Metro Brands exits sub-Rs 1000 shoe category after fall in sales
Metro Brands was not immune to the weakness in the less than Rs 1,000 shoes category. This category has been a challenging one for the company, and it accounted for only 13 percent of sales and was expected to decline further.
Metro Brands has not been immune to the weakness in the less than Rs 1,000 shoes category post the pandemic. The category has been a challenging one for the company and has accounted for only 13 percent of sales in the last reporter quarter with expectations of further decline. It's noteworthy that peers like Bata India and Relaxo Footwears have reported similar pain in the segment.
In response to this challenge, Metro Brands has taken the bold step of exiting the less than Rs 1,000 range altogether. While this move may seem risky, Joseph is confident that it is the right decision for the company.
Speaking to CNBC-TV18 after the earnings report, Nissan Joseph, CEO of Metro Brands said that weakness is seen in the sub-Rs 1,000 shoe category.
He said, “I do not think we are immune to what is going on below the Rs 1,000 segment. A lot of that is also because we have exited it driven by 700 basis point goods and services tax (GST) increase. So, anything that was on the cusp of Rs 1,000 is now over Rs 1,000.”
The multi-brand footwear retail major reported a decent set of earnings for the December-ended quarter with revenue growth of 24 percent on a year-on-year basis. In fact, it also opened 48 new stores this quarter, taking the total store count to 720 stores.
The company says that it is now focused on cleaning up the existing inventory of Fila, one of Metro Brands' most popular brands. By doing so, the company hopes to create a stronger foundation for growth in the future.
According to Joseph, there is a strong opportunity for Fila to grow, particularly in the premium segment of the market. He noted that the brand had been doing well in this category and that there was still room for further expansion. In fact, Joseph revealed that Fila's premium products had been performing better than expected, which was encouraging news for the company.
Of course, it will take time to see the results of Metro Brands' strategic shift. However, Joseph is optimistic about the company's prospects. He believes that by focusing on higher-end products and cleaning up inventory, Metro Brands will be in a better position to weather the challenges of the current market and thrive in the years to come.
Also Read | After highest-ever quarterly store addition, Metro Brands has set this target for itself
The stock was up 0.04 percent in last five trading sessions and 1.40 percent in a month.
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