Summary
Aditya Birla Lifestyle Brands Limited - Q3 FY26 Earnings Call Summary Tuesday, February 03, 2026 4:00 PM
Event Participants
Executives 3 Ashish Dikshit (MD), Dharmendra Lodha (CFO), Vishak Kumar (DMD & CEO)
Analysts 8 Ankit Kedia, Archana Menon, Devanshu Bansal, Gaurav Jogani, Jay, Kunal Bhatia, Rajiv Bharati, Sameer Gupta, Videesha Sheth
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹2,343 crores | +10% YoY; Driven by 9% growth in Lifestyle and 13% in Emerging Businesses. |
| EBITDA | ₹431 crores | +21% YoY; Margin expanded 180 bps to 18.4% due to strong operating leverage. |
| PAT (Reported) | ₹69 crores | +15% YoY; Includes one-time exceptional labor code impact; Normalized PAT up 66% to ₹100 crores. |
| Lifestyle Brands Revenue | ₹2,002 crores | +9% YoY; Supported by 5% LTL growth and highest EBITDA margin (20.6%) in 4 years. |
| Emerging Businesses Revenue | ₹341 crores | +13% YoY; +19% excluding Forever 21. Margin improved 790 bps YoY. |
| Net Debt | ₹800 crores | -₹200 crores QoQ; Management targets additional ₹75-100 crores reduction by FY-end. |
| Store Footprint | 3,300+ stores | +90 stores added in Q3; Spans 4.8 million sq. ft. across 785+ cities. |
| LTL Growth (Overall) | 6% | Sustained growth despite festive shift and reduced wedding dates in December. |
Geographic & Segment Commentary
- Lifestyle Brands (Louis Philippe, Van Heusen, Allen Solly, Peter England): Revenue reached ₹2,002 crores with a record 20.6% EBITDA margin. Growth was driven by product upgrades in wedding categories and a 5% LTL increase. The segment added 50+ stores in Q3, focusing on larger formats and impactful retail experiences.
- Emerging Businesses (Reebok, Van Heusen Innerwear, American Eagle): Segment grew 13% YoY (19% on comparable basis). Reebok delivered 20%+ growth and has doubled its network since acquisition to 200+ stores. Van Heusen Innerwear saw a strong recovery with double-digit growth and halved its operating losses.
- Geographic Trends: Small-town India outperformed urban centers this year with a 13-14% same-store growth (SSG) in Tier-2/3 markets. Urban IT-heavy markets like Bangalore and Hyderabad showed relative moderation compared to the high-growth trajectory of smaller towns.
Company-Specific & Strategic Commentary
- Network Expansion: Management plans to add 150 net stores in FY26, with a pipeline of 120 stores for FY27. The goal is to deepen presence in micro-markets through both COCO (Company Owned) and FOFO (Franchise Owned) models.
- Product Innovation: Focused on “Bridge-to-Luxury” (e.g., Philippe by Louis Philippe) and expanding women’s wear in Van Heusen and Allen Solly. Reebok is shifting mix toward performance/running footwear (carbon-plated shoes) and increasing apparel contribution to 36%.
- Operational Efficiency: Realized significant margin expansion through reduced selling expenses and supply chain cost initiatives. The Innerwear business is being streamlined via “predictable replenishment” models to improve distributor ROI.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 12% Steady State | Targeted annual growth through 6-7% LTL and 5-6% from network expansion. |
| Emerging Business Mix | 25% of Total Revenue | Targeted within 4-5 years as Reebok and Innerwear scale exponentially. |
| Net Debt | Near Zero | Expected within a 3-year timeframe while maintaining aggressive growth capex. |
| Innerwear Profitability | Break-even / Profitable | Management expects at least one profitable quarter in FY27. |
Risks & Constraints
| Risk | Context |
|---|---|
| Consumption Volatility | Shift in wedding calendars and festive dates impacted December demand; early Q4 performance remains dependent on wedding dates. |
| Competition | D2C brands and private labels are increasing aggression in the Innerwear and Athleisure segments. |
| Capital Allocation | High capex (₹330 crores in FY26) for renovations may slow the pace of debt reduction in the short term. |
Q&A Highlights
Lifestyle & Demand
- Question: What is the divergence between primary and secondary sales? (Archana Menon)
- Answer: Secondary sales remained robust in department stores; wholesale/e-commerce corrections are complete, leading to a steady double-digit growth trajectory (Vishak Kumar).
Innerwear Recovery
- Question: What led to the turnaround in Innerwear after several subdued quarters? (Sameer Gupta)
- Answer: Retail LTLs exceeded 25%, inventory freshness improved following corrections, and losses halved due to better fixed-cost leverage (Vishak Kumar).
Capital & Debt
- Question: Why use NCDs if the demerger rationale was no fresh fundraising? (Videesha Sheth)
- Answer: The ₹500 crore NCD is purely for refinancing existing debentures that matured in January; it is not fresh debt (Dharmendra Lodha).
Reebok Strategy
- Question: What is the limiting factor for Reebok’s scale-up? (Tejas Shah)
- Answer: No major limits; business has doubled in 3 years. Focus is now on high-performance footwear and expanding geographical footprint beyond the current 200 stores (Vishak Kumar).
Key Takeaway
Aditya Birla Lifestyle Brands delivered a resilient Q3 FY26, with revenues growing 10% YoY to ₹2,343 crores and EBITDA margins expanding 180 bps to 18.4%. The core Lifestyle segment achieved its highest margins in four years (20.6%) despite a shortened wedding season in December. Strategically, the company is pivoting toward aggressive expansion, increasing FY26 capex to ~₹330 crores to support 150 net new store additions. A significant highlight was the recovery in the Emerging Businesses segment, particularly Reebok’s 20% growth and the halving of losses in the Innerwear division. While net debt remains at ₹800 crores due to high growth investments, management remains committed to a “near-zero” debt target over three years. Looking ahead, the company aims for a steady 12% revenue growth driven by small-town momentum and the scaling of Reebok, while monitoring competitive pressures in the innerwear space.
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