V2 Retail to add 35-40 stores in FY25 on strong demand

In FY23, we did an average ₹665-per-sq-ft monthly sales. This year (FY24), the average per square feetsales increased to ₹850. In the first nine months, we saw same-store sales growth (SSG) of almost 29 per cent and in the fourth quarter, we saw another 40 per cent rise. The best thing about this was we saw the growth across regions. There was no specific cluster or region that did much better than the other. That means there was a huge fundamental change in the business itself, which was driven by product development. We have seen very high growth across geographies. But Karnataka was especially better with 50 per cent SSG in Q4.

What we did was, we reallocated space, according to the sales performance of categories. We saw that certain items, for example, half-sleeved casual shirts sell more than full-sleeved shirts in the South. Whereas in Bihar and UP, full sleeves do better. So we had assortment and space allocation changes. The biggest change was almost 35 per cent of our products in the store was exclusively of V2, designed by our in-house team. This used to be zero two years ago.

We’ve seen much higher growth in fashion products. Earlier, fashion used to contribute only 10 per cent to our sales, now it is 25-30 per cent.

As you can see, from our results, this year has been a year of turnaround for us. Now we feel that we have been able to establish a very strong model. The new stores that we are opening, they’re getting a very good response. All the new stores have turned around, we don’t have a single EBITDA-loss making store.

I would say that value fashion is growing faster. There’s been a bit of a pressure on the premium segment, but I think one of the biggest reasons for that is also because of the valuations. The difference between value fashion and premium, more than the quality and the product is the price multiple. In a premium brand, the price cost to maximum retail price (MRP) multiple is almost four-five times. So a premium retailer will buy a good garment for ₹200, and sell the same for about ₹1,200-1,300, whereas that markup for a brand like us is only 55 per cent, which is the lowest in the industry. So for the same product of ₹200, we sell in our stores for ₹310.

This year, we plan to open 35-40 stores, that will be about 4 lakh sq ft. But we’re not chasing growth blindly without focusing on profitability. For example, we’ll open the first batch of 20-35 stores and if we feel they’re doing well, as per our standards, then we will go for the next spurt of growth. The capex for the store expansion would be about ₹40 crore and the inventory required for that will be another ₹50 crore.. so, we are looking at about ₹90-100 crore investment.

We will start an omni-channel strategy in two-three months. We had ecommerce about two years ago, but that was without omni channel. We saw that it was very hard to be profitable with our average selling price. We did not want to have dual pricing of the same product for online and offline customers. So then we thought about investing in the omni-channel technology, and now the testing and the implementation is going on.