Shoppers Stop Limited (SHOPERSTOP) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Shoppers Stop Limited Q2 FY '27 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Ms. Deepali Kumari from Arihant Capital. Thank you, and over to you, ma'am.

Thank you so much. Good evening, and thank you all for joining us on the Shoppers Stop Q2 FY '27 Earnings Conference Call. Today, we have with us the senior management represented by Mr. Kavindra Mishra, Customer Care Associate Managing Director and CEO; Mr. Pankaj Chaturvedi, Customer Care Associate and CFO. We will begin the call with the opening remarks from the management, after which we will have the forum open for the interactive Q&A session. I must remind all that the discussion in today's earnings call may include certain forward-looking statements and must be viewed, therefore, in conjunction with the risk that the company faces. Please restrict your questions to the quarter's performance and the strategic questions only. Housekeeping questions can be dealt with separately with the IR team. I would now request Mr. Kavi Mishra for the opening remarks. Thank you, and over to you, sir.

Thank you, Deepali. Good evening, all. I'm joined with Biju and Mahesh in addition to our colleagues from the finance team; Pankaj, who is our CFO; JP and Rohit. We have uploaded the investor presentation on our corporate and Stock Exchange website. Let me start with talking about the current operating environment. The current operating and consumption environment, which started kicking in Q1 sustained the momentum through Q2. And I'm happy to share that the demand continues to remain strong. Both Rakshabandhan and Olam saw good consumer traction. And I'm happy to share that the run-up of Pujo in East and Dasara in key markets has been significantly strong, and I would comment on this in detail. Talking about the festive season, the start of the Pujo calendar for East market has been very good, and we are witnessing a healthy mid-teen like-for-like growth in our stores. Given the fact that we have a very strong base in East, these numbers are very encouraging. Similarly, the Dasara calendar to has shown a strong upsurge with a mid-teens like-for-like growth. Turning to our quarter 2 performance. Here are some of the key highlights. Given the background of festive calendar shift from Q2 last year to Q3 this year, I'm pleased to report that the results for Q2 have been quite encouraging and demonstrate the execution of the Shopper Stop 2.0 strategy beautifully. While on a non-GAAP consol basis, our revenues grew by 7%, and EBITDA grew by 6%, and as a result, we were able to turn around PAT from a loss of INR 7 crores in last year to a profit of INR 6 crores this year. This is GAAP also PAT recorded a positive swing from INR 20 crore loss in last year to INR 3 crore profit this year. Let me talk about the individual verticals now. Starting with an update on the departmental store business. We opened 4 departmental stores during the quarter, indoor in Ahmadabad, Jabalpur, [indiscernible] Patna and Chassis which means we opened total -- in total 6 departmental stores in H1. From an earlier guidance of gross store openings where we had mentioned that we will open between 9 to 10 stores, we are looking at 12 store openings this year. And in line with our strategy, these are upmarket so elevated designs, modern ambience and premium assortment. We'll be opening our seventh store in Pacific Mall in Jaipur, which is North India's largest mall in next week on third October. The like-for-like business for departmental stores grew by 2% this quarter with a total growth of 4%. Adjusted for the festive calendar shift because [indiscernible] rate shifted from September to October, the like-for-like growth was 6.5%. Our consistent focus on prevention and experiential retail continues to resonate strongly with consumers. Our customer entry grew by 1% for like-for-like stores and overall growth of 7.7%. We had the highest-ever additions to our first Citizen loyalty program with 2.5 lakh new recruitment. The premium end of our loyalty program, which is our Black Card program has reported the highest ever enrollment. We had 19,000 new recruitments and highest have renewals of 21,000, which is a renewal rate of around 66%, demonstrating deep value proposition from a consumer perspective, besides personalized service standards. The total loyalty membership base grew to 14.1 million. Total contribution this quarter was 84% with a repeat rate of 68%. Noticeably, our numbers across the loyalty program metrics continue to grow. What was especially heartening for us was the fact that with the posting change, we were also able to attract a new set of consumers and 37% of our bills were made by consumers who came for the first time in our stores. With constant focus, the premium portfolio contribution in stores improved by 390 basis points, and they stand now at an all-time high of 73% and the ATV for the quarter has gone up by 9%, which now stands at INR 5,471 showing core operational strength. Our personal shopper program, which is centered to our experiential retail strategy is now contributing 27% to our revenue, which is a growth of around 200 bps versus last year. Sales generated through personal shoppers grew by 13% with total sales reaching INR 349 crores for the quarter. In our quest for the premiumization and service experiences, we are resourcing the stores through more personal shoppers and we see this contribution reaching to 30% of revenue by end of the year. As a part of our provision strategy, we have always talked about the 5 power categories. They continue to outperform with the departmental stores. Watches grew 24% Y-o-Y. Handbag grew by 16%, credence by 13%, footwear by 9% and sunglasses by 8%. We're also seeing a very strong growth in fashion, and we believe that it all goes well for the coming festive. Now I will move on to the private brands business. Private brands continue to be a strategic key pillar for us in terms of operating differentiated ranges and covering the gap a set of categories. We shall continue to focus on driving productivity and improving profitability through premation and specializing discounts. Despite reducing the number of brands and reducing the inventory by 26%, I'm very happy to share that we have seen a significant uptake in the profitability of the private wealth concept. We had also announced a partnership with [indiscernible] lifestyle brand from the Stockpile and collab. It brings together 2 iconic names in Indian menswear to deliver exceptional quality, contemporary style and greater value for our consumers. I'm very happy to share that the initial results have been quite encouraging, and we expect the same to accelerate further. Our Beauty business continues to deliver encouraging momentum and as an update of the same. The overall Beauty business, including global at duty delivered a revenue of INR 367 crores. During the quarter, registering a healthy year-on-year growth of 18%, led by Fragrances, which grew by 35%. With consistent efforts and initiatives, including MAC royalty program and pushing exclusive services, Estee Lauder business grew by 4% like-for-like for the second consecutive quarter after LF decline for the last 4 consecutive quarters. Our Beauty distribution business continued its strong growth trajectory, generating revenue of INR 168 crores, which is equivalent to INR 270 crores of GMV with a stellar 59% growth year-on-year. We opened 2 boutiques in this quarter. And with this total, we now have 11 boutiques, 4 Armani, 3 NARS, 2 Shiseido, 1 Prada and 1 Creed. We'll continue to accelerate scale through ongoing capital allocation, which has generated healthy return on capital employed. The performance underscores beauty as a strategic pillar for Shopper Stop aiming high growth through strategic partnerships, digital acceleration and store expansion. Let me throw some light on initiatives starting with Intune business. Our continuous commentary last year on Intune was that we need to stabilize the operations, improve the unit economics and liquidate the whole inventory. Before we start seeing the growth in business. I'm happy to share that the execution of the business has started showing initial results. We recorded a revenue of INR 72 crores in June with a festive adjusted like-for-like growth of 6%. Just like as in shopper stock, the start of the share in the festive calendar has been very positive, and we are growing mid-teens in Intune as well. Relentless focus on inventory freshness to in-season clearance and online accessibility helped us reducing inventory by INR 33 crores year-on-year. Business is currently operating at an inventory level of 16 weeks cover. We are confident of operating with similar discipline in coming months, driven by improved full price sell-throughs, robust supply chains and more frequent drops. Due to these controls, we are entering the festive with a high freshness in merchandise and we believe Q3 will be a very strong quarter for us. Our repeat customer business improved to 49%, while the ABV is improved by 6%, and the items per transaction were at 3.5. Given the fact that in Q1, our repeat customer mix was 47%. This quarter-on-quarter movement is a very good news for us. Led by improvement in tune productivity and integration of xsbeauty.[indiscernible] .com, we could reduce the EBITDA losses in new businesses by INR 8 crores in Q2 and INR 12 crores in H1. We expect the losses to reduce further in Q3 and Q4. We also believe that we'll be able to share our expansion plans to include in our Q3 earnings call, something which has often been asked to us. Moving on to the e-commerce business. Our investments and efforts over the last year on improving the UI U.S. and integrating the sites have started showing good results. We grew by 52% over Q2 last year. Interestingly, we are seeing the impact of [indiscernible] online as well. Our average bill value grew by 9% and power categories like watches led growth, reflecting the premium behavior of our consumers across both offline and online. On store expansion and financial discipline, we continued our prudent capital allocation strategy focused on enhancing returns and reinforcing balance sheet strength. During the quarter, we opened 7 stores for departmental stores in Beauty boutiques and [indiscernible] Max shop-in-shop. The total inventory was optimized by INR 78 crores year-on-year. I'd like to share how we are leveraging AI across the business. Over the past couple of years as an organization, we have been working a lot on both machine learning language and AI in various parts of our business. Within Shoppers Stop, we look at AI 2 perspectives, reversion and cost. Under revenue generation, our focus is on personalization and targeting the consumer activation. We have just rolled out the Personal Shopper app version 2.0, which uses deep insights for enhancing the consumer experience. We have also rolled out the position of opening for consumers in the stores based on their shopping behavior. We believe that as both these projects mature, they will be very meaningful in our consumer experience journey as well as driving the like-for-like growth. Under the cost mitigation, our focus is on sharpening the back-end systems and processes. Inventory planning and optimization through demand forecasting, which started with private banks has now been extended to INTUNE as well. And the efficiency being pushed will be seen over the next few quarters. Finally, let me reiterate our strategy going forward. We'll continue to accelerate provision. We'll continue to deepen our strategy by strengthening partnerships with leading brands and expanding our prime portfolio, launching new brands and enhancing the premium shopping experience through new store openings and key renovations. Building on the momentum in consumer walk-ins, we will continue to elevate the Shoppers Stop experience through innovation, GTM and aspiration brand positioning. We'll continue to strengthen our footprint in premium malls and high potential locations, levaging our growing preference among leading mall developers and reinforcing our portion as the departmental store of choice. We'll continue to work and reduce the further losses in INTUNE in H2 and finally, beauty distribution is something which is a core target for us, and we'll continue to expand the portfolio. We maintain our estimated revenue growth of mid-single to slightly higher in FY'27 and healthy expansion of profitability has already business in H1. With this, I would like to open the floor for an interesting Q&A session. Thank you.

[Operator Instructions] Our first question comes from the line of Avi.

Yes. This is Avi Mehta from 361 Capital. Sir, I just wanted to kind of get your thoughts on one aspect. For the last few quarters, you've been on this journey of balance sheet health improvement, you've been more or less done or closer to be finish line, if I may say. Just wanted to get your thoughts, how do you see or what is required for us to up the ante on store addition, especially in, say, INTUNE and the departmental stores. So your thoughts on how do you see it, while you've increased from 9 to 12. Is this something that can move to, say, 20, 30? And what is required from that to kind of happen -- that will be useful, point number one. The second question, sir, that I also wanted to kind of check with you is on the Beauty side. Now we've been missing this question about online versus offline in the Beauty segment. Your thoughts on what kind of is -- because we started with a very strong kind of situation over here, the pace of growth, how do you see this panning over the next 3 years? How large do you see your market share behaving? Those are the 2 questions could kind of

Thanks, Avi. Great questions. Let me start with the first, which is on the departmental store expansion thought process. So as you rightly mentioned, at the start, we had spoken about opening close to 9 stores and now that number has tended to 12. How we are looking at the departmental store business is because as we move into a more premiumization story, we need to ensure that there is a certain size of the store and a certain catchment of the store. And when I say cashment doesn't mean that we can -- we only need to be in the jewel of the world. We just opened chassis and we opened Jabalpur and both of them for their was our premium and they are doing well. Currently, as we speak, our sense is that the number of store openings is also a function of the malls and the locations. So we are in the process of building a very healthy pipeline of the same. Our guidance would be around 10 to 12 stores, of which we have mentioned 12 this year, a similar number for the year for the coming 2 or 3 years. If you are able to get more options based on the [ patent ] land availability. We are very, very eager to do that because what we are seeing is that clearly, the concept is working well in terms of the differentiated positioning which we have and the kind -- the way consumers are reacting to our product offering and service offerings. So we are quite bullish on it. It's a function of getting the right departmental store space and location. So from our side, I think we are quite open to open more stores. It's a function of how we are able to close the thing. In terms of Intune, as I mentioned, last year, we were talking about getting the operational piece, right? And I think as a team, even at the start of the year, we have said that we want to wait 2 or 3 quarters see the performance. And then fix the operationing pieces, fixed supply chain takes the merchandising. And once those pieces are fixed unit economics is something which we have cracked, then we would go for the next set of expansion. I think a very critical quarter for us is Q3 as we speak. And I would be able to answer your queries in a much stronger way and a more positive way that what is our expansion plan on how we are looking at INTUNE for FY '28 and going forward. Right now, I think our focus is to just ensure that we deliver on the momentum which we have got right now, yes. On the question of Beauty, I think, as I mentioned, Beauty is something where we are seeing strong acted growth. So if I talk about beauty businesses, there's a retail business is a distribution business. In retail, we are seeing the way stores are growing. We are seeing a growth there as well. We're also excited about the distribution business where we see that, I think we are more or less going by 50%, 55% year-on-year, and we will continue to grow in segment going forward. And if you look at our distribution, we are very strong in the premium end of play and fragrances is something we are very, very strong and it's doing well. For us, ELCA, which was struggling for some period of time has actually turned around and it has become positive. And again, we are talking to the business there and trying to develop on that piece as well. I would request Biju also to maybe speak about what he feels about and how we see the distribution business in this kind scenario.

With regards to the distribution business, as you could see from the numbers, we have been able to reach to a strong base. Obviously, the company is still very young. But in the last 3.5 years, we have been able to grow quite strongly. And also the ability to work with partners that are, let's say, serious long term and who believe in the Indian market. So together, we think that we should be able to continue to create momentum and the belief that international fraternity puts in this country as a big opportunistic opportunity market, and this is where we are working about.

Got it, sir. Sir, if I may just clarify one bit on the beauty side. So do you think the path to better profitability may entail need for investment in working capital to kind of better -- as we kind of use data. Is that the way I should see this margin profile, this is just an operating cost leverage story?

So as far as addition of portfolio and brand is concerned, yes, we might need infusion of some capital, and you will see in our cash flow statement that we have invested in the distribution business. As far as the retail business is concerned, it will be pretty much BAU. Any kind of investments required are self-funded. And if you see the kind of optimization that we have done in our overall inventory levels that working capital reduction is also helping us over there. So whatever growth that we are achieving right now, we expect to achieve that. And if there is some requirement of capital, I would say that there are no concerns to it. We are [indiscernible] for that.

The next question comes from the line of Avinash Karachi with Motilal Oswal Financial Services.

Congratulations on good set of numbers. My question is regarding tune. Intune has seen a couple of store closures this quarter. So what are the learnings from these totals? What is the commonality amongst these closures? And do we foresee any further closures as well.

Thanks, Avinash. So I think if I talk about the store closures, one, yes, there are obviously operational learnings for us in terms of the spaces which we have chosen for the combination of locations and catchments. I think for the mall is especially assumes not really, really well. So the 2 pieces where we have closed our primarily high street, this is something which we are loaning on. On the other hand, we also have opened stores of INTUNE but I think that's a small number. What we see is that as the brand matures over a period of time, we will get that strength in the high streets as well. While malls are doing well for us. I think HiSeq is something which we are working on driving through both marketing and repeat customers. So I think that the data, which we shared with you in my speech that 49% of my consumers are coming back and again and buying is a very, very healthy number. And I think as we build that repetitive consumer book behavior. I think we will be able to drive both high streets and small SPS stronger.

Okay. Got it. Can you speak something on the back end of the supply chain changes that you have done for INTUNE because of which you'll be expecting a better performance going forward?

Avinash, the back-end changes have happened at 2 fronts. One in terms of getting the supplier base, right? So working with more reliable suppliers to ensure that your OTIF welcome better. I think that's 1 of the key things which we wanted to drive to ensure that the product is there on time when it is required. The second thing is on the automation. We -- 2 years back, we launched new within Shoppers Stop private brands, and we saw a very good positive impact there. This has now got implemented in June, and that's what I was saying that, that's something which we'll keep on driving there. I think the third is we wanted to have more frequent drops because the focus on freshness is super important in a category like this, where at such an then stage, 49% of the people are coming back and shopping, right? So I think that's the other thing which we are trying to drive. So vendor base, ensuring that the automation takes care of the deliveries and focus on [indiscernible] which means more drops. These are the 3 fundamental things which we have driven to ensure that engine productivity [indiscernible] and finally, I think the other project which we are talking doing right now is to ensure that we are able to reduce the tax from design to flow, whether it's taking bets on great fabric to ensure that we are able to get the output faster. I think there's another project which we are working on this. But that's something which is WIP. The other things which I have told you have already been implemented over the past few quarters, and we are now seeing the results of that.

Just double tapping on this one. How frequently are the launches currently because if we speak of some -- one of the competitor who is doing well, every portfolio, the test tool will be with the newer products, the product catalog wise? So how frequent is it the similar number for this?

So we are ensuring that right now, we are -- we have moved to a weekly updation of the merchandise. And typically. So obviously, we are not doing the entire store, but at least 100 to 150 on lines as we call them, are dropping into the stores every week.

And lastly, is there any pressure in the interval

Sorry, what pressure?

Gross margin, raw material cost pressure. And have you taken any price hikes to offset that?

So we don't see that pressure right now with Intune. We have not taken a price hike, but I think in our mind, we were artificially having a ceiling of 999. When we started testing out this last year at the start of this year with a line of 1 to 9, we realize that both the obviously the return on loss, which is return on sales as well as the throughput, which is the sell-throughs are very high. So we are actually building on a nice product, which is not necessarily a price hike, but a better product and testing out prices of INR 129 and INR 149, and we are seeing very, very good success there. So to answer you, no pressure on the margins as of now. And we are testing -- we're also seeing a higher ASP doing well for us.

Got it. And secondly, regarding the departmental stores. So you have raised the guidance on the departmental store additions. So wouldn't it be a challenge finding such a big area across the country and whether these stores are going to be in the existing cities? Or are you tapping newer cities for this expansion?

Okay. No. So that's why I think when we asked this question about can we open 20 stores or maybe higher stores. So the answer was that we are trying to build a healthy pipeline. Over the next 3 years, we have a visibility of at least 12 stores every year in terms of addition. But we keep on doing. So I think 2 or 3 things are happening, Avinash. One is our teams are working on building the pipeline. The second is, a lot of departmental stores, which got signed in 2000, early 2000s are all coming for renewal, right? And those might be in the places where we currently didn't have a store. But given the fact that we are the only department store operator who is now working on premiumization and building the -- and attracting that kind of consumer, which the premium was spot, we will also get spaces from our competitors. We did one in Pune, where we opened a store now, which was with somebody else, and we got that. So I think that will keep on happening. Our size is something which we have to have because size is important. As I mentioned, if you premiumize you should have a nicer walking spaces. You need to give respect to the brand in terms of cases they want so we'll keep on working on this. When I say when you are opening stores, we are looking at a combination of metros, Tier 1 and Tier 2. In fact, the last 2 stores which we opened were in Jaffi and Jabalpur and the exon which you're opening is in [indiscernible] which is where we already have 3 stores. So we'll always keep on having a mix of newer cities and more so in the same city. And I think the response has been encouraging. See, we know for sure, and we are seeing this interaction with all the leading developers now that we are the partner of choice for them. And I think that this whole reporting and Shoppers Stop 2.0 helped us to achieve that. And as we go up, there are very few operators who work on that kind of a thing. And I think that's where we are seeing a positivity there.

Okay. Got it be -- there's a lot of things -- and one last question, if I may ask. So we are most likely to be debt-free by the end of this year. So with the cash that you'll be generating, what is the plan to deploy data? Is it be adding more stores? Or how are you looking at it?

So Avinash, good question. while we'll achieve our balance sheet robustness that we've set for ourselves. The cash that is generated and all our internal accruals will be used for expansion, expansion in a healthy profitable manner. We just mentioned about 12 stores per arm. At the same time, we also discussed how Intune is on course of profitability. So there will be some investments required whenever we get right opportunity for Intune as well. So we will grow our distribution business also very rapidly. You've seen the kind of CAGR that we have achieved on the distribution business. So all these areas, areas of profitable growth, they will need some kind of capital investments, and we'll have internal accruals as well as the balance sheet robustness to fund for that growth.

The next question comes from the line of Abhirav Bandari with Equitas.

My first question is on from the distribution JSS. Since it's a 3-year point with or brand, -- the orders are kind of signatory going forward is scale since the lot of competitors out there like Knight, [indiscernible] et cetera, what needs those brands tasty and not that just to also to understand this business going forward? Can we see some competitive pressure for the bit of the newer contracts, which we later margins or market share?

Yes, great question. So if you think about it, we were not in the distribution business at all. The sheer fact that we were able to sign contracts with very powerful groups and brands globally, confirms that we are doing a few things right. While we don't want to underestimate the competition, and I'm sure competition is here to stay. We believe that certain beliefs and thoughts that we have is making us a very, very preferred partner for the country. And yes, contracts depends largely, 3 years, some of them 5 years, and some of them beyond that. Contract is obviously a binding factor. But what is more important is to be able to do a good job for the brand as they see fit with local adaptations. So all these brands have got very, very strong capabilities in terms of market knowledge, expertise, exposure, marketing, mine, et cetera. But what makes us quite different as we believe, is our ability to do a lot of things locally. Because we position ourselves as the experts in India. And for us, with the legacy of 30-plus years of retail, consumer behavior, and exposure in beauty, we think we are quite qualified, and we are able to continue this robustness going forward. Having said that, we are quite cognizant of the competitive landscape. We respect the competition. because as a distributor, we work with all these partners. So our philosophy is just to be very, very unbiased, very, very fair to all partners that exist in the ecosystem.

Okay. So my second question is on India.

Ma'am, I'm sorry to interrupt. Could you please use your handset? The voice is not coming clear.

Yes. So in terms of an order now on the quarter-on-quarter as increased by INR 5 crores. So just wanted to understand that we be done with our closures and inventory rationalization. I wanted to understand where is this incremental loss coming from? Second, what kind of further store closures are we looking for in the current year? And third would be, are we still on line to close this year on INR 450 crores losses?

I think you are referring to Q1 versus Q2, if I understood your question correctly? So see, that will not be the right comparison. Okay, because of various reasons, every quarter is different in nature. The right way to compare is Q2 of this year versus Q2 of last year, if you see our new ventures performance update, we actually reduced the losses by 33%. So I think that would be the right comparison. That's what we have done in H1. As far as your store closure question is concerned, Kavi did mention, but as we continue to improve our margin profile, there may be some part of the team that we have to cut down. At the same time, when we get the right opportunities, we'll open new stores as well. So we are not ever to opening new stores. We've added 2 stores in this financial year for India as well.

So on a net basis, we seem to initiate in the [indiscernible]

As of now, yes. But as we mentioned, as far as interview is concerned, our strategy is to fix the margin profile and then ramp up. But in the process, if we get an opportunity for a right store, we will open it. At the same time, if we find that any store is where we are losing money, we'll be bold enough to shut it down as we --

And Abhirav, as I mentioned, please wait for Q3 because that that's when we will give an update on this for us. Q3 is when we are talking about the Q3 results, that is when we will talk about the expansion plan going forward.

Coming to Q3, you continue to less effective let we are seeing the mid-teens kind of a growth. So that would be 100% coming from ASP hike or that will be a mix of volume?

So are you asking me that is the hike coming from price net on...

Price led or volume level, what will be the mix of the same?

No, no, it's a -- that 15% growth is -- or the mid-teen is a mixture of both. So it is around 7% for ASP and the balance 8% because of volume. So we are -- what we are seeing is that we are able to sell more merchandise and with a higher price.

This will be for the first 2 weeks, right?

No. So actually, for Pujo, we have a 6 weeks this thing. And back as we speak, the data I'm talking about to use at 5 weeks over. So this actually is a very, very strong data. It's not a 2-week data. for Pujo, the Pujo week take till the [indiscernible] So all practical purposes, now we have done 37, 38 days, and the mid-teen growth is coming from there. The [indiscernible] number, which I told you is also a 4-week data. And right now, we are in the last 4 days. So in both the cases, the mid-teen number covers a fair bit of time taken by the stores to see how we are performing.

Got it. In terms of overall departmental stores, are we see new stores with to bring that total to 12 for the year. What kind of [indiscernible] we seeing there?

So we have Avina,we have opened 6 stores, and we will until 31st or till 30th September. We'll open 6 more stores this year. We are looking at a 1 or 2 store closure.

Okay. And then do we see any cost getting optimized or reduce? Like what would be a one-part that old fixed cost meters would be reduced for that.

So what we are doing is we are running a very strong project to either turn around a few stores which are loss-making maybe because the market is shifted or whatever other thing is other way, I think if you look at the way we are managing costs quarter-on-quarter, that's type. So I think we have been quite efficient cost. In fact, our OpEx is for more factory purposes, it is flat. So I think looking at a full year cycle and with stores coming in, I think it's a very good, strong tight cost optimization and cost control without compromising on the consumer experience.

And currently, we're reading a lot of new better intent for the more high increase because the vacancies, there's no supply as such. So are you seeing a similar trend when you are saying that you are adding more new department stores, et cetera, have you seen the kind of incremental and versus your average rental value and what..