Metro Brands share price drop 6% after Q3 earnings

In today's early trade, Metro Brands, one of India's leading footwear retailers, faced a 6% drop in shares falling to ₹1,140. The decline follows Q3FY24 earnings that fell short of street expectations. Reported a consolidated net profit of ₹99 crore for the quarter, marking a 12.4% decrease from Q3 FY23, attributed to increased expenses and a sales slowdown, also approved dividend and has set 31 January 2024 as the record date.

Financial Overview

On a positive note, the net profit showed 45% sequential improvement compared to the previous quarter, which stood at ₹68 crore. Despite the dip in profits, the company reported a 6.17% YoY growth in revenue to ₹636 crore. Notably, this marks the slowest growth since Metro Brands went public in December 2021 but stands as its highest-ever quarterly revenue.

During Q3 FY 2023–2024, Metro Brands opened 31 new stores, bringing the total count to 87 for the fiscal year. The company is on track to achieve its target of 100 stores for FY 2023–2024. This expansion aligns with Metro Brands' strategic plan for increased market presence.

Metro Brands signed a long-term partnership agreement with Foot Locker, Inc., the New York-based athletic retailer. This exclusive agreement grants Metro Brands the rights to own and operate Foot Locker stores in India, enhancing its position in the market.

Metro Brands retails footwear under its own brands like Metro, Mochi, Walkway, Da Vinchi, and J. Fontini, along with third-party brands such as Crocs, Fitflop, Fila, Skechers, Clarks, Puma, and Adidas. As of 31 December 2023, the company operated 826 stores across 192 cities in 31 states and union territories in India, solidifying its widespread market presence.

Metro Brands' shares delivered 44% return in CY23 and 93% in CY22. Currently, the shares are trading 128% higher than their issue price of ₹500, reflecting the company's overall positive performance over the years.

Final Words

Despite the recent share slump, Metro Brands remains committed to expansion and diversification, evidenced by the strategic partnership with Foot Locker. Financial results, though not meeting expectations, reflect sequential improvement, and the company's steady growth trajectory indicates resilience in a challenging market.