Shoppers Stop Ltd Management Discussions

At Shoppers Stop

We are one of the Leading retailers in the country, offering a diversified portfolio of premium non apparel products. With the growing demand for Luxury and premium Lifestyles, Shoppers Stop began its premiumisation journey two years ago, placing non-apparet at the centre of this strategy. Categories such as watches, handbags, footwear, and sunglasses have evolved into key style statements and essential elements of personal styling. To tap into this demand, we have built a strong portfolio across these categories, featuring a curated mix of Leading national and international brands, strengthening our position in the premium retail space.

Category Highlights & Big Wins:

Watches and Handbags remain our hyper-growth categories, consistently outperforming broader trends. White Watches recorded a phenomenal 16% overall growth with 70 watches being sold per hour (Total 5.8 Lacs watches sold), the high-end watches with Average Setting Price (ASP) >Rs. 20,000 outperformed with 20% growth during the year. The ASP for watches has grown at a 12%

CAGR over the Last three years, reaching approximately Rs. 11,000. We have bolstered this portfolio with gtobatty renowned brands tike Boss, Victorinox, and Cerruti, focusing on timeless precision and design. Landmark achievements this year

included launching Baume & Mercier in Juhu and successfully selling luxury watches priced up to Rs. 5,00,000.

Similarly, we sold 60 bags per hours converting to a total of 4.7 Lac units during the year. The handbags category delivered robust 10% growth, seeing strong traction through a refined mix that appeals to the sophisticated urban shopper.

In Sports & Footwear, we built a robust portfolio with major additions such as Asics, and Adidas Originals. A standout achievement this year was successfully onboarding Nike—a highly premium brand—within just six months.

Furthermore, our strategic, year- round focus on Gifting as a distinct, curated category has successfully recession-proofed this segment. By securing exclusive collections and positioning them through high- visibility visual merchandising during

Valentines Day and wedding seasons, our Non-Apparel division remains margin accretive and critical to overall business growth.

Digital Transformation

The retail industrys digital transformation reguires far more than just launching a basic e-commerce app; it demands the creation of a frictionless, fully integrated phygital ecosystem where the boundaries between the physical shelf and the digital cart completely disappear. Modern Indian consumers, habituated to on-demand services, expect Al-driven personalisation, real-time enterprisewide inventory visibility, seamless digital payments, and rapid hyperlocal fulfilment to be standard, non-negotiable components of their shopping journey.

At Shoppers Stop

We treat digital transformation as the central nervous system of our strategic corporate evolution. In this journey, we have comprehensively relaunched our primary digital flagship, ShoppersStop.com. We have migrated to advanced new service providers, integrating real-time back-end inventory across our entire physical network of over 100+ stores, essentially turning every store into a localised fulfilment hub. This creates a truly unified, latency-free omnichannel experience. Coupled with our mobile app crossing a monumental 21 million downloads, we ensure that whether a customer discovers a product via our network of Glamfluencers on Instagram or whilst browsing in a physical store, the path to secure purchase is instantaneous, intuitive, and completely frictionless.

• The Ultimate Loyalty Engine: Our

First Citizen Club programme is the absolute bedrock of our financial stability, providing a moat that purely digital players cannot replicate. Recently expanded to nearly 13.5 million highly engaged members, it drives an unparatteted 84% of total sales. The elite, high-spending Black Card segment witnessed record- breaking enrolments and renewals, showcasing immense brand stickiness and Long-term customer engagement at the Luxury tier.

• Premiumisation Wave: At

Shoppers Stop, we recognised the significant consumer shift toward premiumisation early and capitalised on it by fundamentally redesigning our store Layouts to feature premium, curated zones and expanding our product portfolio to include premium international brands attracting affluent and aspirationat customers. This overarching strategy for our Premium Brands portfolio gives us an edge over competitors and has yielded phenomenal results. We successfully achieved a 69% contribution from the Premium portfolio versus 65% in Last year.

• Personalised Shopping as a Revenue Multiplier: Backed by a strong and heavily trained team of 430+ expert stylists, our Personal Shopper programme is a massive competitive moat. By curating personalised wardrobes and offering VIP treatment, they contribute 26% to overall sates and drive ATVs up to three times higher than the normal average, significantly boosting our gross margins.

• Data-Driven Strategies: Continue to make the best use of available targe customer database through advanced Al powered analytics and focused social media outreach to build stronger connections with consumers and improve overall brand resonance.

• Elevated Store Experience:

Investments in store renovations into state-of -the-art design architectures with elevated experience and better space utilisation resulting in higher productivity and improved profitability.

• Strong Beauty Presence: Between our high-touch standalone SSBeauty physical stores, Shop in Shops in departmental stores and our Global SS Beauty Brands distribution arm, we have established dual-front prominence in Indian premium beauty, effectively controlling both the retail and B2B distribution channels for global mega-brands.

• Agile Operational Execution:

Strategic reduction of inventory byRs. 153 Crores in FY2025-26 supporting operating Cash flow generation of Rs. 301 Crores demonstrates our agile operational excellence.

By decisively clearing slow- moving stock, we freed up sizeable working capital, improved our inventory turns, and allowed for the injection of fresh, fast-moving, futt-price merchandise.

• Prudent Capital Allocation:

Disciplined and cautious approach to capital allocation, with a strong emphasis on returns and maintaining balance sheet strength. The strategy is anchored in a profitabitity-ted growth model aimed at maximising shareholder value, prioritising enhancements

in the productivity and profitability of the existing portfolio, white pursuing expansion—particularly in new ventures—only where returns are clearly defined and foreseeable.

• Non-Metro and Tier 2 Expansion:

Aspirationat shoppers in emerging, rapidly urbanising cities are actively seeking premium Lifestyle products previously unavailable to them tocatty. Our modern department store formats often become the primary, undisputed premium/tuxury destination for entire regions, offering a vast, highly underpenetrated growth runway with favourable real estate economics.

• Rising Domestic Travel: Amid geopolitical uncertainties, domestic travel is increasingly driving stronger demand for Bridge to Luxury and Premium brands in the country. Our premiumisation strategy along with enhanced presence in the airport retail supported by our destination inspired fashion campaign, Travel Edit positions us welt to capture this segment.

• Sustainable Growth in INTUNE:

Despite a competitive discounting environment, we maintained pricing discipline and improved supply chain efficiency, enabling INTUNE to return to positive LFL growth. With a dear focus on improving store productivity and unit economics, the brand is welt positioned to tap into the growing aspirationat value segment. In this journey, we have Launched a new price point ofRs. 1,299, bringing a premium touch to the Value fashion for the aspirationat consumers.

• Social Commerce Presence: Video shopping, live commerce events, and our expansive network of Glamfluencer collaborations continue to unlock highly lucrative, high-conversion avenues. This allows us to connect directly with digital natives on the social platforms they use most, significantly lowering traditional customer acguisition costs while driving authentic brand advocacy.

• Managing Premium and Value Mix: As Shoppers Stop grows across both segments, ensuring a balanced approach to pricing, margins, and customer expectations remains essential.

• Rising Rental Costs and Availability of Quality Real Estate:

Securing the prime locations at viable economics alongside keeping up with the continuously rising rentals of the existing location is critical to profitable store expansion. •

• Workforce Investments & Regulatory Shifts: Expertly navigating the significant financial and administrative impacts of the New Labour Codes and Minimum Wage norms across states while simultaneously continuing to

invest heavily in attracting, training, and retaining highly skilled front-end retail talent in an industry historically plagued by high attrition.

• Technological Infrastructure Upgrades: The continuous, capital-intensive reguirement to modernise and upgrade legacy IT systems to support sub-second enterprise inventory visibility, seamless omnichannel integration, and hyperpersonalisation at a massive scale, reguiring significant continuous investment.

• Inflationary Pressure and Supply Chain Disruptions: Rising fuel prices and raw material led inflation amid global uncertainties may impact demand in short term besides nominal surge in operating costs. Furthermore, impact of supply chain disruptions is likely to be seen in the latter half of FY 2026-27.

• Macroeconomic Volatility & Climate Impact: The constant challenge of managing volatile consumption patterns directly impacted by unpredictable seasonal shifts (such as the shifting of major festive calendars,

prolonged heatwaves, or delayed monsoons which temporarily suppress rural and semi-urban footfall and alter seasonal buying patterns).

• High Competition in Value- Segment: We operate in a fast-evolving space characterised by deep, sometimes margin- destroying discounting strategies from value-fashion competitors.

• Rising Digital Acquisition Costs:

Increasing advertising rates and customer acquisition costs on social media platforms make it important to focus on organic growth, strong brand recall, and customer retention programmes to sustain profitability and reduced dependence on paid channels. Owing to ongoing global uncertainties, inflationary pressures in technology hardware sourcing may also impact procurement costs and margin structures.

A Snapshot of Key Ratios

The table below summarises key financial ratios showcasing Shoppers Stops performance.

(Note: Ratios computed as per GAAP financials)

Insights

• Return on Equity : Return on Equity declined from 2.0% in FY 2024-25 to (8.6)% in FY 2025-26, primarily due to tower profit during the year. This was impacted by the implementation of the New Labour Codes, which resulted in an additior employee benefit Liability of Rs. 17.5 Crores towards gratuity and Leave encashment, as per Ind AS 19.

• Return on Capital Employed: ROCE declined to 6.7% in FY 2025-26 from 7.3% in FY 2024-25 due to tower operational profit.

• Debt Equity Ratio: We reduced our debt to Rs. 154 Crores which ted to improvement in Debt Equity ratio from 0.3 in FY 2024-25 to 0.2 in FY 2025-26.

• EBITDA Margin: The EBITDA margin declined by 90 basis points, from 16.9% in FY 2024-25 to 16.0% in FY 2025-26 primarily attributable to our continued investment in execution of the New Business ventures, Loyalty and Technology.

• Net Profit Ratio: Net Profit declined from 0.2% in FY 2024-25 to (0.6)% in FY 2025-26 due to tower profits in current yeai considering impact of New Labour codes.

• Current Ratio: The current ratio remained broadly stable at 0.8 in FY 2025-26, Largely in tine with the previous year.

• Debt Service Coverage Ratio: The DSCR ratio improved from 0.3 in FY 2024-25 to 0.2 in FY 2025-26 owing to tower debt FY 2025-26.

• Inventory Turnover Ratio: The Inventory turnover ratio remained stable at 1.5 in FY 2025-26, in tine with FY 2024-25.

• Trade Receivable Turnover Ratio: The Trade receivables turnover ratio improved significantly from 78.8 in FY 2024-25 t 119.6 in FY 2025-26, reflecting better collection efficiency and improved operational discipline.

^Financial Metrics numbers are as per GAAP Financials

The case for investing in people at Shoppers Stop is not philosophical. It is commercial. Our seven social material topics reflect a business model in which the customer experience is entirety a function of human capability. There is no algorithm behind the Personal Shopper. There is no automation substituting for the store associate who understands what a customer needs. Human Capital Management ranks among our most material topics because retaining and developing skilled frontline talent is operationally critical at a scale of 295 Locations, and because the communities in which we operate are both the source of our workforce and the beneficiaries of our growth.

Cultivating Future-Ready Talent

Your Companys unwavering people-first approach is vividly reflected in its strong, continuous emphasis on advanced skill development and career progression.

We provided health and safety training to all 7,055 employees in FY 2025-26. Skills-based training reached 97.3% of the workforce through LEAP, LEAD, the Personal Shoppers Training Programme, and the Baby Kangaroo onboarding programme. Compliance training reached 95% of employees other than the Board and Key Managerial Personnel. All permanent employees are covered by health and accident insurance. Provident Fund and Gratuity coverage stood at 98.0%. Our Employee Assistance Programme provides confidential mental wellness support. Menstrual leave is available to all female employees. Well-being expenditure as a proportion of total revenue was 0.26%.

Well-Being and Employee Experience

Prioritising comprehensive employee well-being is core to our retention strategy and operational excellence.

We recorded zero lost-time injuries, zero high-conseguence incidents, and zero fatalities in FY 2025-26. Daily safety checklists, thermography scanning, fire safety training, and evacuation drills are maintained across all stores. We received 23 complaints under the POSH Act during the year, of which 21 were resolved and 15 upheld. Two remain in process within statutory timelines. There were no complaints of discrimination, child labour, forced labour, or wage violations. Human rights obligations are embedded in our vendor contracts and Supplier Code of Conduct.

Fostering an Inclusive and Equitable Workplace

We actively and passionately work towards creating a deeply fair environment where absolutely every employee feels respected, heard, and valued.

As at 31 March 2026, we employed 7,055 permanent employees. Women account for 32.5% of our total workforce and 22.2% of our Board of Directors. We employ 180+ differently abted individuals in permanent rotes across store and service office functions. Alt Locations are designed with ramps and elevators in compliance with the Rights of Persons with Disabilities Act, 2016. We hold a Great Place to Work certification in India, earned through independent employee feedback. Through our community programmes, we have supported Livelihoods for over 3,500 persons with disabilities and provided vocational skilling to more than 20,000 youth and women.

Empowered Employees, Enriched Communities

Through the powerful ‘We Volunteer programme, our employees are encouraged and facilitated to actively engage in high-impact community outreach. This includes dedicated education drives for underprivileged children and hands-on environmental sustainability projects, fully integrating eco-friendty practices across our corporate and retail workplaces.

Our We Care CSR platform operates across three strategic pillars: skilling persons with disabilities, fashion and textile recycling, and Livelihood creation for marginalised youth and women. Our initiatives are anchored in advancing womens economic and personal empowerment, white community investments span education, skilling, nutrition, and environmental stewardship, aligned with SDG 1, SDG 6, SDG 5, and SDG 8.

Shaping the Workforce of Tomorrow

With a highly progressive workplace culture, a robust, tech-enabted Learning ecosystem, and a genuine commitment to employee well-being, your Company effectively eguips its workforce for future success, acting as the unstoppable driving force behind our continuous retail innovation.

Smarter Supply Chains

A highly optimised, profoundly agile supply chain is the invisible backbone to delivering the right products at the right time, maximising futt-price sett-throughs. Your Companys highly structured, technology-driven distribution network ensures absolutely seamless, rapid inventory flow across our brick-and-mortar stores, digital online platforms, and remote airport Locations.

This year, radical supply chain agility was a primary corporate focus. We aggressively and successfully reduced outright inventory by a massive Rs. 153 Crores and optimised overall working capital. For our fast-paced value fashion format, INTUNE, the entire supply chain architecture was fundamentally restructured to support extreme

high-freguency agility. This reengineering successfully enabled the rapid Launch of 75 to 100 fresh, trend-right new style drops on a weekly basis, achieving mature- brand Level futt-price sett-throughs and minimising end-of-season markdown dependency.

During the year we invested Rs. 13.5 Crores towards setting up state-of-the-art and modern warehouse in Bengaluru encompassing an area of 1,19,785 sg ft focusing on automation.

A sophisticated, centrally monitored warehouse management system eguipped with automated inventory tracking enables pin-point accurate stock visibility and significantly faster replenishment cycles. This, combined seamlessly with strict 100% GS1- comptiant barcoding standards, radically enhances systemic transparency and ensures highly efficient, error-free stock movement. A robust, deeply integrated vendor network and a strategic Plug-and- Play onboarding approach ensures a steady, uninterrupted supply of high-guatity products, superior predictive forecasting, and incredibly guick turnaround times for our exclusive capsule collections.

Creating Sustainable Value

Indias fashion retail sector is at an inflection point on sustainability.

Investors, customers, regulators, and employees are increasingly scrutinising the environmental cost of clothing, Labour practices across the value chain, and the integrity of data held by retailers. Companies in this sector that build structured ESG programmes now wilt be better positioned commercially and reputationatty as regulatory reguirements expand and stakeholder expectations rise.

For Shoppers Stop, FY 2025-26 was the year when we moved from aspiration to architecture. During the year, we established the structural foundation that makes maturity achievable: A completed materiality assessment, a first GHG measurement, the first renewable energy installation, and a Board-Level governance structure over sustainability. These are the conditions that precede targetsetting, and target-setting is the

condition that precedes meaningful progress.

Across 295 stores, millions of First Citizen Club members, and a network of vendor partners, our impact on people and the environment is immediate and direct. That is not a Limitation on our sustainability ambition. It is the reason our sustainability programme is worth building carefully.

How We Determine What Matters

In FY 2025-26, we completed our inaugural Double Materiality Assessment (DMA), a structured evaluation of 16 sustainability topics across two independent dimensions.

The assessment drew on inputs from internal and external stakeholders, a peer analysis of domestic and global retail comparators, a cross-functional internal workshop, and validation with senior management. What emerged is a ranked List of 16 topics that now anchors how we allocate effort, set priorities, and report. Governance topics rank highest, a concentration that reflects the nature of our business: we hold the personal data of millions of customers, manage a multi-tier vendor network, and process targe daily transaction volumes. Each carries real accountability.

Environment

Our four environmental material topics share a common thread: they are alt concentrated in the operation of our store network, where consumption of energy and water is continuous and where the packaging of every customer purchase adds to a cumulative material burden. The guestion we are asking ourselves is not whether we have a footprint. We do. The guestion is whether we are managing it with the rigour it reguires.

This year, the answer for the first time is grounded in actual measurement rather than estimate. We completed our inaugural GHG inventory, measured our water and energy consumption systematically across the network, and began reporting both absolute figures and intensity trends. The direction is positive. The ambition is now be to formalise targets

Energy Management and Decarbonisation

Our total energy consumption in FY 2025-26 was 266,874 GJ, sourced entirety from the grid. Energy intensity per rupee of turnover improved to 56.68 GJ per Rs. Crores from 59.12 GJ per Rs. Crores in FY 2024-25, a reduction of 4.1%. loT-enabted real-time monitoring is now operational across 96 stores. Building Management Systems are being deployed for FIVAC optimisation. LED retrofitting continues across the network. We commissioned a 250 KWp solar power plant at our warehouse during the year, our first renewable energy instattation. Generator sets across operations have been upgraded to CPCB IV emission-compliant standards.

Governance

Four of our five governance material topics rank in the top six of our DMA. The concentration reflects the nature of our business. Across 295 stores, our e-commerce platform, and the First Citizen Club, one of Indias Longest-running Loyalty programmes with over 13.5 million members, every customer interaction generates data: purchase history, contact details, payment information, and behavioural patterns that inform how we serve them. That data is a commercial asset and a custodial responsibility in eguat measure. Beyond our customers, our supply chain spans domestic manufacturers, international brand Licensees, and private Label vendors, each carrying

Our combined Scope 1 and Scope 2 emissions totalled 55,916 tC02 eguivatent. Emission intensity improved to 11.87 tC02e per Rs. Crores from 11.99 tC02e per Rs. Crores in FY 2024-25. The year-on-year increase in absolute Scope 1 reflects an expanded reporting boundary that now includes generator fuel at alt stores, and not an increase in underlying emissions. We have commenced Scope 3 measurement since FY 2025-26. The intensity for Scope 3 emissions was 60.82 tC02 per Rs. Crores.

Water Stewardship

Our water consumption in FY 2025-26 was 193,728 kilolitres, a reduction of 3.2% from 200,098 KL in FY 2024-25. We source alt water from third-party municipal supply and undertake no

distinct compliance and ethical obligations that we are accountable for even where we do not have direct operational control. At this scale, governance is not a support function.

It is the foundation on which customer trust, supply chain integrity, and commercial reputation are built simultaneously.

Board Oversight of Sustainability

Oversight of our sustainability agenda is vested in the Corporate Social Responsibility and ESG Committee (CSR and ESGC) of the Board, chaired by Independent Director Ms. Purvi Sheth, with Managing Director and Chief

groundwater extraction. Water intensity per rupee of turnover declined from 45.11 KL per Rs. Crores to 41.15 KL per Rs. Crores.

Waste & Circularity

We are registered on the CPCB Extended Producer Responsibility portal and in FY 2025-26 recycled 159 metric tonnes of plastic through a CPCB-approved processor. Our private Label range incorporates bamboo cotton, Linen, and recycled plastic fibres. Establishing a comprehensive waste baseline is identified as a near-term priority alongside our Scope 3 programme.

Executive Officer Mr. Kavindra Mishra among its members. Alt nine NGRBC Principles are covered by Board- approved policies, independently assessed by our GRC function and internal auditors annually. Our Board received four training and awareness sessions on ESG, governance, and statutory matters during FY 2025-26.

Ethics and Compliance

We reported no material fines, penalties, monetary settlements, or non-monetary sanctions in FY 2025-26. No Directors, Key Managerial Personnel, or employees were subject to enforcement action for bribery or corruption. Our Anti-Bribery and Anti-Corruption Policy applies to alt Directors, employees, and third parties. The Vigil Mechanism received 21 whistleblower complaints during the year, alt resolved with nit pending at year end. Code of Conduct training covered 95% of employees other than the Board and KMPs.

Data Privacy and Cybersecurity

Data Privacy and Cybersecurity is our highest-ranked material topic. We hold purchase history, financial records, and contact details for millions of First Citizen Club members and online customers. Protecting this data is a material regulatory obligation under the

Digital Personal Data Protection Act 2023 and a foundational condition of the trust on which our Loyalty programme is built. Our Information Security Management System is aligned to ISO 27001. A Security Operations Centre provides continuous monitoring. We maintain annual penetration testing, a tested Data Breach Response Plan, and embedded consent management controls. We received zero substantiated complaints concerning breaches of customer privacy in FY 2025-26.

Supply Chain Integrity

Our Supplier Code of Conduct prohibits child Labour, forced Labour, and discrimination across our entire vendor network. ESG screening is applied to alt new suppliers at onboarding. Critical suppliers are subject to independent third-party audit. Human rights obligations are embedded in our business agreements. We met our EPR plastic recycling obligations in FY 2025-26.

The Year Ahead

FY 2025-26 has given us the infrastructure that makes ambitious ESG commitments achievable: a completed materiality assessment, a baseline GHG measurement, our first renewable energy asset, and Board-Level accountability. What it has not yet given us is a set of guantified, time-bound targets. That is the work of FY 2026-27. We will formalise targets across our 16 material topics, with renewable energy adoption, Scope 3 measurement, and supply chain sustainability as the near-term priorities. These targets will be disclosed in the next Annual Report.

Detailed disclosures across ESG topics, including complete performance data, and NGRBC Principle-wise performance indicators, are available in the Business Responsibility and Sustainability Report (BRSR) which forms part of this Annual Report.

Framework and Governance

At Shoppers Stop, our Enterprise Risk Management (ERM) framework is deeply integrated with our strategic planning and performance management processes. This structured approach, aligned with the gtobatty recognised COSO 2017 framework, strengthens our governance and enables risk- assessed decision-making in our day-to-day operations.

Our risk governance is ted by the Board of Directors, which provides overall oversight. The Risk Management Committee (RMC) is responsible for the policys

implementation and effectiveness. The Risk Oversight Committee (ROC), a body of CXOs and Business Heads, manages the day-to-day execution, ensuring that mitigation plans are effectively implemented and continuously monitored.

Risk Management Process

Our risk management process is a dynamic cycle designed to proactively identify and manage threats to our strategic objectives:

• Identification: Continuous scanning of the internal and external environment through workshops, market research, and peer tracking.

• Assessment: Evaluation of identified risks on a 5x5 matrix gauging impact (financial, operational, reputational)

and Likelihood.

• Mitigation: Execution of targeted mitigation packs containing defined timelines, metrics, and risk owners.

• Monitoring: Dynamic review of Key Risk Indicators (KRIs) with periodic reporting to the RMC and Board.

Principal Risks and Mitigation Measures

Our business faces a variety of risks across its different segments. We have identified several high-priority risks and have implemented the following targeted mitigation measures to address them: