Indian footwear retailer Metro Brands’ Q3 profit hit by slowing sales

BENGALURU (Reuters) – India’s Metro Brands, which sells shoes from brands including Fila, Crocs and Mochi, reported its fourth straight drop in quarterly profit on Thursday, hurt by high inventory costs amid slowing sales growth.

The company’s net profit fell 12.6% to 978.1 million rupees ($11.8 million) in the October-December quarter, missing analysts’ estimate of 1.22 billion rupees, as per LSEG data.

The footwear retailer’s inventory-related costs — which account for about 60% of its total costs since it does not manufacture its own products — have been steadily increasing for most of the year.

They rose 5% in the December quarter and, along with higher employee and finance costs, pushed total expenses up about 12%.

Metro Brands is the first among listed Indian footwear retailers, including Bata India and Relaxo Footwears, to report its results.

Its revenue rose 6% to 6.36 billion rupees in the quarter, logging its slowest growth rate since the company went public in late 2021. Metro did not give details on its sales for the period.

The company opened 31 new stores in the quarter, bringing the net stores added this fiscal year to 87.

Metro Brands, recently struck a deal to operate Foot Locker stores in India, giving it access to brands such as Nike and Adidas in a move that analysts say will further propel its growth.

Metro Brands’ stock price has fallen 8.7% since that deal was announced. Shares closed up lower at about 1% ahead of the results. ($1 = 83.1060 Indian rupees)

(Reporting by Navamya Ganesh Acharya and Varun Vyas in Bengaluru; Editing by Savio D’Souza)