in Q4 being one of the peak quarter, would be in the range of 8%-8%.
Okay. Going ahead, I mean, next year we are seeing decent double-digit growth. Anyway, FY 2022 had several issues for retailing industry. Obviously this margin should increase, right, going ahead on an annualized basis.
Yeah. I mean, internally we have planned for an increase, Pawan. That's right.
Okay. Thank you so much.
Thank you. The next question is from the line of Ankit Kedia from Phillip Capital. Please go ahead.
Sir, two questions from my side. First is on the, you know, cost saving. Do you think there are any cost savings left for us for FY 2023 or broadly we have exhausted and now, you know, in the inflationary environment, you know, we will see significant inflation now versus FY 2020?
Ankit, we discussed in the past that there are cost savings that will continue even in FY 2022. For example, the employment cost or some of the operating costs. All these things, what we did in FY 2021, when we implemented zero-based budgeting, these costs will not be there and we will continue to save. What you have been seeing in the income statement is a lot of new stores have opened, a lot of normal costs that have come into it now. That's the reason the savings bit came as low, Ankit.
Sir, I'm asking for FY 2023 perspective going forward.
Right. We will still save. That's what I meant. We will still save.
Okay. Sure. Sir, my second question was, you know, in the initial question and answer session, you mentioned that we have actually planned CapEx for 2022 departmental stores. Just wanted to understand why we are guiding for 12 stores. The planned CapEx is for 2022 stores. I didn't get that reference. You know, for next year's plan, CWIP this year is what we will invest in. Is that the right understanding?
You are right, Ankit. See, what happens is, when we make investments, a department store normally takes 90-120 days to complete a store from the time we sign the agreement. Sometimes it takes slightly longer because landlord may have, what do you call it, statutory approvals that has not come in and so on and so forth. Our guidance on new stores is we will open 12-15 stores, but we may have almost five-eight stores in the pipeline to hopefully be opened in Q1 and Q2 of next year. The investments, what that is appearing or what Venu has said includes all the CapEx investments of 20-odd stores.
Understood. That's helpful. Thank you so much.
Thank you.
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you, Mamta. And thanks to all the participants and for the questions. In summary, what I would like to say is that we have strong growth and our growth trajectory is very good, and that's something we are very pleased about. Our strategic pillars are firing on all cylinders, and we are seeing the benefit of the wardrobe reboot and the office reboot, combined with occasions of weddings and postponed marriages, et cetera, that are helping us. Our store expansion strategy continues to be strong and overall we are investing into talent to fill the new age skills that are required for our organization as we move to being a strong omnichannel retailer.
[audio distortion] Thank you. On behalf of Shoppers Stop Limited.