Purple Style Labs (NSE:PERNIASPOP) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the q one FY twenty seven earnings conference call hosted by Purple Style Labs Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. I now hand over the conference to Mr. Abhishek Agarwal, hold time director and chief executive officer from Purple Labs Limited. Thank you, and over to you, sir. Hi. Good afternoon, everyone, and welcome to Purple Style Labs PERNIASPOPUP SHOP q one f y twenty seven earnings conference call. Along with me, we have the SGA team, our investor relations advisers.

0:49 It's a pleasure for us to address analysts and our investors as a listed company for the first time. I hope all of you have gone through the investor presentation that we have uploaded on the exchanges and also on our company website. Let me... Before I take you through our financial performance, I would like to spend some time explaining our business and how we have evolved it over the last few years. As we believe that understanding the underlying business model is important to interpret our financial performance better. So our core business, PERNIASPOPUP SHOP, is one of the largest and fastest growing multi brand luxury omnichannel fashion platforms in India, serving customers across India and international markets. We offer a carefully curated selection of luxury fashion sourced from more than 1,100 active designer brands and two lakh plus SKUs designer products on our website.

1:38 Our product portfolio spans women's wear, men's wear, jewelry, accessories and kids wear with a strong focus on the occasion wear segment. We combine online discovery with large format experience centers, allowing customers to explore a wide range of designers on our website while providing personalized styling and an immersive shopping experience at our stores. Therefore, we see online and offline not as competing channels, but as complementary in our customer journey. Another important aspect of our business model is our inventory strategy. We follow a breadth over depth approach, offering a wide range of designs while maintaining mostly singular quantity of individual products at our stores. Depending on the product category, we use a combination of outright purchase, back order, and consignment models with different commercial terms and varying markdowns across designer brands.

2:28 This unique aspect... The unique aspect of our business model is the back order model, in which the customer places the order first with upfront payment, following which we procure the product from designer with a delivery window of seven to ninety days depending on the product. This approach allows us to maintain a very wide duration with efficient inventory management while limiting the need to carry large quantities of individual designer products at our stores. PERNIASPOPUP SHOP in February 2018, prior to which it was primarily an e commerce platform. Post acquisition, our journey can broadly be understood through three distinct generations. You can refer to the slide seven on our presentation for the same. Post acquisition, our journey can broadly be understood through these three generations. The first generation from FY '19 to '21 was all about laying the foundation.

3:19 During this period, we transformed PERNIASPOPUP SHOP into an omnichannel platform, opened eight experience centers across five cities, including London, and build the designer brand supply across categories and price points. This foundation helped us grow the platform GMV from 23 crores in FY nineteen to 66 crores in FY twenty one. Now the second generation from FY twenty two to twenty four was about scaling the footprint. We scaled our experience centers presence to 13 locations across eight cities and started the transition towards large format experience centers, which typically range between 20 to 60,000 square foot and deepened our designer supply, particularly in women's wear of 1 lakh plus and men's wear segment. During this period, the GMV increased almost 10 times from 6 to 622 crores in FY twenty four versus FY twenty one. While we almost doubled from 22,000 in FY twenty one to 46 k in FY '24.

4:15 Now FY 'twenty four, we then consciously trimmed the long tail of both designers and customers and sharpened our focus on luxury. This marks the beginning of what we call as the third generation of growth. Starting in FY 'twenty five with a focus on optimizing the platform first. Then after March 'twenty five, we have actively changed growth gears and opened four large experience centers during FY 'twenty six. The iconic Port Mumbai and South Lake Delhi locations have been fully operational since Q2 of FY 'twenty six. Then another important project, our Linking Road, Bandhra, Mumbai store opened towards the end of March twenty six, alongside opened one of the most important milestones of our recent journey, a flagship store in Madison Avenue, Manasseh, New York. During this time, the average order value increased from 46 ks in FY 'twenty four to INR 76 ks in FY 'twenty six. And in the first quarter of 'twenty seven has jumped to a further INR 86 ks. FY 'twenty seven is therefore the first full year with which we have started realizing the growth trajectory of the investment that we had made in the last financial year.

5:17 Now please refer to the Slide nine on our presentation to understand our geographical expansion strategy. This evolution across three generations reflects in how we have scaled our presence in the relevant markets of our industry. In the first generation, we focus on establishing our initial footprint across key cities through eight small stores laying the base for future growth. We also established our first international presence in London in the same window. Now in the second generation, we scaled this footprint and began moving from bigger stores starting in our largest market, Delhi, which has a strong concentration of affluent customers and luxury fashion demand, thereby increasing the Delhi GMV contribution sharply to INR 127 crores in FY 'twenty four. In our second largest market, Mumbai, we added footprint in the same existing locations of Juhu, Banra and Kalagoda, which again led to a steep GMV increase to 127 crores in FY 'twenty four.

6:13 During this period, our international business also grew significantly, all online led by U. S, which contributed the highest GMV in FY 'twenty four. By March 'twenty four, we had grown to 13 locations spread in eight cities. All of the above combined led to a 10x growth within a short span of three years between March 'twenty one to March 'twenty four financial year, crossing another important milestone of INR 500 crore plus revenue in FY 'twenty four. Now since FY 'twenty six, we have shifted focus on relevant luxury shopping destinations and markets where we see a stronger spending potential by adding four large experience centers in Mumbai, Delhi, New York in FY 'twenty six. Now for FY '26, GMV of 722 crores was led by Mumbai at 205 crores and Delhi at 166 crores, which together contributing more than 50% of our total GMV, while international markets also remain key contributor to our platform.

7:07 So just to summarize the geographical growth strategy. In the first generation, our focus was establishing physical touch points and building the initial omnichannel ecosystem. As we move to the second generation, we developed a deeper understanding of the luxury customer base and the importance of physical shopping environment. This led us to transition towards large format experience centers typically ranging from 20 to 60,000 square foot, opening our first large format store in Merolli, Delhi. In the third generation, these large format stores have become integral part of our platform strategy and with the focus shifting from simply expanding our physical footprint to improving the customer economics. These large stores act as a discovery and ordering platform where customers can explore a much broader assortment with back order capabilities, receive personalized styling, and wherever required, also access our wider digital catalog as well while their presence at the store.

8:03 This is reflected in the steady increase of our average order value from 27 in FY 'nineteen to 46 k in FY 'twenty four to 76 k in FY 'twenty six and eventually 86 k in the last q one FY 'twenty seven. While our annual GMV increased from 23 crores in FY 2019 to $7.22 crores in FY '26. Now let's post March 24, we entered the third generation of our growth with strategy of trimming the long tail. During FY '25, we actually reduced the number of designers on the website and scale down the marketing spend to trim away the low ticket size transaction of our platform. So if you move to Slide 12 to understand the trimming of the long tail of customers. So historically, the focus was always on acquiring more customers and building the scale. Since the implementation, the value contribution of our customer base had increased significantly.

8:57 Average GMV per customer grew sharply to 67 ks in FY 'twenty four, which increased to 108 ks in FY 'twenty six. We're also seeing increasing wallet share from our high value customers. Please refer to the Slide 13 for this. In FY 'twenty one, our top 10 ks customers contributed INR 59 crores of GMV, which increased to INR $40.06 crores in FY 'twenty six. Similarly, in FY 'twenty two, our top 50 ks customers contributed INR $2.34 crores, which increased to INR $70.02 crores in FY 'twenty six. This trajectory is an important part of our third generation strategy, where the focus is increasingly on deepening the wallet share of our customers. This improvement in customer metrics is also visible in our AOV and reflects the transition across generations.

9:43 During the first gen, the base AOV was 22 k in FY twenty one. As we move to the second generation, the expansion into higher value women's wear and men's wear along with the first pair of Meroli stores in Delhi. This resulted in steady increase of AOV to 46 k by FY twenty four. And in the third generation, as we build the focus on luxury positioning and higher value customers, this further increased to 76 in FY twenty six. Now let's try to understand our supply side. The designer brand ecosystem, which has also gone through a significant transformation as part of the trimming the long tail strategy. In the first and second generation, our priority was to build a very large universe of brands on our platform across price point and categories. However, as the platform scale, we realized that the very long tail a very long tail increases the complexity across merchandising, inventory management, designer relationships and execution.

10:36 In FY '24, the top 100 designers were contributing 67% of the sales on the platform. Therefore, since FY '25, we have consciously moved to a more curated designer universe, focusing our resources on brands and with stronger customer recognition, established product market fit, and the potential to scale. As a result, we have reduced our active design of race from 1,910 brands in FY twenty four to 1,109 brands in FY twenty six. While the AOV increased from 46 ks to 76 ks in the same period. Importantly, we continue to maintain a significant breadth of products on our website while reducing the operational intensity that comes associated with the long tail. Now on Slide fourteen and fifteen, the evolution across the three generations is also reflected in our category mix.

11:25 In the first generation, the objective was to establish a wide supply of products from all designer categories. In the second generation, we began building greater depth in luxury women's wear, which is 1 lakh plus price point and men's wear. Because of this change in strategy, the one lakh plus women's wear increased from 7 crores in FY 'twenty one to 187 crores in FY 'twenty four, while men's wear grew from just INR 2 crores in FY 'twenty one to INR 96 crores in FY 'twenty four. Now in the third generation, we are sharpening the focus towards higher value categories, which has led the INR 1 lakh plus women's wear generating INR $3.12 crore GMV in FY 'twenty six compared to INR 187 crores in FY 'twenty four. Men's wear has also grown meaningfully to INR 132 crores in FY 'twenty six. At the same time, the lower value below INR 35 crores women's wear has declined from INR 162 crores to INR 86 crores in FY 'twenty six, reflecting the deliberate shift from long tail supply towards more relevant luxury products, which translates to higher value transactions.

12:27 Now let's discuss FY 'twenty seven. We see this as an important year in our journey because the investments made in FY twenty six are now entering the first full year of operations. We opened four large format experience centers during FY twenty six in Port And Linking Road and Southex, Delhi and Madison Avenue in New York. In Q1 FY 'twenty seven, the GMV increased to 193 crores from INR 133 crores in Q1 of FY 'twenty six, while AOV increased from INR 66 ks to INR 86 ks. At the same time, inventory reduced from INR174 crores in Q1 of FY 'twenty six to INR159 crores as well as the net working capital reduced from INR105 crores in Q1 of FY 'twenty six to INR66 crores in Q1 of FY 'twenty seven. These operating metrics reflect the continued focus on customer economics, higher value transactions and working capital efficiency.

13:18 Now let's analyze our three ms FY 'twenty seven performance from Slide 18 onwards. So the growth momentum has continued in Centimeters of FY 'twenty seven versus Centimeters of FY 'twenty six, with Mumbai's contribution increasing from INR28 crores to INR50 crores, Delhi from INR29 crores to INR39 crores, Hyderabad from INR10 crores to INR16 crores, and USA from INR20 crores to INR29 crores. Our growth strategy is to focus in geographies by deepening our presence in markets where we see strong customer demand. This is achieved by shifting to large format experience centers with generational gear changes rather than simply just increasing the number of locations in a given city or country. On Slide 19, from financials perspective, revenue from operations increased from INR 106 crores in Q1 of FY 'twenty six to INR 119 crores in Q1 of FY 'twenty seven.

14:04 But while assessing the performance, the revenue should be adjusted for increase in the advance received from customer, which has gone up from INR37 crores in quarter one of FY 'twenty six to INR49 crores in Q1 of FY 'twenty seven. Gross profit also increased to INR43 crores, while retaining the gross margin at 36% as compared to Q1 last year. EBITDA stood at negative INR 11 crores compared to INR 4 crores in Q1 of FY 'twenty six. This is due to the increased cost structure attributed to four large experience centers, which have opened versus last Q1. That stood at loss of 88 crores as opposed to 100 crores in last year of q one of FY twenty six. Our numbers continue to reflect the investments and operating costs associated with the platform as we are working towards delivering operating leverage.

14:49 It's important to look at the business from a cash flow statement perspective as well. So if they refer to the financial summary highlights Slide 19 on the last rows. You can see that the net cash used in operating activities improved from INR 55 crores in Q1 of FY 'twenty six to INR 19 crores in Q1 of FY 'twenty seven, while free cash flow improved from negative INR 71 crores last year to negative INR 24 crores in Q1 of FY 'twenty seven. To conclude, Purple Style Labs has moved from building the platform to optimizing and scaling the platform in the ongoing third generation. We have built a robust market leader omnichannel global distribution platform for Indian designer brands with a curated designer ecosystem, a growing high value customer base, and a global network of stores. Going forward, our focus will be on deepening our presence in key markets, improving customer experience and store productivity, strengthening inventory management, and working capital efficiency.

15:45 All of these for driving greater operating leverage and overall capital efficiency. With this, I would like to open the floor for questions. Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask questions may please press star and one on the touch tone phone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and 1 to ask questions. The first question is from the line of Ankit Kanodia from ZenNivesh Advisors Private Limited. Congratulations on the IPO and your first earnings call.

16:42 My first question is, in your business, I think inventory becomes a very, very, very important part of the whole puzzle. So and based on the DRHP, what I could understand, there are three ways you manage inventory. One is the outright purchase, second is consignment and the third is back order. If you can just give more color on to which I'm sorry, sir. The line for that... Yes, it's disconnected, the line for the person who was talking. We'll take the next question from the line of Shantanu Basu from Smiths Limited. Please go ahead.

17:33 Hello. Thanks for the opportunity, and congratulations on the IPO. I have two questions. So the first question is with regard to the fact that your inventory declined from INR 174 crore in Q1 FY 'twenty six to INR 159 crore in Q1 FY 'twenty seven. And the reported net working capital fell from 105 crore to 66 crore. Yet, I see that the operating cash flow remained negative at 19 crore, while borrowings increased from $3.71 crore at FY twenty six cent to $4.36 crore at June 2026. So what is driving the continued funding requirement? And at what point does the business become self funded?

18:19 And what is the targeted sustainable short term debt level? That is question one. And shall I call out my question two as well, or will you answer and then I'll answer Let let me let me answer the first question for you. So as we explained that the inventory in our business model is operating in a slightly unique model where we focus more on breadth rather than the depth. So post 2022 when we started building the inventory, it was built across brands and across price points to understand which category would work best for us. And the typical cycle to, you know, liquidate the inventory is relatively larger in our industry. So once we cross three years of inventory accumulation...

19:06 So if you refer to the slide in the appendix on the consolidate... Consolidated financial statements and go to the balance sheet, you will see that the inventory increase across years was there from 80 or close to FY '23 to a 114 FY twenty four to a 160 crores in FY twenty five. Now in FY twenty six, despite opening four large stores, we were able to manage the inventory at a similar level. Now given our efficiency on the inventory management has been established, therefore, are seeing a reduction on the inventory from q one last year to this year. The networking capital has reduced primarily due to inventory, and the second aspect on that is the increased advance from the customers. So as I explained the back order model to you in my call, that a portion of the business comes from the back order model where the customer pays upfront.

20:02 So given that we have four more large stores operating this year, the advance from the customer in q one was at a higher number, which also contributed to the reduction on the working capital. Now in our business, the quarterly numbers can sometimes be erratic, so it's important to see them in a cumulative sense. Hence, I would advise as you see more quarterly numbers over the next few quarters, you will get a much better clarity in terms of how the inventory will be managed going forward. And to answer your question on the working capital reduction, but still there's an increment. So there are more line items which are driving that because the outstanding debt on the balance sheet was 370 crores. So we had to fund the interest for that. And because q one in itself is not operationally profitable as a business, but it also establishes your fixed cost structure going forward.

20:58 So the operating leverage, which is delivered in the business because of the fixed cash flow, usually reflects in the subsequent quarters of the business. So hence, my advice will be to observe the subsequent quarters to understand the moment of cash flow in future. Okay. And my second question is the the fact that the the management has deliberately eliminated the mass premium long tail and shifted the platform towards higher value luxury category as you stated during your speech. Now women's were above 1 lakh increase from $1.96 for GMV in FY twenty five to 312 crore in FY twenty six, while the lower price women's were declined.

21:45 So my question is, does the higher ticket strategy generate materially better gross margin and customer retention, or is is it the primary... Or is the primary benefit higher AOV? Am I getting gross margin improvement as well as well as customer retention? So I think we need to understand the gross margin from an absolute perspective in this case and as opposed to a percentage. So as far as the percentage is concerned, the percentage across categories for us is not very different. But as I explained on the call, it is not just the consumer side benefit that you get by eliminating the long tail. It's also the efficiency on the supply side. So from our perspective, the below 35 k was adding burden onto the platform from number of customers and designers both who collectively were not contributing enough gross sales for us to maintain that. So another way to look at this strategy is if you go to the slide 13 to understand the customer contribution, then you will see that out of the 66 k customers that was served in the FY '26, Out of that, 50,000 contributed 702 out of the 722 crores. So what you are seeing is a comprehensive strategy which was implemented in the beginning of f y twenty five. So hence, the customers have been reducing, but the GMV has been growing. Another easier way to understand the businesses is, let's say, in f y twenty two, I had 10 k customers who contributed 154

23:17 crores. That's about one and a half lakh of customers. In '26, you have 50 k customers who are contributing 700 crores, which is 1.4 lakh. So an easier way to understand is that you are able to grow 10 k customers with an average buying capacity of 1.5 lakhs a year, made it 50 k. So the long tail doesn't add any significant value when you are able to grow customers in this category with this propensity. And the same will be true for designer side. Okay. Okay. Understood. Mister, any further questions? No. Thank you. Thank you. We'll take the next question. Thank you, sir. We'll take the next question from the line of Ankit Kanodia from ZenNivesh Advisors Private Limited. Please go ahead. Yeah. Thank you. I'm sorry for that dropout.

24:11 I was asking about the inventory. I think in our business, inventory becomes a very important and critical cog in the wheel. So we have three ways in which we do inventory. So we have outright purchase, consignment, back order. If you can give more color as to how we strategically think on all these three way of keeping inventory and what would be a rough breakup in terms of how much will be outright, how much will be consignment, how much will be back order? So let me stick to the data, Ankit, which is there on the slide 19. It will give you a fair bit of an idea. So if you see the inventory in FY '23 was 87 crores. The idea was we start... Started building inventory from FY '22 when we decided to focus on, you know, the larger format stores and, you know, the higher price point products. The inventory increment went on till March 25.

25:07 And despite opening four large experience centers, we're able to manage the inventory at the same level. Now going forward, typically, if we are not doing any expansion, the inventory would more or less remain, you know, in this range. Now why you're seeing a reduction, you know, from last year of q one to this year of q one? Because as I said now, given that we have large format experience centers and we have been able to do the inventory management more efficiently. So over the next few quarters, we'll get an idea where the inventory at an overall level would be there. Now obviously, the inventory on our books, which is outright purchases, what we are seeing here. For the back order part, now the back order part usually is a function of the revenue that you are doing. So if you see the revenue advance from customer was about 49 close. So if you just go and divide it from, let's say, last twelve months odd revenue, you will see that that's approx one month of revenue.

25:59 And if you take an average delivery of somewhere between forty five to sixty days, so from this, the ratio can be calculated. So as far as the inventory is concerned, inventory doesn't usually have any component of the back order. The back order is like any other platform where the customer pays upfront and once the product reaches out, they get shipped back with the customer. We'll be typically holding inventory only for a very few days in our warehouse for those kind of back orders. Now on the consignment bit, I think that's the business sensitive data. So that I'll not be able to disclose publicly. But whatever is outright purchases is already forming part of this inventory, and which is getting more and more efficient with year by year. Thank you so much for the detail answer. So is my understanding correct that outright purchase would form a larger portion of the inventory rather than consignment?

26:52 I'm not asking for Yes. Yes. Because, I mean, since we don't buy a depth of inventory, Ankit, it's important that we buy bread. And bread would typically buying, you know, singular units for each store. So if you walk into, let's say, any of the large mobile stores and it has hypothetically, it's the 5,000 pieces. You can assume that all 5,000 pieces are different. So it's a unique way of retailing where you show the bread, but you don't really have to stop because the customer is willing to wait and pay the money upfront in this particular industry. Right. Right. So that was very helpful. So my second question is related to finance costs. So finance cost has two component as you have rightly segregated in your presentation. One is the interest on lease liability and the other one is other finance cost. I'm assuming other finance cost means basically interest on loans.

27:42 Yes. Right? Yes. That's right. That's right. So any color on a directional basis, how do we see that going forward in FY '27 and FY '28? Both these interest on lease liability and also other finance costs. So the interest on lease liability and combined with the depreciation on right of use of assets, that's typically a function of... If you do any expansion or make any changes. So as I said, we have already done all the changes till March 26. So they formed a part of, you know, already which is projects which are already done. So the q one that you see right now is pretty much what we are operating at cost structure today. So I don't see any significant change in that unless we make any change to any of our stores in future, which at the right time, we will be modifying.

28:29 Now as far as the other finance costs are concerned, as you said, it's linked to the borrowing on the books. The idea is that as we accrue more and more operational profit from the business, that debt can keep on reducing, which would directly affect the other finance cost. Right. Right. I mean, honestly, a couple of quarters from here, you will have a much better trajectory on how it moves. Right. Right. So when I look at the P and L in general, so it's very difficult to to have a view of where the margins would be because all these are... We are still... We heavily invested in FY '25 and '26. So but so I can't expect anything. I can't expect you to give me any color next few quarters how the margins will come. But if I have to take a say two, three year view, if you can give more color as to where do we see our company moving forward from margins perspective, from profitability perspective, and more importantly, from a business standpoint vis a vis our competitors in general.

29:35 I mean, honestly, any objective guidance at this point, we would refrain from. But just to give you an idea in terms of the quality of the business going forward from here. So if you see the expansion part has been done by FY twenty six. Now that typically fixes your cost structure when you enter into a new financial year. So what you can extract from the q n financials is how the cost structures have been there. That's why if you see the slide 20, we have tried to split, you know, even other expenses in three segments for you, which we obviously will keep reporting going forward. So that will give you a better idea in a couple of quarters that how quarterly the expenses move for this company. Now after that, as far as the operating cash flow concern, they go hand in hand with P and L. The purpose of giving even in a limited review quarter the balance sheet and cash flow was because you cannot understand our business just from the P and It has to be always looked at in conjunction with the balance sheet and cash flow.

30:32 So my request will be to observe it for a couple of quarters. I think you'll be able to figure out the answer for yourselves. Thank you so much, and all the best for the future. If I have any question, I'll come back in the queue. Sure. Sure. Thank you. Thank you. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead. Hi, Abhishek. Congratulations. Thanks for taking my questions. Abhishek, I... With reference to your initial remarks, which mentioned that you opened four large experience centers across Delhi, Mumbai, and New York.

31:17 So I wanted to check, should this sort of lead to an explanation both for us in FY twenty seven before we return to a normalized growth in FY twenty eight? So I just wanted some qualitative outlook from that perspective. So what we have done, Devanshu, in the financial summary, we have tried to give you the comparative numbers for all the levels, which starts with GMV, then revenue, then gross profit, then EBITDA, and so on. As I mentioned, the cost structure in our business model is pretty much fixed. Q one is usually the leaner quarter in our business. So over the next two quarters, I think the numbers would be fairly clearer to the broader market in terms of how does growth trajectory will pan out. But as I said, it's always important to look at the revenue adjusted to the customer advance as opposed to just looking the revenue in isolation.

32:18 That's fair. So my question was more from GMV perspective. So I understand the bridge between GMV revenue. I wanted to check... So maybe if you could just help us better understand there is a typical seasonality in your business. So maybe historically, whatever you have witnessed, how much does 1Q typically contribute to the annual sales in terms of GMV? So as I said, Devanshu, like, q one is obviously the leanest quarter. It increases in subsequent quarters. But I think the numbers would be relatively clearer once we see the next two quarters evolving into the year. But yes, since we have invested into the last year, this first full year is gonna give a very clear scenario run for us for the future.

33:04 Got it. Understood. And lastly long term. Sorry. You said something? I missed it. So I was I was saying it's better that we focus on the long term basis on how the base is set in FY twenty seven. Got it. Got it. And, Abhishek, secondly, you mentioned that you have a back order model, and then, currently, we are saying that working capital is further reduced in 1Q. So wanted to check as your business sort of grows, this back order tailwind you will keep getting from a working capital perspective. So, ideally, how do you look at that from a long term perspective for working capital intensity on this? So as I said, inventory for us is a function of how much is the shelf space.

33:54 If the shelf space is not gonna change much, the inventory usually just moves in a smaller range basis the cycle of the quarters. The same is true for that one from customer. Now as I said, the typical average delivery time line is... The range is seven to ninety days. So even if you average the products to be in forty five to sixty. And currently, can see that usually that one from customer is approximately one month of revenue, which basically means if my... At any point of time is we have forty five days average delivery, so that back order is gonna contribute almost close to 40 to 50% of the sales at any point of time. So it's gonna move in that range of one month revenue. So as business increases, that advance from customer typically would increase.

34:43 Inventory stays flat, so which definitely would have a reduction in the working capital if that comes. And hence, I said, you know, a couple of more quarters will give us a fair bit of clarity when you stack them side by side. Got it. And one last question from my end. So you clearly mentioned that you don't... Your quarterly cost structure is well represented by how one q has sort of set that for you. Yes. So wanted to check on your plans for addition of experience centers. Right? So going ahead, how do you see whether this one q cost structure can be sort of extrapolated for for next couple of years and whatever top line that that you will get will keep adding on to your bottom line? Or do you plan to add new experience on this over the next couple of years?

35:35 So, I mean, from a share operating leverage concept, yes, the q one usually defines the cost structure that will be there for q two unless there is a change. Immediately, there is no significant expansion insight because we have already done four large stores in last financial year. So we want that scenario then to happen. At any point in future, if our expansions plan change, we will make sure we communicate it in our future quarterly calls. Got it, Abhishek. Very helpful. Thanks for taking my questions. Thank you very much. Thank you. The next question is from the line of Shivhanu Bhangal from SEAT Capital. Please go ahead.

36:21 Yeah. Thank you for opportunity. Hope I am audible. Sir, my question on the efficiency pond. What was the... If it is the... Our natural experience center in FY twenty six? Yeah. So we do not look at from a store perspective. We... On... If you go to the slide... Let me just give you a reference. So if you see the slide nine, which has a geographical distribution, so we use the model of a geography line item as opposed to store. So to give you an idea, let's say Mumbai had three locations in f y twenty one. We added more units to those locations, which increased the sales to 127 gross GMV.

37:10 Now we have shifted to two large format centers in Mumbai, and we have shut all the previous locations, which were much smaller in sizes. So from our perspective, tracking a same store growth doesn't make sense. As opposed to that, we always look at how much business are we extracting from a geography. So whenever there is a change in that, you always get to know because we would typically inform, okay, this is being changed with the store. Till then, that same store growth is same as, you know, that city's growth. So if you take any other example, let's say, Ahmedabad, for example. So whatever you see in Ahmedabad on twenty one, twenty seven, thirty one, there's been no change in Ahmedabad. But whenever you see a change in Ahmedabad, that will basically create either a spike or dip depending on how that changes in that.

38:02 Okay. I think that happens with USA business because if I '24 USA business, the GMV was 136 here. But if I '26, GMV is down to 77 here. But but just to clarify, that is that is not store. You can see that there was Internet... So US and UK is international omnichannel business. It's online and offline both. US did not have a store until March this year. So that was only online. And as I mentioned during my call and also in the presentation, we trimmed the long tail, which was mostly, you know, businesses... I mean, brands and customers who were contributing to the lower side of the average order value. That has led to that dip. That is not a negative same store growth because there was no store.

38:50 But going forward, now given that the New York store has opened, we would always look at US in conjunction, contribution at an omnichannel level, how much US does, which is what you see in UK. So whatever you see in UK is the same store operating in London from 2019 and the online business. Okay. Got it. Despite online long tail in '24 to '25, we still had growth. Okay. And my second last question on the average order. We mentioned, we increased our average bill value and average order value in women's wear. As above one last segment continue growing, that means our margin will be increased going further.

39:41 But instead, that's happening that helps our designer also and our product segment also, but margin not will be increased. But, normally, in in any business, as value value segment... As volume decrease and value growth happen, normally, margin increase. I don't understand that. So I couldn't understand that. So all I'm saying is there is one part in margin, which is a percentage, one part which is absolute. So because we work with brands on a commercial understanding of a markdown, the prices are usually set by the brand.

40:26 See, because in this, you are assuming that something which is 2 lakh rupees is expensive and something which is 50,000 rupees is cheap. That's not true because they would be two different categories of products as well. So hence my point from an absolute perspective, if I'm operating, let's say, an average 40% margin, I'm just giving a number. So selling a 2 lakh rupees piece gives me 80,000 margin. Selling a 20,000 rupee piece gives me only 8,000 margin. So from an absolute perspective, it's higher margin. But percentage perspective, it completely depends on what markdown I'm working with that brand. That's why you will see a pretty much a flattish GP for us as far as percentage is concerned, irrespective of the strategy on the price point being lower or higher. So the idea probably there is if you can sell 100 products of 10 x price and generate the same GP, why bother selling thousand products to generate the same absolute GP? That's the whole idea.

41:24 Okay. Okay. Thank you. Thank you, sir. Thanks a lot. Thank you. Best of luck. Thank you. Thank you, sir. Before we take the next question, a reminder to all the participants that you may please press star and one to ask questions. The next question is from the line of Rohit Kumar from ADM Advisors. Please go ahead. Yeah. Thank you, sir, for the opportunity. Sir, I wanted to ask you, can you provide a broader framework to become EBITDA positive? I want to understand at what level of GMV scale and gross margin and operating leverage will be required to achieve positive EBITDA. Yeah. So, I mean, exactly, that is why we have given more detailed p and l in our presentation.

42:16 So if you refer to the slide 20, that is exactly what you are asking. So the idea is whenever you have done your expansion, your cost structures would typically tend to get fixed. It would move in a narrow window depending on some operating cost here and there, but it doesn't move massively. So if you see the cost structure where we have placed '23, '24, '25, '26 for you side by side, '26 was an expansion year. So hence, in '27, you are seeing an uptick on the salary. Marketing, we have anyways been reducing as I said, so you don't see any uptick there. Logistics has been flat, so we are generally efficient there. And other expenses would be a function of, again, some of the costs related to the large format experience sector. So now you know what are the costs which are in q one, which pretty much become flattish because still an expansion is not happening, this cost won't grow drastically higher.

43:12 So the calculation, back calculation up to the GP will give you an EBITDA positive straight away there, which basically means if I'm able to grow the GP to 55 crores, it would convert to a zero GP, a zero EBITDA. Now since the cost structure for stores are below EBITDA for us, ideally, you should add that as well then you want to see the EBITDA positivity. The same answer is there for that as well, which means if you see my increase on lease liability, interest on lease liability, and depreciation of right of use of asset, That's 45 crores. But that is the p and l aspect of it. If you see the cash flow line item, which is there on the second last slide, there you will see the payment of lease liabilities and interest on lease liabilities payment combines only 29 crores. So which means on a cash basis, on that, you will have to add another 29 pro GP to become EBITDA positive.

44:03 But there is on a p and l basis, it has to be 45 crores to become EBITDA positive. So depending on... Sorry. Becoming operationally EBITDA positive. So whichever line item you're looking at, you can just add back those cost to a bit and see where the GP has to land to cover all these costs. I mean, that's the whole idea why we have given a very detailed p and l apart from balance sheet and cash flow. Got it. Got it. That was a very detailed answer. Thank you. My second question was related to the New York Experience Center. Yeah. What what target customer profile and a o... AOV compared with Indian Experience Center we are looking after? And what level of GMV will be required for the store to reach cash breakeven?

44:54 Sure. So if you see our RHP, I have not put in the presentation, but you can see in the RHP that in FY '26, our India online EOB was about 38,000, but the store's EOB was about 90,000. But we have also given The UK for your reference for an international store where, you know, it was almost 460 odd pounds on the online, but it was two and a half times higher on the on the London store bit. So I think that ratio of two and a half times would be to call New York as well even though that data is not available publicly from our side. But average order value generally at the stores is about two and a half times. So let's say if my US average order value online is similar to London, which is coming to about 50,000, which means at the store level, will be about anywhere around 1.25 lakh, which would translate to about $1,500.

45:49 Now since the breakeven is more of a function of, you know, actual sales, as you correctly said, and not a new... It was an indicator how many customers you will have to serve to reach that number. So it's been only three months, honestly, since we are operating. Now with this quarter gone, you'll have data for six months from New York, which will reflect in The US contribution on the geography bit. So you can see how much US would have grown with addition to the New York offline business. Now in terms of profitability, see, it's a June end lease for us. We did a shorter tenor lease to understand how the dynamics would pan out. Depending on how we perform over the first twelve, eighteen months of business, it's always easy basically to tune your rent up and down. Generally, we assume that the the cost structure gets more fixed.

46:36 Since we operate typically only one store per city, for us, it's always easy to maneuver that cost structure. We have historically always done it on the higher side because the business had more and more potential. But at any point, if we have do turn on lower side, that's also possible for us. I would advise, let's observe the New York performance for FY '27, and then we take a conscious call on it on where to move. I mean, what rent to move to make it operationally breakeven. Thank you, sir. That's it from my side. Sure. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to mister Abhishek Agarwal for closing comments. Thank you, and over to you, sir.

47:22 Thank you, everyone, for joining us on our first earnings call. We appreciate your continued interest and support for Purple Style Labs, Earnest Pop Up Shop. We remain focused on building a scalable and sustainable luxury fashion platform with disciplined execution across customers, designers, stores, and capital. We look forward to continuing this journey with all our stakeholders and updating you on our progress in the quarters ahead. Thank you. Thank you. Thank you, members of the management. On behalf of Purple Style Labs Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.