Ladies and gentlemen, good day, and welcome to the Q3 FY 2024 Earnings Conference Call of Shoppers Stop Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Mamta Samat from Perfect Relations. Thank you, and over to you, Ms. Samant.
Thank you, Michelle. Good morning, and thank you all for joining us on the Shoppers Stop Q3 FY 2024 earnings conference call. Today, we have with us the senior management represented by Mr. Kavindra Mishra, Managing Director and CEO; Mr. Karunakaran Mohanasundaram, Chief Financial Officer. We will begin the call with the opening remarks from the management, after which we will have the forum 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 risk that the company faces. Please restrict your questions to the quarter performance and to strategic questions only. Housekeeping questions can be dealt with separately with the IR team. I would now request Mr. Kavindra Mishra for the opening remarks. Thank you, and over to you, sir.
Thank you, Mamta. I hope I am loud and clear. Good morning, friends. Thanks for joining us today to discuss Shoppers Stop financial results for our third quarter. I wish you and your family a very Happy New Year. As Mamta mentioned, I have Karuna, our CFO, and my colleagues, Jaiprakash, and Rohit from Finance. As always, I begin with the retail market update, and then we will cover our company's performance, strategic pillars, and conclude with outlook for the year. We had begun the quarter with Pujo, followed by Diwali-Deepavali in November. I'm happy to say that the festive sales were good. We had a 4% like-for-like growth and overall growth of 8%. We had signs of recovery during the festive season, particularly in the premium category. Post Diwali, we have witnessed a seesaw situation in the market.
There has been a delay in winter this year. The temperatures were significantly higher than normal, which impacted our winter wear sales. Post-Christmas, we have seen a recovery, but it's still not consistent. There are green shoots, but overall, the market remains muted. While these challenges continue in demand, our performance has been driven by engagement with our loyalist members, our overall customer journey, our shift to premium, and more importantly, growth of non-apparel, including home businesses. I will speak about the performance and then on our strategic pillars going forward. We delivered sales of INR 1,084 crores with a 4% growth. As I said earlier, during the festive period, our sales grew by 9%, with like-to-like sales growth of 4%. Our performance has been driven by brands, beauty, and non-apparel business.
During the quarter, 14 stores out of our 100-odd stores achieved their ever highest sales. On the non-apparel category, watches and fragrances have clocked their highest quarterly sales. Apparel continues to have a muted growth, particularly in women's western wear and partly in menswear. Having said this, we had the highest sales in women's Indian wear and in the kids' wear. Our private brand STOP grew by 8%. Our gross margins declined by 70 basis points due to one-time impact, which I will speak to you about.
Just to recap, our private brand grew by 70% versus pre-COVID last year. While ordering the spring, summer, and autumn winter merchandise, we didn't anticipate the slowness as we are experiencing it now. We decided to clean up and provide for the obsolescence of inventory, which is worth around close to INR 9 crore.
Due to this, our gross margins were impacted by 60 basis points. EBITDA has also been impacted by the cost base, which was built for a much larger scale. Our rentals, which are largely fixed, and that has a negative leverage if the sales are lower. In addition to this, we had investments in marketing and technology, which are critical and which we will continue to keep investing in. The new businesses such as ssbeauty.in and Intune had cost.
Though Intune had cost to grow in EBITDA, with expenses largely fixed, it had a negative bearing on the overall profitability. On the income side, we did reverse the provision for interest on GST in FY 2023 for INR 30 crore. This was included in other income in FY 2023. While speaking at the investor call and in results which you published, we have stated that.
If I talk about the KPIs, our ATV grew by 6% versus last year. While I've spoken to all of you last quarter, I said the premiumization is on the rise, and we are facing a three-tier recovery. There are a number of reports in the recent past which suggest that premium and premium plus goods are outgrowing in terms of and outstanding in terms of demand. At Shoppers Stop, we have built our store to cater to premium and premium plus products to our customers. We firmly believe that with the growth of market, our company is poised to reap the benefits, and we have also become the preferred partner of choice for a lot of brands. Our IPT, which is an important unit matrix which we drive, grew by 5% during the festive period.
We also observed a certain number of items by a customer. Let me speak about the operating costs now. Overall, our costs have increased by 10% versus last year. On a like-to-like basis, the cost increase is mainly 4%, which is largely inflation-led. Our cost increases are due to the following: our investments in tech, which will continue for this year and going forward in next year as well, to enhance our customer journey, besides investing in cyber security as well.
We have opened 19 stores in the last 18 months, and we launched Intune two quarters back. We launched ssbeauty.in again at the beginning of the year. Until the store matures, scalability is built in Intune and conversion increasing ssbeauty.in, we may have to continue to invest. As I mentioned, 14 of our stores achieved their ever highest sales in this quarter.
Of the above eight stores, they launched in FY 2020 and FY 2022. I'm fairly confident these investments will disproportionately deliver results in the years to come. During the quarter, we opened four large departmental stores, four beauty stores, four Intune stores, and one airport store at T2, Bangalore. We spoke in detail about the store opening for this fiscal in the next few years. We are targeting to open 56 stores during the year, including 15 departmental stores and 24 Intune stores. We have opened state-of-the-art beauty store at T2, Bangalore, BIL last quarter, with added beauty services like nail bar, hairstyling and treatments. Our KPIs have improved in the last 11 quarters. Our three Ps framework, which talks about customer centricity, consistency in growth, and capital allocation, is firing well.
In terms of customer centricity, Accenture has established a customer-centric culture with a strong focus on providing exceptional service and creating a seamless shopping experience. This has led to increased customer loyalty. Also, our personalization campaigns working on consumer personas have started yielding wonderful results for us. Consistency in growth. We have been consistent in growth over the last 12 quarters, indicating stability and predictability in its performance. We have a well-defined strategy that outlines the company's long-term goals and the tactics to deliver them, flexible enough to adapt to changing market conditions. Capital allocation. Our strategic allocation of capital from internal approvals to enhance both the physical and digital capabilities to build long-term success continues to focus on. Let me talk about some operations about our strategic pillars. First Citizen. Our success has been our patented customer journey.
Over the years, we have added many services to our customers, such as personal shoppers, makeovers, and several other initiatives, which are made to engage with them at the highest level. We were and are confident about our sustained investments, which will add disproportionate growth and success in our business. For the quarter ended, our loyal customers contributed 78%, including 65% repeat contributions. Our membership grew to 9.7 million, and we'll be touching a 10 million number shortly. Our premium Black and Platinum customers contributed to 13% of sales and grew by 18%. We had 118 customer events all across all our stores in the quarter, making it a memorable shopping experience for our customers. This also is a differentiating point which we have versus our other peers. Now, I'm separately covering First Citizen contribution in beauty.
Our First Citizen contribution to beauty has been steadily growing. The contribution to beauty by the First Citizen customers has been 69%, a 12% YOY increase, driven by strong 35% increase in the beauty sales. Overall, there has been a 5% growth in the First Citizen customers trying beauty as a category for the first time, which we call them as a trialist, and repeat members shopped in beauty category up by 8%. Now, let me talk about private brands and Intune. The challenges in private brands continued for the second quarter too, particularly in women's western wear and parts of menswear. I had spoken at the beginning of my speech too. Our sales declined by 6% and overall contribution more than 13% and within apparel at 19%.
The silver lining is that our women's Indian wear grew by 7% during the quarter. We are aware of the challenges, and we are course correcting, including buying closer to the season, optimizing vendors, and more importantly, streamlining the options to make it more relevant. I'm very confident that the corrective measures will show the impact on profitability in the coming fiscal. From private brand, let me talk about Intune, our success story in the last eight months. We have opened 11 stores, and I'll now dwell into the performance and the future plan for the same. We had opened four Intune stores during the quarter. The addition two stores were delayed due to regulatory approvals, out of which we have opened 1 in January 2024.
Some of the key initiatives being put in place to track customer feedback and shopping experience at Intune are: We've analyzed the customer behavior based on the shopping basket, that's which are the best performing categories, best performing merchandise points, stores, frequency of purchase, and sorted the merchandise in each store. We are also reaching out to our customers, having exit interviews to understand, analyze their shopping behavior, and see how they shop versus the positioning which we had initially chosen of. We have engaged promoters immediately after launch of a new store to have the feedback of our new customers. Through our digital, though in the initial stages, we are also trying to get the NPS scores from our customers. Like this, there are several initiatives to understand the consumer behavior as we are launching many stores.
This has helped us to improve the KPIs, such as monthly traffic conversion, and more importantly, in business. This has also helped us to improve our APV. Previous to sales, this all is committed in improving the business. I'm proud to say that within eight months of operations, we have positive EBITDA at the store level, though we are very in the initial stages, there will be a learning as we go ahead.
As we grow, we are learning too. As we commence the journey, the learning curve has been steep. We continue to learn, and I'm sure our customers will never let us down, and our initial response and then their initial response to us has exceeded all expectations. Now, let me speak about beauty. Shoppers Stop invested in premium and luxury beauty at the time beauty was literally non-existent in India.
These investments have been yielding good outcome. Before I dwell in detail about beauty, some of the key achievements in the quarter are: Beauty achieved its highest ever quarterly sales at INR 262 crore, growing by 10%. Overall, beauty contribution increased to 18%. Our engagement with the customers were at all-time high, with 266,000 makeovers and 138 master classes. In a fabulous campaign in the last quarter, namely, Diwali, which is the festival, Singles Day, and Black Friday. We also had a push exclusively at a party event in December. All these campaigns yielded excellent results with high efficiency. Our First Citizen contribution in beauty increased to 72%, with repeat customers of 60%. As I said earlier, we have opened four stores and a large SSBeauty store at T2 Bangalore Airport.
In our recently launched exclusive website, ssbeauty.in, our followers and engagement rate has been increasing. We have gained followers in YouTube and other social media. During the quarter, we launched 15+ beauty brands and added 80 SKUs in our private brand, Arcelia. Our beauty distribution has also achieved its highest ever sale during the quarter, making profits in the first year of operation itself. India's beauty and personal care market is estimated to touch $30 billion by 2027, accounting for about 5% of the global market. The beauty market in India is currently under-penetrated versus other Asian countries. Indian beauty and personal care market is growing at a rate twice as fast as FMCG-led brands, signaling the significance of specialized beauty and personal care-focused players.
With the investments made, I am reasonably confident of bigger milestones which are yet to come in beauty business. Omnichannel. Our omnichannel retail strategy is to improve the customer experience and provide an additional channel for customer purchase, whether it's on mobile, web, or in stores. The availability of multiple purchasing channels lead to an increase in sales and traffic. Our sales share have largely flat in omnichannel, though the overall trend seems to be that omnichannel is slowing down. Our investments in omnichannel too will continue. We are reasonably confident, similarly to beauty, omnichannel will be leading channel in the next few years, and we are fully prepared for that. Let me also talk about HomeStop. I briefly spoke about the revival of our HomeStop in the last nine months. We have observed improving trends in sales.
During the quarter, our HomeStop contributed INR 42 crores to our overall sales. You may recall that I joined as a Chief Commercial Officer and CEO for HomeStop. With my team, I'm devising a new strategy to revamp the business. This will enable to optimize and improve productivity for each store. There are several brands which grew twice as that of last year, and we have also introduced new products which are successful since launch.
As it will reach the scale, I will speak about our future plans on HomeStop going forward. From strategic pillars, I will move to capital expenditure, working capital, and cash flow. During the quarter, we opened four large departmental stores, four Intune, and four beauty stores, and one state-of-the-art beauty store at the Bangalore T2 terminal. Our total investment during the quarter in CapEx and deposits for new stores were INR 51 crores.
In the last quarter, we dealt in detail about our investments for the year and subsequent years. Just to recap, we'll be opening 56 stores within this year, out of which 32 have already opened. On the balance, 24 stores, 14 are Intune and seven are department stores. Our working capital, which was negative at INR 89 crore at the end of Q2, has reduced further to INR 173 crore negative at the end of quarter three. We reduced INR 80 crore in our apparel inventory and private brands in the last nine months, which I believe is a significant step. Without our inventory in beauty and Intune, the business we are building upon, our inventory in the last nine months have reduced by INR 45 crore.
As I look back at quarter three, beauty, Intune, home business, the brand business in Indian women wear and private brand has fared really well for us, and we had a good success in that. We have challenges in private brands, in men's and women's fashion wear, which we are aware of, which we are course correcting, and which will start reflecting in the coming quarters. As I'm about to conclude my speech, we will lay our emphasis on our strategic pillars.
The first is in loyalty customers, private brands, Intune, beauty and beauty distribution, store expansions, and omnichannel presence. The broad outlook for Q4 will be as follows: We'll continue to grow well in non-apparel, particularly the beauty business. There are a number of events during the quarter, such as Valentine's Day, which will further help us to acquire new customers. The end-of-season sales started ahead of time.
I expect some impact in Jan and Feb. Overall, we are expecting a mid-single-digit growth in Q4, similar to Q3. I'm confident that our investments in new stores will yield disproportionate growth in the years to come. As I said before, we are opening 56 stores this year, and we expect to open 100 stores next year. We are excited about the success of Intune. We are building the team to ensure that we are sustained the success and resource it strongly. There has been a steady rise in share of wallet across boards. Customers' preference for premium products have increased. We are in the final stages to have some leading international apparel brands in our stores, who will be our exclusive partner. This will further enhance our transformation journey and differentiate choice for our customer base.
I'm very optimistic about the growth prospects of Shoppers Stop with the right investments we have made on our strategic pillars. I'm confident our next year would be another success story with our strategic pillars, including Intune, firing on all cylinders. I will hand it over to the operator and happy to take questions from our participants. I also have with me Biju, who is the CEO of our beauty business, and Devang, who is the business head of Intune business, and the team would be happy to answer any queries around the business. Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions may please press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Participants are also requested to limit their questions to two per participant. Time permitting, you may return to the queue for your follow-up questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahul Jain from Phillip Capital. Please go ahead.
Good morning, sir. I have a couple of questions from my side. With regards to Intune, what are the franchisee models that you are exploring currently? And could this be done for Shoppers Stop as well? That's my first question.
Good morning, Rahul. This is Kavi here. Intune, we are, as we mentioned, we are just setting up the whole system of Intune and process. Right now, as we set our own stores, we will have a lot of learnings which we need to factor in the way we want to grow the business initially. So right now, the focus of the organization is more in terms of putting the company-owned stores and taking the learnings from there. As we achieve a certain scale, definitely during FY 2025, at some point of time, we will be also looking at getting into a franchisee model. Because it's about throughput of the store, it's about the optimizing of CapEx, about the working capital.
So once we fix these things, and when we have a consistent model, I think that's the time when we would like to go to a partner, because at the end of the day, it's the thing which we need to commit, right? So I think that's the process we have. In case of Shoppers, we are not looking at franchisee model as of now.
Understood. Sir, my second question is, with regards to the revival of demand from FY 2024 onwards that you mentioned in the presentation. What would be the key drivers of this revival, going forward, according to you?
So for us, there are two or three things which are very, very important, and that's the trends we are seeing. One is that the entire non-apparel piece, whether it's beauty or non-app, is doing really well. We also foresee that, going forward, the premium brands and the premiumization journey will keep on becoming stronger and stronger. And that is a journey which we believe that that particular customer will keep on investing and buying in, and in the experiences which he or she gets in the store. So for us, those are the reasons why the revival in demand will happen.
Understood. Lastly, sir, on private label, the contribution mix has been on the lower side for the last few quarters. Are you taking any additional measures to revive that and, to improve the sales mix going forward? Could you just share a little bit of what you've been doing on the back end regarding this?
As I mentioned, if I look at my private label, there are four parts to it. There is Indian women's wear, which is really faring well, and which we keep on pushing as we speak. There is kids, which is doing fairly well. For us, the biggest struggle is in two categories, which is women's western wear, which actually as a market itself is a little bit of a, it's actually bit of a turmoil now. And then we have got menswear. So what we are trying to do is two things: One, getting the positioning right for our brands in these categories, ensuring that the customer gets a differentiated product from us.
See, because we are a house of brands, we have the best brands in the business sitting in those four walls and selling those products. So until and unless we are able to provide that differentiation, which our Indian wear does beautifully well, we won't be able to get the traction and the kind of ambition which we have for the private label. So the desire is to get the positioning right, clear up the inventory, which was there. So that's why we have taken those one-time hits, clearing up the inventory and working on making the brand stronger. As we speak, that lot of that work is happening, Rahul. We should start seeing the results next year.
Got it, sir. Thank you for the answers.
Thank you. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Hi, everyone. Good morning, and thanks for taking my question. Firstly, on private brands again, so this quarter is in a 6% decline, and if you consider that INR 11 crore of the sales is Intune, it's actually an 11% decline. You mentioned about the categories of women's western wear and menswear. So just wanted to understand a little bit more, in nitty-gritty. So, is the decline in women's western wear also happening for you in your non-private brands, or is it something to do with our private brands?
Sameer, just to clarify, Sameer, Intune is not part of private brand. So when we say we have declined, it's a like-to-like comparison, and we have not included Intune in that.
Got it, sir. Thanks for that clarification. So INR 189 crore is excluding the INR 11 crore of Intune?
That's right. Absolutely right. And we are not planning to include Intune as a private brand in the future also.
Great, sir. That's, that's great for clarity. But the question still remains.
Yeah, so the question is that, or the answer to the question is that, we are seeing the stress in women's western wear across the base, whether it's national brands or private brands. Women's western wear has been under a little bit of a stress across. What we've also seen, Sameer, is that and when we were looking at the personas, and we look at customer data in great detail, a lot of the women's western wear buyers, whether they are private brand buyers or national brand buyers, we aggregated, especially in the last quarter, towards Indian wear. That is a trend we have seen across. So I think that is something which we are cognizant of. That's an industry phenomenon, the sector phenomenon.
Coming back, I think there's a lot of work which we need to do at our end to ensure that the women's western wear offering, which we offer as a private brand, becomes stronger. So whether it's putting the brand positioning and or putting the right set of merchandise, I think that work is happening, Sameer.
Got it, sir. Switching on to Intune, last quarter you had mentioned about the sales per square foot number of INR 14,000 and store EBITDA of 10%. Just if you could give a corresponding number for this quarter as well. And secondly, 14 store openings in fourth quarter expected, do you think there's a large chance of some spilling over happening over to the next year, or you are still good to go to this, 14 store additions in this year?
Thank you, Sameer. This is Devang here. First part of your question, the FPS and the EBITDA we sustained in Q3 over Q2, so I think all the numbers that we said in the last call, they hold true and we are improving on them. Secondly, as far as your question on the 14 more stores in Q3, I think that's absolutely on track. We will definitely end the year with 24 stores.
Cool. So lastly, if I can squeeze in, the LTL growth of 4% during festive, what would be that number during the quarter? And, this guidance of mid-single digit LTL that you have shared, like in previous quarters, would it require a meaningful pickup in consumer sentiment to reach there, especially on the apparel side? Or are there some company-specific initiatives, including what you have shared in the private brands, that you think, can still power, you know, a meaningful recovery in your LTL, or you are just dependent on the overall consumer sentiment picking up for this number to be achieved?
So there are two parts of this. One, I think, the festive LTL, as I mentioned, was around 4%. The overall LTL for the quarter was -1%. That is the number which we have. If I look at the things which we are trying to do, so obviously there is a base effect, which is- which comes into the play this quarter versus the last quarter, same time, which was a little, stressful quarter for all the businesses. Having said that, I think, we, I spoke about the personas and targeting the consumers in a very, very personalized way, ensuring that the throughputs come higher.
We are trying to. So if you look at our businesses, I think that the one business where we need to up the game is private brand, and I think that whole piece we are driving. Also, we believe that, there's a lot of momentum which we have in beauty, and beauty within Shoppers Stop as well, which we see as an important part of driving business going forward. So while the market condition can be tough, we have charted out, whether at the product level or the marketing level or the category level, launch of new brands. We will also see launch of some new brands within Shoppers Stop, in the coming quarter. So I think there's a lot of work happening on the merchandise product marketing build piece, to drive the numbers.
Sameer, Karuna here, Sameer. When Kavi was concluding the speech, he said that mid-single digit growth, that is the overall growth and not LTL. I just want to clarify that.
Yeah, yeah. That is for the fourth quarter, sir. Yeah, I understand that. Thanks, sir. Thanks, thanks for clarifying, and I would come back in the queue for any follow-ups. Thanks.
Thanks, Sameer.
Thank you. Thank you. The next question is from the line of Nihal Mahesh Jham from Nuvama. Please go ahead.
Yes, thank you so much, and good morning. So my first question was, while you did highlight the fact about what could drive the improvement maybe in the coming quarters, just taking a step back, during Q2, I think there was an expectation that with the spillover of Pujo and also with festive at that point in time, performance was good, that we would see a decent quarter. But now, at least on the commentary, even Q4 is not looking good, I'm assuming, based on the data that you're seeing for the first 20 days of January. Just to understand, in your assessment of consumer sentiments, what is leading to this prolonged and delayed recovery, where even after festive, is it that the trends did not sustain for the rest of the quarter and even, say, going into January?
Yes. So we are seeing. So Nihal, it's a great question. So we are definitely seeing a shift in the consumer spend. People spending more for the travel or experiences rather than only buying for the product. So I think that's a reality that we see as an industry level. Having said that, I think the important thing is are we able to engage our customers with experiences? And that's what when we spoke about doing 110 events or in our commentary, we spoke about more than 200,000 or 244,000 odd, you know, beauty makeover. So I think there, there are ways in which we can engage with the customer and drive it.
Specifically coming to the Q3 performance, we had an inkling of the plans which we had was for 4%-5% LTL. I think that's the commentary which we had talked about when we spoke last and when we met last. During the festive, actually, we were able to continue play on that piece. But I think December, where winter plays a very, very important part as a base, that is something which was very, very challenging for all of us, because winter is a big base in terms of layering, in terms of the ASP, which can go higher. Having said that, while the market has been soft, when we speak to brands, I think the clarity is that we continue to outperform the market.
So if you talk to brands and we see how we as Shoppers perform as a chain or the business, I think in a lot of cases we are hearing that the performance of us as a channel is far better going. Also, if I look at, I think another data point, and it's good to share with the team here, that the premium portfolio in Q3 grew by 6% like for like, and we will keep on doubling down and making it as a point of differentiation as a departmental store, which I think is something which is very, very unique to Shoppers and our customers.
And this premiumization is being done not only in one category, so you must have seen the number of launches, and I would love Biju also to answer some part of it on what he's doing on the premiumization bit. But, talking about beauty pieces or non-apps or apparel, I think we are upping up the game there. And I would just ask Biju to also speak a little bit about what he is doing to drive business moving forward.
Yeah. Hello, Nihal. This is Biju here. So just to complement what Kavi mentioned, clearly, as a destination, Shoppers Stop is having some of the most powerful, iconic brands. And particularly from a beauty standpoint, we have been able to introduce very powerful brands such as NARS and Bath & Body into the ecosystem. And you will continue to see this journey. And engagement has been very, very central to our customer specific approach, and that is something we did, and we are doing it with a lot of mastery. We did 266,000 master makeovers and master class in the quarter, which is a significant number.
All these would really help us to continue the premiumization journey, which in turn is going to get us better numbers going forward.
Sure. That is helpful. The second question was on the private label bit, not Intune for the Shoppers Stop format itself. Did we mention that the reduction in inventory was primarily the private labels when you're talking about inventory? And, a related question on the private label, that is, that, if we are going to premiumize our portfolio in terms of the kind of brands we get, does that, in a way, change the customer profile and naturally put a lid in terms of the share of private labels in the future for Shoppers Stop as a format? You want to talk?
Nihal, are you talking about the reduction in inventory or you want to know what, what is it like? I mean, your voice was not clear at that time.
I'm so sorry. I was asking that, just to clarify, was the reduction in inventory that you mentioned, from March, primarily in the private label business? I was not able to get that part.
That's right. We have reduced the private label inventory. What we bought for both autumn/winter and spring/summer, for this year, we have reduced it close to INR 75 crore-INR 80 crore, Nihal. You're right.
Okay. And just one final question on private labels was that, with the effort of wanting to premiumize, say, the kind of brands that we get, and assuming the customers that come in also change, is it that incrementally the share of private label naturally gets a little because the customer walking in is more premium and maybe, that in a way limits the kind of creation you could see on the private label side?
Nihal, it's a great question, but I think the answer lies in the success of our Indian wear. If private label is done well, one, it is not considered as a label, but it is considered as a brand. If the private brands are done well, we talk about it, we do the same things which a brand needs to be done. We create a chemistry around it. We give a life to it. The moment you start doing that stuff, you will see that the private brands can have a better throughput in an environment where you have the best national brands today. We have done that in case of Kashish, and I see there's no reason why we can't replicate it in case of other brands, if we position them well and execute them well.
I see totally there is, there is no issue there.
Sure. Point taken. I'm done. Thank you so much. I appreciate it.
Thank you. Bye. The next question is from the line of Varun Singh, from ICICI Securities. Please go ahead.
Thank you very much. Am I audible?
Yes, Varun, you are.
Okay, so thanks for taking up my question. My first question is on private brands. Where they say that in women western wear and menswear, we are getting positioning right in this segment. So, I mean, if you can give more clarity with regards to what exactly do we mean by getting positioning right? Is it getting pricing right? Is it about the customer segment? Is it about narrowing down the categories in women western wear where we are present? So what exactly we are in terms of positioning, getting right in these two segments?
Okay, great. Yeah, great question. Just to give you a sense, and, you know, it's a question where I can actually, we can engage and discuss this over for the next three, four hours. But let me take you through one example so that it gives a sense of how, what we are looking. Let me talk about menswear. I think that's something which is very natural to talk about. Let's look at when the entire menswear category positioning happened, there used to be a part of the business, there used to be a denim part of the business, there used to be a casual part of the business, and there used to be a formal part of the business. That's how initially in India, menswear brands got structured.
Now, if you look at us, we have a Life and we are Life Jeans. But in today's world, if you go and reach out to the customer-
Sorry, sir, can you repeat your last line, please? The voice broke.
I'm saying in today's, in today's world, if you will go so-- Okay, so let me just go back. If you look at our portfolio, we have got a Life Jeans and a Life Casual, and I'm taking just one example to show that how, what is the direction of our thinking. Do you actually think that the customers differentiate between Life Jeans and Life Casual, or the, or jeans is now a part of the casual lifestyle? That's what I was trying to tell, Varun, that we are trying to answer these basic questions and put that whole structure right. Can we make a casual brand which also has jeans as a part of it? So that is one. Second, if it becomes a casual brand which has jeans a part of it, what is that brand?
Is that brand, for example, for the sake of a better name, is it Jack & Jones? Is it Pepe, what is it? So I think that is the kind of discussion and work we are doing as we speak on that, Varun. And then what kind of persona who comes to our store gets attracted to this brand? So that's why I'm saying the way when these brands are structured versus how the consumers have changed, we need to be in line with that, and that is the work we are trying to do. And when we define the positioning, then we also talk about, we don't need to do 180 days buying cycle. We can actually do 60 days. There's a learning, which even with a smaller business of Intune we have.
So we don't need to do a 180 days, buying cycle. Can we have more frequent drops? Can we do, do the freshness? Can we put the supply chain in a certain way that we actually, we actually talk about freshening of the merchandise every 45 days. So I think those are the kind of things which we are working on, Varun. It's, it's something which is at two levels, one is strategic, other is operational. As we speak, that correction is happening, and you will see the full impact of it in following term.
Got it. So if I understood it correctly, maybe we are trying to do something with regards to the category itself. I mean, as you mentioned about Life Jeans and Life Casual and maybe mixing, I mean, not making it more sharper with regards to definition and maybe not be present into too many categories. So is that understanding correct?
For example, Varun, when as a customer, as a customer, what are the usage occasions you want to shop for, right? And do we have the specific brand to drive only that product usage for those occasions? That is the challenge, and that is the problem we are solving for.
So, right, I understand. I mean, why I'm asking this question is because it has been multiple years since we would have, as a company, invested money, resources, time, et cetera, to get the private label positioning correct. And rightfully, like, as an analyst, I was also observing all the incremental steps that we would have executed to get the strategy part of it right. But many a times I would wonder that what exactly we are getting wrong, maybe, you know, since so many quarters, years, et cetera.
So I mean, that makes me a little bit more worried with regard, I mean, I would think that is, is this more of, inventory regionalization as a problem, or is this because of the choice of maybe, not so rightful category, where maybe brand has a larger role to play compared to a private label? So, I mean, this absence of understanding creates little bit of confusion with regards to, to get the, you know, basically the question itself correct, that what exactly are we missing on, or what are we trying to fix, to get the segment right?
Yeah. So Varun, in our minds, we are very clear what we are trying to do. For every business and any kind of category, if your positioning is right, then the next steps becomes s o first is the strategy and then is the execution. For, and I'm just giving an example of menswear again, as long as your strategy is right, and, and it's not something which we are talking, which is very different from what we have not done in the past of our business. For example, in our kids wear, and especially now, Indian women's wear, those positionings are really, really good. So they're really good, they show in terms of the throughput. I think the same exercise and little bit of sharpening we have to do for menswear.
As I said, this is something which cannot be, you know. This is something which we can spend a lot of time discussing this point. For us, the starting piece is the positioning, which we are fixing. Once that is fixed, everything else becomes easier. And that's what I am working on, Varun, with my team.
Got it, sir. And my second question is on Intune. On the PPT, you mentioned 65% full price sale. So just wanted to understand that, given this is a new format, how are you thinking about the end of season sale strategy per se, with regards to how to discount the product, et cetera, discounting window, percent of products that we need to sell on discount compared to price. So how have we thought about the USS, ongoing season? That's the second question.
Yeah. Thank you, Varun. I think to start with the number of full price sales that we gave, that gives us a lot of confidence that, you know, in our first ever season, we've beaten our targets on full price sell-through. So much so that right now. Yeah, right now you will find us to be possibly the only fashion player not on USS. Our products are also not very prone to obsolescence, right? I mean, you will find that, you know, they are more casual locations. So as of now, we will not go very heavy on USS. We may have some liquidation, as is the nature of the business, and everyone needs to, but we don't see the need for a very aggressive USS in Intune as of now.
No, sir, my question is on the policy front, that end of season sale, what kind of strategy we want to live with in this format itself?
Okay. I mean,
It's a little bit long-term question, not related to just what we are doing right now.
So, okay, as a policy, there will be some liquidation. That will definitely happen. In the long term also, we are not shying away from USS. Beyond that, I mean, Yeah, it's, it's a little early for us as a brand to have a very well-defined long-term strategy, right? I mean, all I can say is that early signs are we don't need to be aggressive, and we will definitely have, liquidation, and we will, Kavi already mentioned this a while back, that, you know, our focus will more be on frequent drops and, you know, ensuring that there is always freshness on the floor. I don't think I can be more specific on long-term USS strategy at this stage.
Okay, sir. Got it. That's it from my side. Thank you very much.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, rejoin the queue. We would request the participants to keep their questions short so that the management will be able to address them in a proper manner. Thank you. We'll take the next question from the line of Gautam Rathi from CWC. Please go ahead.
Hey, hi, thanks for taking my question. Actually, I had one question-
I'm sorry to interrupt. Sir, may we request you to kindly use your handset?
Yeah. Yeah, okay. Hello. I just had one question. Am I audible now?
Yeah, you are audible, Gautam. Go ahead.
I just have one question, with regards to the member base, right? Loyalty member base, which we have. So, we have about 9.5, 9.7 million member base, but last time I remember, you mentioned in a call, like, last quarter call or before that, is about 25% of them are active, right? First of all, can you help us understand how do you calculate this member base? These are your, the whole life, like, which is last 20 years base, or is it just, like, the active ones, 9.7 million?
And on top of that is, if I just calculate 25% member base, which is about 2.5 million customers, this would mean that the customers which are buying are buying four times, but the other customers are not buying at all, because you said 78% of the revenue comes from that. Can you just help us understand this a bit better?
Hey, this is the base of almost from beginning of the Shoppers Stop, so that's 9.7, that's the base. The last three years, Gautam, 33% of them have shopped during the last three years, and if we talk only about the last one year, 22% of them have been active and shopped, to give you a sense.
Right. So basically, it's 25%, 33%. So logically, 33% is the actual member base. And then you were also trying to,
Your voice is not clear, Gautam.
We can't, I think there's-
Your voice is muffled.
Sorry. I'm sorry. Maybe if this is better?
Yeah.
Yeah. So the only other thing is you, you were trying to run programs around, you know, reactivating this member base, which are, which are inactive, right? With, with personalized programs. Can you help us understand, like, where are we reached on this? How is it turning out? What, what is the kind of contributions we are seeing from those inactive member base?
So we are actually, as a pilot, doing a CLTV model, which we started in Q3 of this year. As a POC, we have taken two cities, which are Bombay and Delhi. I think the initial response has been significant. And what we are trying to do, Gautam, is that going forward, we are deliberating that instead of a regular RFM, can we move into this kind of a model only, which is a CLTV model? So as we speak, the programs are running. We'll be able to share more because the programs have got a life in terms of, you know, the cycle which is running. So I think maybe in the next call when we meet, we'll be able to give you target versus achievement and where we are on that.
But I think the whole work is happening on the CLTV model, where we are trying to reactivate this base. We're looking at the base, which is not only for the last one year, but in the last six years, Shoppers Stop.
So if I'm not wrong, this 9 million customers, a lot of them had come through the Citibank Shoppers Stop First Citizen card, right? And, you know, credit card was a very important part of it. So how many of those credit cards are a ll these customers who are there are all active with the credit card, or are you looking at reactivating that strategy again, right? 'Cause that is, that was one of the biggest draw of that membership, right?
You are right, Gautam. I mean, just to give you the numbers, Citibank, when they sold their business to Axis, they had 107,000 members active, and they continue to remain active. They do buy between INR 250 crore-INR 300 crore within Shoppers Stop, and at the overall credit card level, they still buy at a significantly higher amount. These are all private numbers, and I can't share anything beyond that. But to answer your question, yeah, outcome is 100,000, I'm reasonably confident that more than two-thirds are active with Shoppers Stop; they are there right now. The cards are now shifted to Axis. We are working with Axis to now issue the Axis Bank co-brand card for these customers, Karuna.
So out of—is my understanding right, that out of 9 million, that is 23% who've shopped in the last three years, 25% who've shopped in the last one year, and only 100,000 are coming through that Citibank credit card, right? That's the way to think about it.
Absolutely right. It may not be exactly 100,000. It may be slightly smaller than that, but you are right.
Sure. And okay, that is a much bigger ticket spend. So that is an option you are trying to explore in detail right now. Okay, that's very good.
Yeah.
Thank you. Thank you.
Thank you. The next question is from the line of Gaurav Jogani from Axis Capital. Please go ahead.
Thank you for the opportunity. My first question is with regards to the beauty distribution business. I think we have already achieved INR 77 crore sales for now. If you can also highlight what kind of profitability margins and the EBITDA level we are making and some plans for the same going ahead?
Yeah, hi. Hello, Gaurav. The beauty distribution business has started off quite well. As you can imagine, to start with some powerful brands, talks about the potential of the partnership and the confidence that beauty brands globally have in Shoppers Stop. And as we speak, our EBITDA margins, we are already profitable and we are looking at decent margins to come through. And what we are focused now is to bring the best of the expression of the brands for the discerning beauty customers in India.
So you know, we are also disproportionately investing in the experience part, and I'm sure, you would start to see significant amount of representation of our brands in the markets to come. Hey, just to answer the question, as now we do have high single digit EBITDA margins. Just remember that this is the first year of operation, and we also have a decent gross margin. So the year of operation, as we move along, we are reasonably confident we will not only sustain this and probably increase the EBITDA margin with the volume that comes along.
So just follow up on this: is there a possibility in the future, if not now, but two years hence, to clock a low double digit or high single digit EBITDA margins as you scale up? So that is one. And other thing, you know, as I mentioned about the experience and the beauty discerning. So what our understanding was that you will be catering to the people who are selling these beauty brands across the country. So if you can answer on both of these aspects.
Yeah, absolutely. Your, your understanding is absolutely right. On the first part of it, we will definitely deliver the type of margins that we spoke about. With regards to the second part of the question, yes. Again, we are distributors, so we import the brand, and we make the brand available across every retailer in the country. So, so we talk about distribution into Nykaa, into Sephora, into Tira, into Lifestyle, into Shoppers Stop, and, and whoever qualifies to represent the brand in the manner that the brand owners deem fit, we will, we will be engaging them and making it available across the country for all the customers.
Also, my next question is with regards to the Intune brand. I mean, Intune, we do understand, you know, that the sales per sq ft would be somewhere around that 14,000-odd INR per sq ft. You know, now where we compare to some other player like Zudio and all, who do 20,000+ INR per sq ft. So as you scale up, do you see you also reaching in that area? Or, you know, given that our price points are at the 450-odd levels, probably we could remain in that 15,000-16,000 INR per sq ft mark. And also, if you can guide in terms of the margins that maybe two years, three years down the line, you are looking into this format.
Thank you, Gaurav. First of all, I think the SPS numbers that we've clocked right now is only a starting point. If you ask me whether we have the confidence of going to a certain number that's already delivered in the industry, I think I will do better than that in the long term. So I think there is nothing that stops us from doing better. Kavi did mention that it's early days, and, you know, we are still learning from our customers. All those channels that we spoke of in the initial commentary, we are listening to our customers, and we are tailoring our assortment to meet their needs. I'm sure we will do better in SPS in the seasons to come. That was the first point. You mentioned about margins.
I think in the last investor call between Karuna and Kavi, they did mention about the fact that there is a gradual ramp-up of margin that we will achieve as we scale. That narrative still holds true, and that's a constant endeavor for us. Where exactly we land, I think, once we are more mature in terms of the network, we will come back to you with more tangible numbers.
And one last bit, if I can see. I mean, you know, store addition has been really good for us over the past couple of years. We have been adding around 10, 12 department stores and, you know, a good number of beauty stores as well. However, if you see the overall top-line growth, the top-line growth, you know, has been in that mid-single digit kind of a number. So where is the miss exactly, and how do you see this improving ahead, given that, you know, we used to guide a mid-single digit kind of an SSG, say 7%-8% kind of a growth from these store openings. So where is the miss in the entire mix?
See, if you've seen, there is an overall slowdown in the retail industry, which Kavi spoke in detail at the beginning of the conversation. So the LTL itself is flat, and whatever growth we had during the quarter and whatever growth we expect in Q4, it's primarily because of the store additions. So these are the, I mean, once the retail sale picks up, we are reasonably confident of clocking a mid-single-digit growth for the like-for-like stores, and also deliver the other KPIs. Just to inform you, most of the new stores what we have opened is as per the financial feasibility and delivering the ROC, what we internally measure.
So the only question, you know, was, given that, you know, the store number addition is also pretty good. I mean, if you look, on the base of 100 departmental stores, we are adding around 10, 12 stores every year, so that itself is, you know, 10% addition. Though I understand in the first year they would be not operating at the full capacity, but in the following years, we should also contribute. So the question was more in that context, you know, that is, that, the throughput, per store is not reaching, to the system average right now, and probably once you see the recovery, even that should scale up along with the LTL recovery.
So, Gaurav, and let me answer, address this question. So I think there are two parts of it. One is, there's obviously an impact, and as you rightly said, the stores in the first year don't perform the same way, and the next year stores, as in stores which see the full year, the second full year, obviously has a growth impact. That's one. Secondly, what we have also done, Gaurav, is the sizes of the stores which we are opening now are very different from the initial bases which we used to have. So you typically look at it as a 25-30 K. We have, that's, that's the zone in which we are opening stores now.
So the earlier size stores, even if I open, I'm opening 10 more stores, it doesn't mean 10% growth because the sizing or the size at which we are trying to open is not the same. That's the second thing. Third, I think there is a very strong focus on shift on profitability. Open better quality of stores, tighter stores, and I think that's the way we are also changing our store identity as well. So strictly for a 10, 10% kind of a thing is what we wanted to say. Stores typically, as Karuna pointed, are doing as per their feasibility, and most importantly, the ROC, which we expect them to do, they are delivering.
Sure, sir. Thank you for answering all the questions, and all the best.
Thank you. The next question is from the line of Alia sgar Shakir from Motilal Oswal. Please go ahead.
Yeah, thanks for the opportunity. I have a couple of questions on Intune. So, you know, we have quite a you know, strong aggressive target on the store addition, you know, and we will be somewhere around 165 stores at FY 2026 level. At the current run rate, you know, should this contribute, in my understanding, close to about upwards of INR 1,500 crore based on the current you know, revenue per sq ft that we are clocking? This question is coming more from the point of view that, you know, I mean, Shoppers Stop historically, as a company, has not you know, added such an aggressive store. So, you know, what is your perspective in terms of the revenue growth?
Also in terms of the opportunity and competition, you know, this is now a space where we are seeing all the large retailers quite aggressively growing. So, you know, how will the competition pan out, and your sense on the opportunity, you know? That's the first question. I'll just have one more question here is in terms of the merchandise. Some of the players, other players in this value fashion space have some, you know, legacy in terms of a very large portfolio of private labels. We have typically been a company which is mostly, you know, operated through the third-party brands, except for our own, you know, Shoppers Stop label, which has been a very small contributor.
And that, too, as you mentioned, in the recent past, is, you know, we're working around the positioning of the product and so on and so forth. So, you know, I mean, what is the capability we have internally built in Intune to, you know, I mean, create that, private label merchandise? While I know that your private label doesn't include this, but that capability in terms of design and everything, so that we could give a unique and experience to the customer and, you know, drive business over there. Those are my two questions. Thank you.
Thank you, Alia sgar. Let me not put a stress on my memory and take the last part of your question first, right? In terms of how I'm coexisting with all the tough competition that exists in the market, I think last investor call we did mention about how Intune's positioning is finding a sort of a niche in the entire space, right? We are family centered, we are kids first. Our first two quarters have given us very, very strong confidence that the customers are reacting very favorably to our family orientation and our kids' orientation, right? We are matching the sharpest price points, and we are upping the game on quality.
So I think, you know, between these two factors, we have found our space, we are building on that space, and I don't see a reason for us to fight with anyone else in terms of market share. I think the market is very, very under-penetrated, and I think we will all grow. Intune for sure is the confidence we all have on the table. So that's the part on competition and how we will grow within the competition, right? You asked your last question, which was on how we are building the capability of delivering private label. I think I'll latch on to one point that Kavi said a while back. This is not private label, this is a brand, and this brand itself is, you know, doing its own merchandise.
We also mentioned in one of our investor calls before that the entire customer-facing team of Intune is separate. Even as we speak, once we've seen the success in the first 10 stores, we are gearing up very strongly in terms of the team structure needed to go on to the next year. I think Kavi did mention that in his ending notes. A large part of that is being able to deliver the merchandise that our customers want. I think, in the interest of time, I won't be able to go into finer details on how we are doing it. But I think, it suffices to say that, you know, come spring/summer 2024, we will have freshness every month, right?
Given our product sell-through that I spoke on a while back, I think there's a lot of acceptance on what, merchandise we put on the floor. So I think both of these things put together, we should be doing well in terms of building that merchandise capability. Right. That was the last part of your question. Now, I'll jog my memory on the first. Like, you mentioned about long-term sales growth and, you know, where we will, where Intune will go. I think we are eight months old. For the time being, for us to comment on a three-four-year horizon would be a little premature. I will echo what Kavi has said in his introductory note, that the confidence levels on, Intune scaling up faster than, the company's expectations are very high.
We think we will keep on upping the game on the numbers quarter-on-quarter. I'm not even looking at year-on-year right now. We are too small to look at year-on-year. I think I'll stay there. Have I missed on something? Can I
No, I think that was quite useful in, in detail. Thank you so much for your answers.
Thank you. The next question is from the line of Tejas Shah from Avendus Spark. Please go ahead.
Hi. Thanks for the opportunity. Just a couple of questions. So full price sales were 65% for Intune. How should we see this number? Like, in our understanding, fast fashion brands should have higher number of full price sell-through, or is this a very competitive number as per your expectations?
Okay. Tejas, thank you for the question. I think, fashion in itself, 65% full price sell-through is a good number. I think over the years, anyone who's worked, long-term in fashion industry will tell you that's kind of a magical number. You know, 65% is where you achieve the balance of profitability and avoiding loss of sales. And the minute you go very high in full price sell-through, you can be assured that, you know, there is demand which is not being met. Having said that, 65% is a starting point. This was also with the staggered launches of stores that we had, with all the early learnings that we will have, right? I mean, in the first season, we will not get all customer expectations right.
In my mind, 65% is fairly out there at the top, which also echoes in my comment to one of the previous questions. We are not on sales in the first month. I think that resonates with the kind of confidence we have on this number being good, and we will keep building on it.
Sure. And the second, just on your observation on consumer behavior, where they are spending more on travel. Now, I'm assuming the people who are spending on travel are essentially our customer base. They must be spending on more luggage, more holiday apparels, more beauty products while they are traveling. So for this cohort, we should be the most relevant brand. So I, I'm just, like, not able to reconcile that why if the same cohort is spending somewhere else and associated categories are housed under our brand, why are we not participating in that or not kind of reflecting that kind of numbers?
So Tejas, a lot of those categories are actually doing well for us. So beauty, we spoke about fragrance doing well. Non-apparel, we spoke about the non-apparel, the handbags, those categories, makeup, Indian wear. So I think a lot of those categories are doing well for us. Where the industry has struggled, and that's what we are seeing across, are parts of western women's wear, and that can also be a function of the quarter from which we are coming out from. And menswear has also been a little tepid in. But we are seeing, for example, menswear apparel casual doing better, kids and girls doing better, Indian wear doing better, handbags. So a lot of those categories are doing well for us.
Yeah. Sure. And, and, and if I may squeeze in one last, whenever we, So we have data of last many years, whenever we kind of get into such cycle and the consumer sentiment seems to be worse, usually, how much time does it take to turn it around?
So literally, if you see, it's not only about Shoppers, but as a broader industry, it is now, I think, the fourth or fifth quarter when we are seeing a slowdown, right? So I think we are seeing a completion of that entire cycle. We are quite hopeful that it should start picking up from FY 2025. In fact, a case in point, the festive, I mean, we spoke about 4% LTL growth during festive. Actually, if I exclude the match days and the non-match days, and I don't want to go into that match, on the non-match days, which was basically all the Sundays. We actually were going with 8% LTL, so it's like really, really strong.
I think somewhere when the usual occasion comes in, the demand picks up. We are also seeing that there are a lot of marriages in the coming months, so hopefully that should trigger the revival pick up.
Great. That's all from my side. Thanks.
Thanks, Tejas.
Thank you. The next question is from the line of Shalini Gupta from East India Securities. Please go ahead.
Good morning, sir. I have two questions. One, you had spoken about the reduction in gross margins in the quarter briefly. Can you touch upon that? And secondly, why is the other income so low? This again, you touched upon, if you can talk about these two.
Okay. Hey, thanks, Shalini. That's a great question. I will answer the last question. The other income is lower because last year we had a one-time GST interest reversal, which we have included in other income of approximately INR 17 crores. And that's the reason if you exclude the INR 17 crores, our other income has increased this quarter.
That's a one-time income. When we spoke last time, we had qualified that, and when we published the results also, we had qualified that. Coming back to this year, the gross margins are lower because again, Kavi spoke in detail. We had provided between INR 9-INR 10 crores on private brand obsolescence. That took away almost 60 basis points on the gross margins. In addition to that, we also had higher offers in private brand. That also impacted the overall gross margins.
Other than the private brand, our gross margins versus last year have been higher.
Okay. So can you just repeat your reason why your gross margins were lower, please?
Yeah. I said that we have made INR 9-10 crore provision for obsolescence this quarter on private brand. That almost contributed 63 basis points on the gross margin. Plus, we had higher discounts and offers on private brand for both festive and end of season sales. That also impacted the overall margin because our realized, gross margin realization in private brand has been lower than last year.
Yeah, great. Thank you. That, that's all from me. Thank you.
Thanks, Shalini.
Thank you. Participants who wish to ask questions may please press star and one now. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Hi, sir. Thanks again for giving me the opportunity. On the beauty distribution portion, firstly, out of the total brands on board, are all of them exclusive arrangements with Shoppers Stop to distribute in India, or, they can be non-exclusive and find other partners also? Specifically on the distribution part, do we have any medium-term targets in terms of sales, profitability? I understand you mentioned a low single digit to high double digit, but any number there that you can put currently? I think you have clocked INR 2 crore EBITDA, if I do a consolidated minus standalone. So that's a pretty impressive number. Just going forward, any targets you can share on this?
Yeah, absolutely. Let me take one by one. Yeah, we do have exclusive distribution as of now on all the products we are distributing in Global SS Beauty. I mean, the large three products are L'Oréal International Division, which we call LID, Clarins and NARS, and of course, there are smaller brands also. So to answer your question, we have an exclusive distribution within India, and just now we just spoke about, like, who are the retailers, how we are distributing and other things. Second, again, we spoke about the sales and the profitability. During the quarter, we recorded INR 39 crores, and for the year to date, we recorded INR 77 crores. And as I said, we are at a single digit EBITDA.
Please, remember that this is the first year of operation, and in the first year of operation, including all the costs, that is the employee cost, our SO cost, and everything put together, we are still profitable. And to answer your last question, do we have a strategy? Yes, we have a strategy. Do we have internally the numbers, what's going to be for the next two, three years? Yes, we do have. And do we have the margins, both gross margin and EBITDA margins? Of course, we have. So we did, we do have all these numbers.
Can you share whatever is possible, sir?
No, not right now. I mean, because we are internally, you know pretty well, we don't give guidance for the future years, but we did mention to that, right? The global distribution business will have a disproportionate growth next year. I mean, to give a good broad number, we should clock anywhere between INR 300 crore-INR 400 crore revenue next year, and we should have a high single digit EBITDA margin.
Great, sir. That is, that is helpful. Just one more question, if I can squeeze in. So this LTL of -1% this quarter, can you see any material difference between, let's say, the LTL of new and recently renovated stores in the system versus rest of the system? Is there anything you can call out? Not maybe specific to the quarter, but over a period of time, has there been a broad divergence in these two cohorts?
So if you look at the LTL, of course, the board, obviously the stores which have opened and have not been completely analyzed, so I think those are the ones which have done better. So if X is the baseline, the newer stores have grown by more than 5% of that in terms of LTL, just to give you a number.
The renovated ones?
Yeah. So it's more or less the trend is very similar.
Sir, just to understand this more, if let's say we were to renovate the whole of the system, let's say, over a phased manner in three-four years, can that be a decent kicker for LTL going forward?
So we are doing that as we speak. We are in the process of firming up the plans for the coming year, and we are looking at renovating close to seven-eight stores in the coming year. I think that process is on. Because what's happening is that as markets mature. Also, as we are preimumizing, we are getting newer brands, the look and feel has to become better. So that process is on, and Sameer, we are very, very buoyant on that. And by 2025, by FY 2025, 75% of our stores will be the next gen stores, which we are working on.
75% in by FY 2025?
Yeah.
Oh, cool. Great, sir. That's all from me. Thanks, thanks again.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, with that, we conclude our question and answer session. Thank you, members of the management. On behalf of Shoppers Stop Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.
Thanks, Michelle. Thanks, Mamta. Thank you.
Thanks, Michelle.
Thank you.