Spencer's Retail Limited (SPENCERS) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Spencer's Retail Limited's Earnings Conference Call, hosted by MK Global Financial Services 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 this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sunny Bhadra, MK Global Financial Services Limited. Thank you, Anubhatiya, sir.

Thank you, Swapnali. Good morning, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Anut Singh, CEO and MD, Mr. Manjir Basu, CFO, and Mr. Konkaj Keria, Executive Director, Investor Relations. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.

So, good morning, everyone, and welcome to Spencer's. Quarter 4 and FY26 results call. With me in the room today, I have Pankaj Kedya, our Group Head of Investor Relations. I have Manjeet Basu, who's the CFO of Spencer. I have Pratik Kabra, who works in the CEO's office and looks after investor relations. We'll start the flow, as always. We'll start the flow by – I'll give a short commentary on – What the quarter was and therefore what the four-year 26 picture was, and then we'll open it up for questions from your side. So as some of you may have had the chance to glean through the results, we announced our results from post our board meeting yesterday evening. Quarter four, and I'll give commentary first on the consolidated level, then I'll talk specifically about Spencer's and then about Nature's Basket. So if I look at it at a consolidated level, quarter four, I would, by all measures, term it a respectable quarter, largely given by the fact that this was a quarter where after a long time we were able to demonstrate and deliver growth. So quarter four was a growth of 6% versus quarter four of last year. At a consolidated level, we did sales of 436 crores versus 412 crores in quarter four last year. If I look at the margins, margins were... We maintained the margins, you know, at a quarterly level at around 18.8% versus 19% last year in the same quarter. Our operating expenses continued to be run tightly, and we had our operating expenses which were in line, which resulted in an EBITDA, which is a marginal EBITDA of 2 crores versus, you know, a flat zero EBITDA last year quarter four. So if we look at the 12-month picture, the 12-month, the sales at a console level were at 1,800 crores, down from 1,995 crores last year. As some of you would recall, in FY2425, particularly in the second half, we had exited 49 stores. We had exited regions in the north and the south. So this contraction and top line is a result of that. So year on year, if I look at it, it's almost a 10% decline. But again, that was done for a particular purpose. You know, I'm not going to reiterate that, but largely it was to exit non-strategic regions and to exit our high loss-making stores, drive efficiency. At an annual level, at an FY26 level, our margins, we've been able to deliver 90 basis point higher margins compared to last year. So, our margins for the year were at 20.5% at a consolidated level. Our operating expenses obviously came down sharply as a result of a reduction in the footprint on the Spencer's format. The EBITDA was 15 crores compared to 60 crores last year. But let's remember last year, 60 crore EBITDA, there was a huge component of other income, which was a result of all the termination of the leases and the INDS treatment on the closure of the stores. At a PBT level, it remains flat at 250 crores PBT losses. So, that's the picture on the consolidated level. Now, this performance of 6% growth in quarter four was largely powered by growth on the Spencers format. So on Spencers, in quarter four, we delivered close to 380 crores versus the 351 crores in quarter four last year, which represents an 8% year-on-year growth. Now, this is the reason why I'm kind of highlighting this is because this is pretty significant in the scheme of things. You know, this is the first time after many quarters we've been able to, you know, deliver growth over last year. And I can further confidently state that this is not just one-off, but we are seeing a sustained trend where we've been able to generate some state momentum. So really, I mean, if I were to split H1 versus H2 for Spencer's, in H1 we were down versus last year, but H2 has seen a good recovery. So, our H2 growth rates versus H2 of last year, which is actually the like-for-like comparison, because in H2 of F5, 24, 25, we didn't have – we had exited the store. So, H2 is a true comparison. In H2, we delivered almost 4% growth, and since November, which is for the last five months, we're consistently revealing every month we're delivering growth over the previous year. So I think that's a good sign. And I'll come back to a little bit more details on what is driving this growth on the Spencer format. But the sales growth was also... You know, kind of complemented with keeping our margins at healthy levels. So our margins were 17.5% versus 17.8%. On a full year basis, margins improved by 90 basis point. We're at 19% margin on the expenses format. Our operating expenses continue to be quite tight. So, in the quarter, there were 61 crores versus last year quarter of 62 crores. At a full year level, operating expenses obviously are much lower given the exit from the regions. So, there are about 250 crores versus 329 crores in F5 2425. Right? Our EBITDA is... For the quarter, it was 14 crores, up 40% from what it was in the quarter four of FI 24-25, which was at 10 crores. And then overall, at a full year level, EBITDA is 56 crores versus 53, and that is including the one-off impact of other income, which was there in FI 24-25. So, overall, I think on Spencer's, I would say that... You know, it is a good recovery. All the actions which we had taken last year in F5, 24, 25, in terms of reducing footprint is now behind us. We have reset the business from that perspective, and the aim was to then drive growth on this. We were not able to do that in H1, but in H2, we have come back strongly, and we have delivered growth in H2. Quarter 4, which is traditionally not the strongest quarter. In the retail industry, Quarter 3 is the strongest quarter. So in Quarter 4, we were able to grow by 8%. And this was on the back of, I would say, three key things which have been consistently being executed in Spencers. Number one is You know, we are obviously, given the situation we are in, we are always... You know, constraint on funds. As you know, we are not expanding the number of store footprints. So, therefore, it was quite incumbent that we manage our working capital extremely well. And as part of working capital management, the number one point was in terms of managing our assortment. So, last year, there was extensive work done in H1 in terms of our optimization of our inventory, which included, which started with looking at our assortment. You know, design a certain strategy, if you may say, and looking at optimizing. So our SKU mix with a focus on a lowering inventory at an aggregate level, but more importantly, putting focus behind our fast moving ones, because at the end of the day, you know, in retail, it's about the velocity, which is the number of turns which you can achieve. And I think towards that, there was good work done, and which is what gave us, you know, the momentum in H2. What also followed that was the membership to the rewards program, which we launched in July 25. That also picked up significant momentum. And I remind some of you that this was started in July. It was a very simple, very clean reward program wherein consumers were given cash back into their wallets at the end of the month, depending on their monthly purchase. And this was obviously based on a slab, but at the highest slab, on purchase of 10,000 rupees, consumers were getting 600 rupees or 6% off, which is quite significant for a grocery kind of an environment. This membership program, like I said, started in July 2025. It was a paid membership. Members had to pay 500 rupees, but the proposition was pretty simple. You pay 500 rupees a year, and you could benefit of up to 600 rupees a month on your monthly purchases. This saw good traction over the financial year 25-26, and we closed the year with close to 100,000 members who had not only bought into the membership, but had also used the membership. A key point of this membership was, obviously, the objective was to drive stickiness and to drive repeat amongst people who signed up for the awards. And the numbers which came through the year actually validated the whole construct of this membership program. Just to give you guys an idea, you know, an average member with us shocks. Slightly more than two and a half times a month. People who become members of this report program over the years, they have over the year, last year, they shop an average of four and a half times a month. So clearly, I mean, it led to an increase in frequency. The average monthly spend of the members was also significantly higher than the lows of non-members. An average member was spending close to 8,000 rupees a month as far as their average purchase was concerned. The return rate, which is, you know, people coming back and shopping, the M plus one retention rate was also 80 percent plus. So clearly, the membership program was something which found resonance with our customer base and drove higher repeat, higher frequency, higher ABV, leading to growth. Today, roughly 20% to 22% of our monthly sales is contributed by our members. So clearly, that's something which has gone well for us. So number one was the whole inventory optimization and looking at our assortment, focusing on our best sellers, and really putting weight behind SKUs, which had far higher velocity, as opposed to focusing on purely high margin but low velocity SKUs. Number two was the rewards program, which has picked up significant momentum. And number three was continued focus on the online part of the business. The online part of the business... Grew by 37% year on year, so closed at 200 crores for FI 526, which was 37% increase over the previous year. We could have done much higher, but we took a conscious call in H2 to limit our burn on this, because at the end of the day, you know, you could end up scaling this business by another 100 crores, but that would have meant fairly expensive customer acquisition. So we were focused in terms of our objective of this being an omni-channel offer, and therefore primarily targeting our offline customer base and giving them the online option of shopping. So it was largely organic customer acquisition. But we really focused on the operational KPIs, which is in full and on-time delivery. Our delivery proposition is 30 minutes. Our average delivery time was around 28 and a half minutes. You know, our info is close to 90%, and that has seen a decent repeat rate which is coming from. We do an average of... Two lakh-plus orders per month, and our ABVs on the e-commerce business are at 760 rupees per order, which is, you know, I would say best in class in the industry. Quick commerce players are around 450, 500. So I think those efficiency measures were kind of, you know, put in place, and I would say that this is the future for us. We would continue to expand online, but we will do that judiciously and not burn because that's not what our P&L kind of affords. On the online business, the other good part, the significant part was that at a unit order level, we are breaking even now. So we are with an ABV of 760. We generate a rupee gross margin, which is closer to 110 rupees per order. And our fulfillment costs are now, with the scale at about 2 lakh orders a month, our fulfillment costs are around 98, 99. So we are making money on an order, at an order level. Of course, the scale has to go up for us to absorb the other tech and marketing costs for it to be EBITDA positive, which it is not. So, clearly for Spencer's, you know, I would say it gives me a lot of confidence that, you know, the pain and the contraction which we went through in H1, you know, 24-25, has given us an opportunity to reset our base, focus on productivity and efficiency measures, and really drive growth. So it took a couple of quarters of FY25, FY26 to get the growth engine going, but we've started that in H2, and, you know, I'm quite confident that we'll be able to sustain this in quarter one and quarter two and quarter three and quarter four of the current year. The other interesting thing is... Look, we don't disclose our store EBITDA, but just to give you a thing, given that we didn't add on stores, we were able to drive growth from the same base, and we've kept our operating costs tight, obviously means that this, and our margins are flat, which means that this should flow into your improved level of store EBITDA. And, you know, I mean, the state rate, if any one of you who have been following My calls or our calls for the last two years, the stated P&L or the model P&L for Spencer's, we wanted to get to a target of 8% store a bid down. We were nowhere close to that, which is why we did the exercise in terms of optimization of regions. Last year, in FY24-25, we were at a low single-digit store EBITDA, and this year, we've been able to, as a result of growth, as a result of margins being at the same healthy levels and costs being optimized, we've been able to double our store EBITDA levels. Have we achieved the 8% store EBITDA level? No, we haven't, but we've made significant progress. Yes, we've doubled it from the previous year, and we are quite confident that going forward in FY26-27, we will be able to achieve that 8% store EBITDA. What this 8% store EBITDA allows us to do is, you know, that's the right level of threshold EBITDA at which all our other support costs, whether it be DC costs. Marketing costs, corporate overhead support costs, all of that can be absorbed. So for us to break even, we need to get to that 8% store EBITDA, and that's the journey for us. And quarter four and H2 of 25, 26 has given us that renewed confidence that we are on the path to achieving that EBITDA break-even as far as. Spencers is concerned. Just to give you a magnitude of, you know, when our store businesses are concerned, today the EBITDA for Spencers gets consolidated looking at, not the store EBITDA, the overall EBITDA gets consolidated at a Spencers plus RIPL level. We were able to significantly reduce our losses on the offline business. So our EBITDA losses, and I'm not talking here about financial EBITDA, which is... Post the INDS treatment, the pre-INDS of winter, which is a true measure of operations thing, we have halved that as far as the offline business is concerned. The plan is that this year we will be able to break even on the offline business. Definitely. And on the online business, where we made about 30 crores of loss, largely on account of driving acquisition and setting up the whole tech platform, we want to reduce this to low double digit, ideally, you know, in single digits. So I think that's where the journey for Spencer's is. And I'm quite confident that, you know, we're on the right path. As far as Nature's Basket is concerned, I've got to be honest that, look, we were, unlike Spencer, we were not able to power that level of growth on Nature's Basket. But unlike Spencer's where, you know, a lot of headwinds were external, what was happening in the category, what was the impact of competition, I think NB, the headwinds were largely internal. We recognize that. We know exactly where the issues are, and I think the issues are probably at, not probably, are definitely at two levels. One is, we still haven't gotten to that virtuous cycle of synchronizing. Our inventory with what it's selling. So as a result, we are sitting on high days of stock cover. These are not necessarily fast-moving SKUs, and therefore our precious working capital is stuck in slow-moving, and we don't have enough to fuel the velocity on high-moving SKUs. So that exercise which we did in Spencer's last year is something which we are currently doing in Nature's Basket. That will help us. Secondly, the online part of the business is relatively small, you know, but that's something which we revamped using the same tech backbone as Spencer's Jiffy, and we're ready to kind of accelerate that. So these two things are ones which require immediate correction. We've also kind of, you know, looked at optimizing some part of it, but look, there is not a lot in terms of the, you know, store footprint or the magnitude to kind of optimize that. You know, Nature's Basket operates 31 stores. So really the effort there is going to be around how do you drive a higher level of sales per square foot and store productivity. It is not about closing now stores or opening more stores. It's about getting the higher level. And I must admit that, you know, we have done that in the past. It's just that it slipped last year. I'm confident that we will turn the clock back and drive some growth on nature's basket. We have also, you know... We've effected a leadership change at Nature's Basket, so we've brought in a very experienced retail operator as the new CEO for Nature's Basket, a gentleman called Lakshman. Lakshman comes in with experience in diverse retail, started with Future Group, then was with more, and then more recently with scaling up the med plus pharmacy business offline. So, we have a very strong operator, and the focus on NB is to turn around from a growth perspective. And I think, you know, growth will solve the issues and the challenges around store profitability and overall profitability of the format. Nation's Basket continues to be a very strong brand, you know, despite some of our internal challenges. Here's the customer. It's a lot more loyal. It's a very differentiated format. We see a strong consumer-customer traction. Consumer is actually, in fact, forgiving as well, but we can't take that for granted. We have also started the membership program, the rewards program at Nature's Basket. It's called Elysium. There, the construct is a bit different. You buy a membership at 5,000 rupees for the year, and you get up to 10% off on your purchase. And that is not – you don't wait until the end of the month to get it on every transaction you get, up to, you know, purchases of $1,50,000 a year. So basically here the ROI is very simple. You pay $5,000 and you could get discounts of up to $15,000 on your purchases, besides a whole lot of other, you know, intangible benefits like being part of an extended loyalty program on other platforms. The scale is still small. We've got about 9,000 members, but again, looking at the confidence from the Spencer's program and what it does to the overall business, you know, we are going to turbocharge this program as far as Nature's Basket is concerned. So, really, Nature's Basket, you know, is, I would say, is... The next two quarters are going to be critical, and we will demonstrate and drive growth over the next two quarters on that, and growth will solve, because intrinsically, like I said, it's a very... Clear, differentiated proposition, which has a very strong resonance with its consumer segment. The business is concentrated in two cities. We do have presence in a few other cities, but the bulk of our stores are in Bombay and Bangalore. So it's easy to kind of, you know, put in place a turnaround on a scale which is 31 odd stores. Intrinsically, the The margins in the business are... The percentage margins are healthy. So I think a higher level of sales will be able to drive a higher level of RGM, which will then flow down in terms of better profitability. So I think that's the story as far as Spencers and Nation Basket is concerned. Overall, I would say for the full year, you know, again, respectable performance. But what really gives me confidence, and I hope I can inspire and convey some of that confidence to all of you, is that we have not just rediscovered, but we have delivered a quarter of strong growth on Spencers. The playbook, which is around... Smart inventory optimization, driving higher level of store repeats through a rewards program, and building an online platform which is not just centered on acquisition at any cost, but on fulfilling a 25-minute delivery proposition with a high degree of info. I think these three are working. We will continue to drive it. Like I said, since November, five months, we are delivering month-on-month growth. So that also gives me confidence that it's not one-off. And again, we started the year well, despite all the turbulence and macro geopolitical instability that has not impacted us. You know, we have, you know, we've got off to a good start. You know, we operate in East and East UP. In East, we are largely in West Bengal. West Bengal has seen a change in government. And now, you know, for the first time in 50 years, there will be center state alignment, which will, which will, which will, I think. Bear well for the state. I'm sure there will be a lot of not just sentiments, but we'll see on-ground investments, on-ground development activities, which is always good news for a consumption sector like us because it will translate into higher purchasing power and therefore not just sentiments, but actually higher purchasing power. As far as... You know, last year we didn't add stores, you know, and, you know, that's the current thinking as well, that we're not going to add on, it's not a very big expansion thing, because we still believe that, you know, whatever efficiency measures we are doing in terms of increasing store productivity, increasing the sales per square foot, that's what should continue. There is still headroom for us to grow via that, and that's the journey we are on. Our SPSF, again, I don't disclose it, but, you know, I can give you just to kind of, you know. We reinforce the point that we are making improvements on that. You know, on Spencer's, in F52425, we were at around 1,400, you know, sales per square foot, 1,400 rupees per month per square foot. That number has gone up to close to 1,700. So we are driving that. And I think, you know, if you ask me what the true level is, we can reach levels of 2,000 rupees. Which is for Spencer's format, I think that will be the one. So, clearly, growth is not going to come through massive network expansion. We will, of course, we keep evaluating opportunities, you know, within existing geographic clusters. You know, for example, in a city like Calcutta, you know, from time to time, there are different hubs which are kind of coming up, and we will look at opportunities there of putting. So you will see, you know, three or four stores of spenders coming up in this year. Some of them might be new to the network. Some of them could be relocating an underperforming store, and And moving it to a more high growth, and some of it could be same. So we will add on stores, but again, that's not the basis of our growth. We are basing our growth on driving same store sales growth, and the last four or five months have given us more confidence that we'll be able to do that. And for nature's basket as well, we will not add on stores. There is work to be done in terms of improving from our existing stores, and we are quite confident we'll be able to drive that. So net-net, I think I just summarized by saying that, look, this quarter has really demonstrated that we have discovered our growth mojo, and we will continue on this journey. And I think this will help us in terms of looking at a path to a bidda break-even, which I foresee will be the same time. Next year when we're talking, hopefully I'll be able to.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants, you are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question comes. We will take the first question from the line of Parashit Gupta from Prahirval. Prahirvalu Capital, please go ahead.

Thank you for the opportunity. My first question is on the average bill value and the number of bills. Can you please quantify how much these figures were for both Spencers as well as Nature's Basket?

Hello?

Can you hear me now?

Yes, I can hear you now.

Yeah. So, look, we don't give a breakout of the numbers on ABV and orders, you know, on the offline business. On online, we were doing it because that's a key part of our, you know, KPI that determines the overall. So on the online business, I had mentioned and I'll repeat it. We did about 2.6 million orders in the year, which is approximately, you know, you can look at it from a per day basis. You know, we're doing about, or in a per month basis, we do about 2.15 lakh orders per month. And the AOV on that is 760 rupees. So that's the breakout on that. The AOV on our, you know, on our offline business, I'm not going to give you numbers, you can calculate that. But, you know, the AOV on our Spencer's business is in the region of 1300. And I think that that number is also driven by the fact that we have And the number on initial basket is slightly higher than that. So I'm afraid I can't give you exact, I can give you directional. Has there been an increase in NOB or ABV in either of the formats? That I can give you directionally. So the growth which we are seeing is, let me tell you, is driven more by ABV growth as opposed to NOB growth on the offline business. The offline business is the NOBs are not growing, but the ABBs are growing, and that's not ideal. Ideally, you should have both growing, but we still take that, and we still see that because it's also a little bit by design, because this whole membership program gets people to have skin in the game, people to come back more often and to buy, because if now. The incentive is to reach 10,000 rupees of purchase, you know, and you come four times a month, you can do the math. Your ABV will go up to 2,500. So it is a bit of, I would say, the increase in ABV is a bit of, you know, by design, by construct, as opposed to by default or by chance. So that's the relation we're moving on. In Nature's Basket, we haven't seen an increase in ABV, and that is what we're going to drive in the next two quarters. So, Pariksha, I've kind of given you direction. I've not given you exact numbers deliberately, but I've given you the exact numbers for e-com.

Understood. This is helpful. My second question on the balance sheet, how much is the debt which is maturing in the first half of FY27 and for the entire year? But are we also considering refinancing the debt, or...? Can you please share some light on that?

No. I'll ask Manjir, our CFO, to give you the exact number.

Hi, Parikshit. So, during the first half of next year, we will be repaying about 108 crores of debts at a console level, and obviously we will need refinancing of that during the course of the year.

Understood. And do you anticipate, I mean, given the current situation of the company's market value and the numbers on the financials, do we anticipate the interest costs to meaningfully increase from what it is right now?

No, we don't foresee an increase in the interest cost. Right now, we are in the range of 9.5% to 10.5% and we expect that to continue in the financial year as well.

Understood. In terms of nature's basket, I mean, you already mentioned a couple of reasons why it has not been growing, but We've also lost footfall then. If the ABVs have not grown or come down so much, then basically not a lot of people are coming into the store. In addition to optimizing the inventory, what other measures have you outlined now that you have also done a leadership change? What are the key strategic decisions taken for the first quarter or the first half of the current financial year?

So, look, I mean, inventory organization, you know, my apologies, it's a very broad, you know, macro kind of a statement. Really, I mean, essentially the issue was, and you're absolutely right, you know, in nature's basket, obviously, you know, if your sales have gone down, and your sales have gone down, and your ABVs have remained largely in the same level, which means your NOBs have gone down, which means your less number of people are coming. Now, I think the question there is, is what is prompting that behavior? And I think in this case, it's not that people are going and shopping online for this kind of a category. This is a premium gourmet grocery retailer. So one of the reasons obviously is, and which is what I said, the headwinds of the challenges are largely internal. And the internal challenges, if you don't have the right assortment at the right time, you know, you will not, consumers will come in, and then they will walk out empty handed, and they will not come back. So clearly for us, it's about fixing that. And it's quite evident. If I have, you know, I mean, I'll share with you very transparently, you know, our days on hand is quite healthy. In fact, I would say the absolute level of stockholding is above the norm, but it's in the wrong type of categories. So, we have excess stocks in some categories like processed food, canned food, imported trading lines, because your trading lines are not a single, as a result of which we have not been able to have. We have a consistent level of availability of daily or weekly bought categories like fresh. So the number one correction which we are doing is we are saying that, look, we need to ensure, we need to understand and we need to ensure that we have consistent availability of those categories which move on a regular basis and which brings consumers back to the stores. And one of those categories is fresh, which is basically fruits, vegetables, chicken, meat, and the other exotics. And I think that's the number one priority for us. We need to really, I would say, over-index both our inventory and our availability on that, because that is what drives regular footfalls. That is what drives repeat. So that's the number one action which is there. Number two, obviously, linked to that is a stronger push on rewards because, you know, You know, as is evident, once you have skin in the game, once you are kind of, you know, even though, you know, if you're spending $15,000, you would say, you would argue saying that, you know, $1,500 does not make a, you know, big difference, but it does make a big difference. I think consumers like that feeling of, you know, I saved something. So I think the membership program in Nature's Basket is something which can be driven much stronger. You know, 8,900 members is not a pinnacle of achievement over there. I think we should be looking at something like 30,000 members easily. And I think that will drive a repeat frequency. And the number three grow driver would be your out-of-store business. And actually, in Nature's Basket, the out-of-store business comprises both. Phone delivery and phone orders as well as online. Today, phone delivery is much, much bigger than online. That's because, you know, our online platform wasn't really a seamless experience. We've, you know, we've rebuilt that based on all the learnings and the expertise which we had developed over the years on Jiffy, and that the same thing has been applied. So I think these are the three strong levers which will help us get back to the growth territory and to get back to the numbers which we were doing. Because, you know, fortunately, this is not a category which has still been majorly impacted by quick commerce or e-commerce. I don't know, and I can't foretell. Maybe in the next 12 months, we have greater competition coming in that space. But I think we have time to fix it, and we are quite seriously focused on fixing it, and I think it's quite doable. You know, we get the right inventory of the right categories consistently, which is fresh, which I highlighted. We drive our rewards program much, much stronger and enroll. You know, and again, you know, just to kind of illustrate that point, it's a minor point. You know, we ended the year last year with 9,000 members on the rewards program. And, of course, the whole annual plan is built on driving growth. And these are the three pillars. So, on rewards, we did close to 1,250 members. We added on in the month of April. So, again, you know, that is the, it is, you know, at the end of the day, it's a simple identification of what the core issue is and really driving relentlessly the execution of that. So, I think these three things will help us to drive, you know, drive back the NOB-led, growth-led EBITDA improvement in HSB. So, yeah, that's the answer to your question.

Yeah, that's helpful. Just a quick follow-up on the out-of-the-store business for Nature's Basket. So, I mean, Nature's Basket, while it was with Godrej, was right outside my home as well. And I absolutely agree with you that the customer base for Nature's Basket is super loyal, and the fresh category is where most of the sales lie. Thank you. While ordering Nature's Basket, I remember you already mentioned about the app, which was not a seamless experience. So, have you considered maybe enrolling onto the other quick commerce platforms? Because those platforms give you the scale. And while the company's policy is not to build dark stores, however, we really need to up our sales per square foot in Nature's Basket. So, while... It might also help give us an idea about, you know, the customer base who is also ready to or make gourmet categories from other quick commerce platforms and help us understand the acceptability further. So, has something like this been also explored?

No, sir. Thanks, Parikshad, for asking. This is a very good question. I haven't, you know… I didn't mention it because it's still in a kind of a pilot stage. We are looking at it with two platforms. I will not name them. One in Calcutta. We are on a leading quick commerce marketplace. We are trying that. And the other is in Bangalore. And there are also talks in Amazon to have in their marketplace a Nature's Vakit stone. So we're doing that. Of course, it will lead to some dilution in the margins because these marketplaces take a hefty commission. But it will help us in terms of getting a higher, you know, I would say, penetration, visibility of the brand and hopefully top-line business. So the way I look at it is the incremental revenue will come in at a diminished margin, but it will still be incremental. Right? Yeah. So, this is work in progress. You know, we are evaluating it, and once the pilot is successful, then we take a call whether we can extend this.

Understood. And have you considered the same strategy for maybe Spencer's as well?

No. The reason why we haven't done that is because Spencer's is... The online business is largely concentrated in West Bengal, in Calcutta, where we have a good network of stores. We have 42 stores, you know, and we have an ability to service 99% of the PIN codes using our network of 42 stores and one dark store. So, you know, I mean, the idea there is, and in any case, the sector business, if you can understand, it works on smaller margin pools. So listing into the marketplace will get you your top line, but then, you know, that is for vanity sake. From an EBITDA point of view, it will not make sense. You know, we have our moats, you know, on the online business. You know, we do liquor delivery online, and I think, you know, that's what will help us to retain, to attract, and to grow our customer base. We are, you know, again, we are augmenting our rewards program, I would say, because, you know, we've had a very base membership, which is at 500 rupees, you get 6% off. Very soon, we will launch two higher tiers of this loyalty program. So you will have a platinum and a... And what that membership will allow you is to get things like 25 free deliveries in a year, online deliveries. At the platinum level, you will get that, plus you will get certain also rewards and loyalty points on your liquor purchase. So we are augmenting our reward program. I mean, look, the intention of the online business in Spencer is not... To make it go from 200 to 400 crores and burn 60 crores, you know, in losses. The idea is for it to go from 200 to 250 crores next year. And ideally, instead of making 30 crores of loss, which we made last year, is to minimize the loss. So that's the strategy, and therefore, we will not be looking at listing it on marketplaces, etc. But for Nature's Basket, definitely it makes sense to do that, because the scale is much smaller, and the margin pool is much higher, so we can do with that.

Okay, my final question before I rejoin the queue, again, on any equity infusion from the promoters and any plans on that that you would like to disclose at this point?

Yeah. So, look, our response will be consistent. You know, the mandate to the management team is to do an EBITDA, you know, turnaround. And therefore, we are focused in terms of ensuring that we break even at the EBITDA level. I'm sure the moment that happens, that is a strong signal to everyone. And at that point of time, we will look at how do we. I'll recapitalize that. But again, I think that's... You know, it's a step in the whole journey, and we have to first get to that step, and we are managing with, I think, you know, one of the issues is we've been able to manage with the working capital. You asked the question in terms of how much of loan is coming up for repayment, you know, so we have the loan, and we've also got line of sight of, you know, rolling over that loan, so we will repay that and get fresh. So I think, you know, that's something which is covered. We remain focused in terms of getting the business to an EBITDA break-even. And I'm sure that is the point of time where the various options of recapitalizing, whether it is equity infusion through, you know, different means will be evaluated.

All right. These are very helpful. Thank you very much for your answers and good luck for the current quarter.

Thank you, Variksit. Thank you.

Thank you. We will take the next question from the line of Anita Bajaj, an individual investor. Please go ahead.

I'm going to tell you my procedure with the question.

Ms. Anita, you may proceed with the question. Due to no response, we will take the next participant. Before we take the next question, a reminder to all, you may press star and one to ask questions. We have the next question from the line of Sunny. Please go ahead.

Yeah. Hi, sir. Thank you for the opportunity. Am I audible? I just wanted to check on the growth rate of 8% that we have delivered this quarter. Can you just highlight how the geography-wise the split has been, which geography has performed better?

Yeah, so, look, we operate in, it's not that we are pan-India and we are multiple, we operate in largely two geographies, which is West Bengal, East, and Eastern UP, which is... Largely cities of Lucknow and Banaras. In quarter four, this is... In terms of growth, growth has been secular. So we have grown both in East and in East UP. The channels have varied a little bit. So the growth in online has largely been driven in East. Obviously, it is a much larger base. We have 40-odd stores in Calcutta City. So, the online growth has been driven more by – so, this 8% growth is roughly 50% growth on the online channel and 4.5%, 5% growth on the offline channel. So, in East, most of this growth is powered by the online business. East UP has largely been a store-led growth because our online penetration, online presence is much smaller there. Close to 90% of our online business, or 92% of our online business, comes from East. But East UP, the store business, has run very well. You know, they have grown, you know, I would say double digit in quarter four. And again, that has been powered simply by a much higher level of, you know, membership drive. The members have responded well. You know, I guess, you know, they are also value seekers, and we've seen a much better store performance in East UP than over here. So I think that's the geography kind of a question on Spencer's. On Nietzsche's basket, again, you know, it is... The geographies are largely Bombay and Bangalore. And again, the decline has been more in Bangalore, where we've had some internal supply chain issues as well. But Bombay also, we've seen degrowth. So that's, again, I think both growth and degrowth has been secular. And we operate largely, for Spencer's, we operate in one geography, which is East and East UP. And in Nature's Basket, we operate in Bombay and Bangalore.

Yeah. Sure, sir. That was very helpful. Thank you. So, just one more question on the, so I believe there is some adjustment related to membership fees that is getting reflected in the gross margin line item. I just wanted some color on how, where, in which line item this is getting recorded, the membership pay.

So, the membership adjustment is happening in the net sales line, and for current quarter, it is about 5.5 crores.

So basically, what happens is whatever cashback you're giving to your members, that is, accounting treatment calls for that being reduced in your sales. And therefore, that has an impact on your margins. So therefore, your margins come down. So basically, the way to read it is also the way to read differently is the 17 point. 2% margin in quarter four, 17.4% margin in quarter four on Spencer's is actually there is a 120 basis point impact of the membership cashback. So, the real margin delivered by on the category intake side is 18.6%.

Got it, sir. Very helpful. Thank you. So, finally, we can ask for questions.

Sure. Thank you. We will take the next question from the line of Pariksit Gupta from Fair Value Capital. Please go ahead.

Thank you for the follow-up. Just on the management mandate, you mentioned it's for EBITDA positive, being EBITDA positive for the business. Is that with other income or without the other income?

It is with other income. But we don't expect any major, you know, the quantum of other income is actually coming down. What you see, and again, you know, what, what, don't look at it as a, this is not the financial EBITDA break-even, because the financial EBITDA we have, this is pure operational EBITDA, right? Which means that net of interest, you are not losing any money, right? Your cash losses are zero. That's, that's the mandate. And look, I mean, it's not that that's the mandate and once that's achieved, the management has done its job. I think that's the first milestone. You know, and I think then from there, it is a question of, you know, then there are multiple questions. How do we refinance to bring down your interest debt? Then will be the question of, you know, where do we drive growth? Because we can get to a bit of a break-even, but that's not the end journey. The end journey is how do you get to the 2-3% of a bit of a positive? And that would probably need, that second stage would involve evaluating whether it will be through offline, whether it will be through online, if it's offline, which geographical clusters, what's the right size of the store, what's the right location. So, yeah, I mean, that's, you know, that's the second and third mandate. But the immediate, it's not that the mandate is only for EBITDA break-even, the first.

That's helpful, but I'm sure that with the mandate also must come a deadline. So, what is, because we have tried to turn around businesses, we have been successful in parts of them, some parts have not been successful. So, what is the tipping point where the management or the board decides to actually maybe sell a part of the company?

But actually, these are management or board, you know, whatever they decide, obviously, you can't speak on an annex call. Anything, if a decision is taken, you would appreciate. We have to exchange the, inform the stock exchanges first. So, I don't think we'll be able to answer that part. As Anuj has really spoken about the initiative which we are doing to achieve that break-even. And since in the last couple of years our EBITDA numbers have moved up sharply, we really are looking forward in FY27 for a strong operating performance. I think that's what we should be looking at and discussing. Beyond that, I think it would not be possible for us to discuss at this stage.

I wouldn't say timeline, deadline, I would say, but yes, really the management ask is that in FI 26, 27, we break even at an EBITDA level, at an operational EBITDA level. And that would mean that, you know, whether it is offline generates a little bit of surplus to compensate for the online, or it will also mean that, you know, both it happens both across fencers and nature's basket. So that's the mandate. So, it's not a timeline which is two years away, but it is within this financial year, the task is to break even at an EBITDA level.

Okay, yeah, thank you. Thank you very much for clarification, and again, good luck for the current quarter.

Thank you so much, Parish.

Thank you very much. Ladies and gentlemen, we will take to the last question. And with that concludes the question and answer session. On behalf of MK Global Financial Services Limited, we conclude this conference. Thank you all for joining us and you may now disconnect your lines. Thank you.