Bata India Limited, a leader in the Indian footwear industry with a heritage of over 90 years, operates a vast retail network across metros, tier-II and tier-III cities. Known for trusted quality and affordability, Bata has evolved its portfolio with brands like Floatz, Power, Hush Puppies, North Star, and Bata Ladies. The company continues to focus on store expansion, value-driven offerings, digital channels, and premiumization while optimizing inventory and cost structures to strengthen profitability.
1. Overall Performance
- Q1 FY26 was tough but slightly better than the previous quarter.
- Revenue was flattish (-0.3% YoY) at ₹942 crore.
- Gross margin declined by 133 bps due to inventory clearance.
- EBITDA margin stood at 22.9%, while PAT was 5.5% (down 112 bps).
- Exceptional items:
- VRS cost for factory efficiency.
- One-time gain in base year (Faridabad land sale of ₹134 crore).
Despite challenges, management emphasized that operational efficiency and a strong P&L backbone position the company for improved profit growth once demand picks up.
2. Strategic Initiatives
A. Store Growth & ZBM (Zero Base Merchandising)
- 200 stores transitioned to ZBM by June 2025 (added 50 in the quarter).
- Target: ~50 stores per quarter, possibly more.
- Key outcomes:
- 33% line reduction → reduced clutter.
- 22% inventory reduction → better ROIC.
- Higher availability (450 bps improvement) → better consumer experience.
- Improved NPS & Google ratings (4.6).
- Better same-store sales vs control stores.
B. Value Proposition Focus
- Stress continues in the mass/middle segment (<₹1,000 category).
- Initiatives showing strong traction:
- Bata Ladies (₹399/₹499 price points across 800+ stores) → checkouts doubled from 3.5% to 8%.
- ₹799–₹999 segment checkouts improved to 6.4%.
- Power Athleisure at ₹1,699–₹1,999 → 6.6% checkout.
- Plan: Expand these value-driven offerings across 1,200+ stores.
C. Portfolio Evolution
- Floatz:
- Growing 30%+ YoY, ASP 1.2x store average.
- New collaborations (Disney, tech-enabled designs).
- Campaign: “Comfort Never Looked So Good” with Prajakta Koli.
- Power (Athleisure & Premium Sneakers):
- New launches priced ₹2,500–₹4,000+.
- 4.5% checkout rates at high ASPs.
- Expanding Easy Slide collection & premium Stamina running shoes (>₹4,000).
- Hush Puppies (Premiumization):
- 150 EBOs (mix of COCO & franchise).
- Strong traction from “Office Sneakers” campaign with Vir Das.
- Brand refresh – 36 stores renovated with premium concept.
3. Inventory & Agility
- Overall lines reduced 25% across network.
- Aged inventory reduced 23%.
- Top article availability +7%.
- Total inventory down 16% YoY, despite seasonal buildup.
- Stock turns improved to 2.1x (TTM); target 2.5x in next 12 months.
- “Customer First” project to further improve agility & forecasting.
4. Store Network & Expansion
- 644 franchise stores (expansion momentum improving after Indo-Pak disruption).
- Target: 30–40 franchise stores per quarter.
- Multi-brand outlets (MBO/KRO): 1,500 (up by 300 YoY).
- Long-term guidance: 130–150 new stores annually (80:20 franchise:COCO).
5. Other Highlights
- Digital/E-commerce:
- Fastest-growing channel.
- New Bata App launched → 10,000+ downloads in 10 days.
- Focus on profitable growth, not discount-driven sales.
- Marketing Campaigns:
- Floatz – Comfort Never Looked So Good (Prajakta Koli).
- Hush Puppies – Ease Please (Vir Das).
- Bata – Make Your Way / Tropical Breeze Collection.
- Awards: Best Workplace Culture, etc.
Question and Answer Session Highlights
Q1: Gross margins declined despite premiumization. Why?
A (Gunjan Shah): Clearance of aged/discontinued inventory dragged margins. Most of this is now behind us, so margins should improve going forward.
Q2: Despite many initiatives (ZBM, portfolio revamp, digital), revenue growth is weak. What’s holding it back?
A (CEO): Stress in lower price points (<₹1,000) and sluggish MBO channel. Initiatives in mass/value segment are showing traction, which should support growth ahead.
Q3: EBITDA margin has fallen compared to historic 16%. Any guardrail on margins?
A (CEO & CFO):
- Margin levers: gross margin, same-store leverage, and corporate cost control.
- Inventory cleanup will aid gross margins.
- Same-store growth is critical to fixed cost leverage.
- Structural cost efficiencies already in place; ruthlessly cutting excess costs.
- Franchise model is EBITDA accretive.
Q4: Feedback suggests Bata stores are understaffed. Any action?
A (CEO): Staffing is centrally monitored and regionally empowered. Some gaps may exist; we will address specific cases if highlighted.
Q5: Why is Bata struggling with topline growth despite footwear being essential and competition rising from D2C brands?
A (CEO):
- Middle-class consumers still under inflationary pressure.
- Need to reinforce value-for-money positioning.
- Online shift is structural; Bata app + e-commerce investments will capture this.
- Product design upgrades (e.g., Floatz) targeting younger demographics already showing success (₹200 cr annualized run rate).
Q6: Why is ZBM rollout slower than guided (194 stores vs target 300)?
A (CEO): Early over-aggressive rollout caused turnover disruption. Now rollout paced at 50 stores/quarter to avoid blackout periods, aiming for 65–70 going forward.
Q7: What happened to Sneaker Studio initiative?
A (CEO): Still active in 800 stores. Future focus will be on portfolio expansion under Sneaker Studio (Power, Bata, North Star) rather than just panels.
Q8: Why slow COCO expansion and store closures?
A (CEO & CFO):
- Ongoing consolidation of underperforming stores.
- 70–80 gross additions annually, net impact moderated by closures.
- Store closures typically improve margins by 40–50 bps, but offset by new store gestation.
- Closure process continuous, but pipeline of red-listed stores is shrinking.
Q9: What about volume and ASP growth in Q1?
A (CEO): Both flattish. Impacted by disruptions in first half of quarter. Expect improvement as initiatives scale up.
Q10: What’s the franchise contribution today vs pre-COVID?
A (CEO): Currently 12% of turnover, vs less than 3% pre-COVID. 60% of new stores now opened by existing franchise partners.