Spencers Retail Ltd Management Discussions

Management Discussion and Analysis Report

Spencers Customer Proposition and Network Evolution

As Indias retail landscape shifted from small local stores to organised formats, Spencers Retail Limited (also referred to as Spencers or The Company) has consistently adapted to this transformation. Since 2000, the Company has worked to bring essentials closer to everyday consumers and developed a retail format that combines convenience, breadth of assortment, and a familiar shopping environment.

Over the years, this approach has helped Spencers strengthen presence across its core markets, while keeping the business focused on operational discipline and customer relevance.

As of March 31, 2026, the Company, as a proud part of the RP-Sanjiv Goenka Group, operated 120 stores, comprising 89 Spencers stores in 18 cities and 31 Natures Basket stores in 6 cities. Together, these stores covered a combined trading area of 8.73 Lakh sq. ft. (7.55 Lakh sq. ft. for Spencers and 1.18 Lakh sq. ft. for Natures Basket). The Companys footprint remained concentrated in markets with strong brand familiarity, customer loyalty, and deeper consumer insight, particularly across Eastern India and Uttar Pradesh. This regional focus led to better store productivity, tighter execution, and improved cost efficiency across both store and corporate operations.

The Company also continued to refine its retail model through a more integrated format and channel strategy. Through Omnipresent Retail India Private Limited (ORIPL), its e-commerce subsidiary, Spencers has expanded the reach of its offering beyond the physical stores. The Company through its online platform brings together daily essentials, fresh groceries, lifestyle products, and select premium categories in one place, allowing customers to shop across convenience-led use cases. In parallel, Natures Basket Limited (NBL) continued to strengthen the Companys premium retail presence, offering curated gourmet, international and health- focused products, supported by enhanced digital engagement and omnichannel integration.

The Company also continued to scale JIFFY, its quick-commerce platform, positioned around a 30-minute delivery promise and anchored by the brand proposition Joh Bhi Chaho Jhat Se Pao, to address the growing need for speed and convenience in urban consumption. Built on a store-led fulfilment model, JIFFY leverages the existing retail network to deliver efficiently without heavy infrastructure, while maintaining strong control over product quality and availability. This year, the focus remained on strengthening faster fulfilment capabilities for urban consumers, while remaining aligned with Spencers core promise of reliability, quality, and neighbourhood familiarity.

All along, the Companys efforts are centred on delivering a simpler, more efficient shopping experience. Whether through the store network, digital commerce, or quick-commerce delivery, Spencers continues to build a retail model that is intended to offer convenience while retaining its core brand strengths of trust and familiarity. This focus has led to a leaner and more agile operating structure, with the groundwork now in place for stronger execution and better alignment of resources with growth priorities.

Economic Overview

Moderation in a Complex Environment

The global economy is navigating a more complex and uncertain environment, with growth expected to moderate to around 3.1% in 2026 and 3.2% in 2027, remaining below historical averages. This shift reflects the impact of renewed geopolitical disruptions, particularly the conflict in the Middle East, which has contributed to volatility in commodity markets, firmer inflation expectations, and tighter financial conditions. While economic activity continues, the pace has softened, with pressures more visible in economies already facing structural vulnerabilities.

Inflation dynamics have also become less linear, with a temporary uptick anticipated in 2026 before easing again thereafter. The burden of these pressures is expected to fall disproportionately on emerging market and developing economies, especially those reliant on commodity imports, where currency movements and input costs continue to influence price stability.

At a structural level, rising defence expenditures and shifting geopolitical alignments are reshaping fiscal priorities across economies. While such spending may provide short-term support to economic activity, it is also contributing to widening fiscal deficits, increasing public debt levels and constraining long-term policy flexibility. These developments, combined with ongoing trade fragmentation and uncertainty around productivity gains from new technologies, are redefining the global growth landscape.

Outlook

Global growth is expected to remain steady but subdued, supported by gradual normalisation in inflation and resilience in domestic demand, even as the overall trajectory stays sensitive to geopolitical developments, commodity price movements and financial market conditions, with risks largely skewed towards the downside amid constrained policy headroom and evolving trade and supply chain dynamics.

(Source: https://www.imf.org/en/publications/weo/issues/2026/04/14/world- economic-outlook-april-2026)

Spencers Perspective

Spencers remains relatively insulated from global demand volatility due to its domestic, consumption-led business model and focus on essential categories. However, indirect impacts such as input cost fluctuations and supply chain disruptions are managed through disciplined sourcing, inventory control and cost optimisation.

The evolving environment also presents opportunities. Increasing value-conscious consumption and growing demand for convenience align well with the Companys strategy, supported by private labels, a focused store network and the continued scaling of digital and quick-commerce platforms such as JIFFY.

Indian Economic Overview: Domestic Fundamentals Offsetting External Volatilities

The Indian economy maintained strong growth momentum during the year, reinforcing its position among the fastest-growing major economies. Real GDP growth for 2025-26 reached 7.6%, with resilient domestic demand, improving investment activity, and stable macroeconomic conditions coming together to drive an uptick over the previous fiscal.

This growth momentum was broad-based, with private consumption continuing to play a key role, aided by stable inflation and rising income levels. Government capital expenditure continued to drive infrastructure development, while services and manufacturing sectors recorded strong expansion, with several segments reporting high single-digit to double-digit growth.

Price stability remained a key feature of the macroeconomic environment during the year. According to the Ministry of Statistics and Programme Implementation (MoSPI), headline Consumer Price Index (CPI)-based inflation stood at 3.93% in May 2026, with the All India CPI (Combined) Index at 105.91. Looking ahead, the IMF projects Indias inflation at 4.0%, indicating continued price stability over the medium term.

(Source: https://www.mospi.gov.in/themes/ product/9-consumer-price-index-cpi)

Indias economic trajectory continues to reflect sound traction from consumption and investment, aided by sustained government capital expenditure and gradual improvement in private sector participation. Strengthening domestic demand, driven by urban consumption and formalisation trends, is expected to provide a continuous impetus to economic activity.

The growth outlook is likely to be supported by a combination of consumption and investment drivers. Steady income levels are expected to sustain consumption, while continued infrastructure development and persistent capital expenditure are anticipated to support investment cycles and business confidence.

Domestic fundamentals are expected to remain the key enablers of growth, helping offset potential near-term volatility arising from external factors. Continued execution of public spending, steady demand conditions, and structural drivers are likely to support a stable expansion trajectory.

Spencers Perspective

Indias strong consumption-led growth continues to provide a supportive operating environment, with steady demand, improving incomes and expanding organised retail. Spencers remains well aligned to this trajectory through its focus on essential categories and core markets, ensuring stable demand visibility.

The Company is leveraging structural shifts such as digital adoption and growing convenience- led consumption through its omnichannel strategy and the continued scale-up of JIFFY.

At the same time, disciplined sourcing, inventory control and cost management help mitigate inflationary pressures, enabling Spencers to balance growth opportunities with operational stability.

Indian Retail Industry Overview

The Indian retail industry sustained robust growth momentum, driven by rising consumption, expanding urban and non-urban demand, and increasing formalisation of the sector. The retail market was estimated at approximately US$ 1.06-1.12 Trillion in 2025, with projections indicating a scale-up to around US$ 1.15-1.20 Trillion in 2026. This expansion is driven by sustained demand and structural shift towards organised retail formats.

The growth trajectory is aided by steady consumption, favourable demographics, and increasing penetration of formal retail channels. The sector is projected to maintain its medium-term expansion, with the market potentially reaching ~US$ 1.8-1.9 Trillion by 2030, driven by rising incomes and evolving consumption patterns.

With a contribution of over 10% to Indias GDP and nearly 8% to total employment (2024-2025 estimates), retail has emerged as a structurally crucial sector within the economy. However, the industry continues to be fragmented, with organised retail accounting for ~18-20% of the total and the unorganised segment retaining dominance. That said, organised retail is expanding at a faster pace, supported by improved supply chains, better store formats, and increasing consumer preference for branded and quality- assured products.

Tier II and Tier III markets are increasingly dominating this growth momentum, supported by rising income levels, improved infrastructure, and deeper penetration of digital payments. These markets are contributing significantly to incremental retail demand and are expected to remain key growth engines for organised players.

Retail channel dynamics in India are increasingly diversifying. The e-commerce market has scaled to approximately US$ 60-65 Billion in 2025, supported by a growing online shopper base and improved logistics infrastructure. Physical retail also remains strong, with sustained leasing activity and ongoing retail space additions across major cities reaffirming the relevance of brick- and-mortar formats.

Direct-to-consumer (D2C) brands and quick-commerce platforms are emerging as key formats shaping consumer access and purchase behaviour, improving availability and reducing delivery timelines. These developments are fostering a more integrated retail ecosystem, with consumers increasingly engaging across multiple channels.

Shift towards Formal And Multi-Channel Retail Formats

Organised retail continues to strengthen its position within Indias retail landscape, supported by changing consumer preferences and increasing formalisation.

While organised formats have historically outpaced broader market growth, the current phase reflects a gradual shift in market share, driven by improved accessibility, varied assortment, and enhanced convenience.

Digital channels are increasingly supporting organised retail growth, with Indias e-retail market estimated at ~US$ 60 Billion in 2025 and expected to expand further in 2026.

The momentum is being driven by increasing online shopper penetration and improved fulfilment infrastructure. Within this, quick commerce continues to gain traction, accounting for a significant share of online grocery demand, particularly in urban markets.

Organised retail growth is also being shaped by deepening penetration across Tier II and Tier III markets, buoyed by rising incomes and strengthening digital infrastructure. At the same time, increasing presence of branded and direct- to-consumer offerings is tilting the momentum towards formal retail channels.

SpencersPerspectiv^?

Spencers is aligning to a retail environment where convenience, frequency and digital engagement are reshaping consumption. The focus is on building a stronger core through portfolio rationalisation, cost discipline and improved store productivity, creating a more efficient operating base.

Growth is being driven through JIFFY and omnichannei integration, leveraging a store-led fulfilment model to scale digital demand while maintaining capital discipline and improving unit economics.

With offline channels stabilising through better engagement and digital driving expansion, Spencers is transitioning towards a balanced, omnichannei-ied growth model aligned with evolving customer behaviour.

Consumption Trends in Retail: Urban Demand Leading, Rural Recovery Strengthening

Retail consumption in India continues to show a differentiated trajectory across regions. Urban markets remain the key growth driver, while rural consumption is demonstrating a gradual recovery across essential and discretionary categories.

During 2024-25, this translated into steady urban discretionary spending, complemented by improving demand conditions in rural markets.

This trend continued into 2025-26, with retail consumption remaining stable, supported by easing inflation, surging income levels, and sustained government spending. Urban markets are likely to maintain pace, particularly in discretionary and premium categories, while rural demand is expected to see further improvement, aided by agricultural output and conducive macro conditions.

Changing Income Mix Shaping Retail Demand

A Growing and Evolving Consumer Base

Retail demand in India is being driven by a wider and evolving consumer base, with rising incomes and increasing participation across segments. As more households move into higher income brackets, consumption patterns are becoming more diverse across categories.

Diverse Spending Patterns across Segments

Spending behaviour among consumers varies across income groups and geographies. While higher-income households continue to lead discretionary spending, middle-income segments provide stable demand, supporting volume- led growth in retail.

Premiumisation alongside Value Demand

Spending trends indicate a balanced shift, with premium categories expanding alongside continued strength in value-driven consumption. This creates opportunities for retailers to cater to both aspiration-led and essential consumption needs.

Indias Evolving Consumer Landscape

Expanding Working-Age Population Supporting Consumption Growth

A favourable demographic profile continues to support retail consumption in India, with the working-age population accounting for ~68% of the total population in 2025. This sizeable income-generating base supports steady consumption across both essential and discretionary categories.

Complementing this demographic advantage, India remains a relatively young economy, with a median age of ~28 years, supporting demand for lifestyle, fashion, and convenience-led products. At the same time, a gradual increase in the share of older consumers is pushing up demand in healthcare, wellness, and daily essentials categories. This demographic mix, comprising a young consumer alongside a growing working population, continues to support sustained demand across retail categories, enabling both volume growth and gradual premiumisation.

Rising Women Workforce Participation Driving Household Spending

Womens participation in Indias workforce continues to rise gradually, contributing to a broader consumption base. As per the latest data, female labour force participation reached ~34.9% in late 2025, reflecting an improvement over earlier periods.

The rise in participation is supporting higher household incomes and greater financial independence, which in turn is influencing spending patterns across categories such as apparel, personal care, healthcare, and household products.

Retail Demand Shifting beyond Metros

Non-metro markets are playing an increasingly important role in driving Indias retail growth, with Tier II and Tier III cities constituting a rising share of consumption demand. Representing a significant portion of the total population, combined with improving income levels, wider digital adoption, and better infrastructure, these regions are becoming key consumption hubs.

This trend is also evident in the large share of new consumers, particularly in e-commerce, emerging from these markets. Increasing internet penetration and enhanced access to organised retail channels are widening participation, leading to a more distributed demand base across geographies and categories.

Opportunities and Threats in the Indian Retail Market Opportunities

Indias retail sector continues to present multiple growth opportunities, supported by structural drivers and evolving consumption patterns.

Expanding Consumption Base

Rising incomes and an increasingly aspirational consumer class continue to support retail demand, with consumption expected to remain a key driver of sectoral growth.

Digital and Omnichannel Expansion

E-commerce, quick commerce, and direct- to-consumer models are scaling rapidly, reflecting a shift in consumer purchasing behaviour, while providing retailers with multiple avenues to enhance reach.

Technology-led

Transformation

Adoption of technologies such as AI, data analytics, and smart retail systems is improving customer engagement, inventory management, and operational efficiency across the retail value chain.

Growth in Non-Metro Markets

Retail demand is steadily expanding beyond metros, with Tier II and Tier III cities emerging as prime consumption hubs, driven by improving infrastructure and digital access.

Evolving Retail Formats and Infrastructure

Expansion of organised retail through new malls and destination retail spaces is supporting modern trade growth and enhancing consumer experience.

Threats

Despite strong growth prospects, the sector continues to navigate multiple risks that require proactive management.

• Intensifying Competition

Competition from organised retailers, digital-first platforms and quick commerce players continues to increase pressure on pricing and service levels.

• Margin Pressures

Input cost volatility, discount-led competition and rising logistics costs are impacting margins across the value chain.

• Shifting Consumer Preferences

Rapid changes in consumer behaviour require continuous adaptation in assortment, pricing and engagement strategies.

• Operational and Supply Chain Risks

Supply chain disruptions, inventory management challenges and dependence on technology infrastructure may impact operational efficiency.

^ Regulatory and Market Constraints

Regulatory conditions, along with uneven digital and infrastructure penetration across regions, may influence the pace of organised retail expansion.

Indian Organised Retail Industry

The Indian retail industry concluded 2025-26 with a notable shift towards structural maturity. As of March 2026, the sector is valued at approximately US$ 1.12 Trillion, maintaining a consistent growth trajectory despite global economic headwinds. According to the Retailers Association of India (RAI) Business Survey released on March 25, 2026, retail sales in India grew by 9% year-on-year in February 2026. The food & grocery and apparel categories spearheaded this growth, recording 11% and 12% surges respectively, while representing significant data points for Spencers core operations.

The industry is currently defined by the Bharat Surge, with consumption leadership shifting from metros to Tier II and Tier III cities. According to the BCG-RAI Winning Codes for Retail 2035 report (February 16, 2026), the market is projected to reach 215 Trillion by 2035. A critical development in early 2026 is the transition towards Agentic Commerce, where AI-driven systems actively guide customer discovery and purchase decisions. This shift is driving 40-60% productivity gains in supply chain and inventory management for retailers, as organisations move away from isolated tech deployments to full-scale functional transformation.

Key Growth Drivers

Favourable Fiscal Reforms (Union Budget 2026-27)

The Union Budget presented on February 1, 2026, introduced the Income Tax Act, 2025, effective April 1, 2026. By simplifying tax compliance and strengthening fiscal stability, it creates a more predictable environment for middle-class household spending.

Boost to Disposable Income

Specific measures in the 2026-27 Budget, such as the reduction of customs duty on personal imports from 20% to 10% and the exemption of duties on essential medicines, have increased the disposable income for discretionary spending. This supports a higher average transaction value in both grocery and lifestyle retail.

Infrastructure and Real Estate Maturation

According to the CBRE India Retail Market Outlook published on March 12, 2026, approximately 50-55% of the new retail supply through 2028 will consist of large- scale destination malls. This trend provides organised players like Spencers with high-quality spaces to execute experiential retail formats.

Quick Commerce Integration

By the first quarter of 2026, Quick Commerce has become the default shopping habit for urban consumers. Physical stores are increasingly serving as high-velocity fulfilment hubs, seamlessly linking digital discovery with physical delivery.

Digital Public Infrastructure

The continued expansion of the Open Network for Digital Commerce (ONDC), coupled with the widespread adoption of UPI, enabling more sophisticated credit- linked transactions, have lowered the barriers to entry for organised retail in remote regions.

Premiumisation and Value Consciousness

The market is witnessing a dual-track trend. Value-led fashion continues to drive volumes, while the grocery sector is witnessing a substantial shift towards premium, health-conscious, and organic offerings, as consumers prioritise quality and transparency.

The Digital Commerce Landscape

The Indian e-commerce market has evolved from a supplementary sales channel into a core pillar of the national economy. This journey is best captured through the sectors rapid scale-up - from a valuation of approximately US$ 84 Billion in 2022 to an estimated US$ 163 Billion as of March 31, 2026. With a CAGR of 27%, this trajectory highlights a doubling of the market size in just four years, led by the structural shift towards high-frequency daily essentials from discretionary electronics.

The momentum is expected to remain strong, with the e-retail segment alone projected to reach US$ 170 Billion by 2030 according to IBEF and BCG reports (February 2026). A massive broadening of the consumer funnel supports this expansion. Indias digital shopper base has grown from 140 Million in 2020 to nearly 300 Million in 2025-26. For a multi-format player like Spencers, this maturing ecosystem where online payments eclipsed cash-on-delivery for the first time during the January 2026 sales period presents a significant opportunity. It now stands as a strong stimulus to bolster digital engagement through high-trust, omnichannel touchpoints.

Key Growth Drivers

Union Budget 2026-27 Reforms

The Budget 2026-27 introduced a significant reform to help Indian brands grow beyond borders. Effective April 1, 2026, the earlier 10 Lakhs ceiling on the value of goods that could be sent abroad via courier has been removed entirely. For a company like Spencers, this is a great fillip as it enables higher- value shipments to be sent with greater speed and significantly reduced paperwork. It essentially opens a green channel for online brands of retail houses to reach a global audience without the usual shipping headaches.

More Spending Power for the Indian Family

The Income Tax Act, 2025 made taxes much simpler to understand for the average person. By clearing up the confusion around tax filings and leaving more take-home earnings in the pockets of the middle-class, customers are spending more per visit. When people feel more secure about their monthly budget, they are more willing to upgrade to premium groceries or buy that extra piece of clothing - a trend that directly boosts the sales of retailers like Spencers.

Faster, Cheaper Delivery and Better Warehousing

The National Logistics Policy made the movement of goods from warehouses to a customers doorstep significantly more efficient. Additionally, the government has set aside 12,000 Crores specifically to help smaller businesses and partners improve their storage and technology. For Spencers, this translates into a smarter and more affordable supply chain that enables the Company to store more variety and deliver it faster, while keeping internal costs low.

The New Way to Shop: Videos and Social Media

Shopping is rapidly evolving into a social activity, calling for more intuitive experiences than just visiting a traditional website or a store. In 2025-26, Live Commerce, where people shop directly through live videos or social media chats exploded in popularity. Younger shoppers especially prefer seeing a product in action on their phone before hitting buy. By tapping into this trend, Spencers is meeting its customers on their social feeds, the place where they spend most of their time.

Spencers Perspective ^m

Spencers views the organised retail sector as structurally growing but increasingly competitive, with success shifting from expansion- led growth to execution- led efficiency.

The Company has responded by focusing on core markets, exiting under performing regions and improving store productivity, while strengthening its food-first, essential-led portfolio to ensure stable demand.

At the same time, it is leveraging the rise of omnichannel retail through JIFFY and store-led fulfilment, enabling faster delivery and digital scale without heavy capital deployment.

With continued emphasis on cost discipline, inventory efficiency and customer retention (through membership programmes), Spencers is aligning its model to drive sustainable growth in an increasingly margin- sensitive and digitally evolving retail environment.

Indian Quick Commerce Market Overview

The Indian Quick Commerce market has transitioned from a convenience-led service to a primary consumption pillar, reaching an estimated Gross Merchandise Value (GMV) of US$ 15 Billion (-1.25 Trillion) for the full year of 2026. This scale-up is validated by a record-breaking performance in January 2026, where monthly sales hit Rs.11,000 Crores, nearly doubling the sectors previous annual run- rate. The monthly active user base is on track to reach 70 Million by the end of 2026. The market is also moving beyond basic grocery staples into high-margin categories such as beauty, personal care, and electronics. This diversification is actively improving unit economics, raising the projected Average Order Value (AOV) to a range of 520-550 during this year. Additionally, advertising is emerging as a key profit driver, expected to generate 4,900 Crores in 2026 alone, strengthening the long-term viability of the 10-to-30-minute fulfilment model.

Rising Disposable Income Supporting Consumption

The Union Budget 2026-27 and the Income Tax Act, 2025, made taxes simpler for middle-class families.

With no tax on income up to Rs.12.75 Lakhs (for salaried individuals including standard deductions), urban households now have more reliable take-home pay which is often spent on convenience services like fast delivery.

Expanding Category Mix beyond Essentials

One of the biggest shifts in 2026 is that people are using fast- delivery apps for more than just emergencies. Sales of non-grocery items like beauty products and small electronics are growing 1.6 times faster than food items. Since these products have higher profit margins, it brings more financial stability to the entire delivery business.

Store-Led Fulfilment Driving Cost-Efficient Delivery

Retailers are now using their existing neighbourhood supermarkets to do double duty. These locations serve walk-in customers and also act as high-speed dispatch hubs for online orders. This allows businesses like Spencers to deliver products in minutes without the high cost of building separate warehouses.

Digital Infrastructure Enabling Wider Adoption

The continued expansion of the Open Network for Digital Commerce (ONDC) and smarter UPI features have made shopping apps more accessible and easier-to- use. These digital tools are creating strong traction for quick delivery models to thrive beyond metros and create ripples in smaller cities where people are rapidly adopting digital > shopping habits.

Spencers Perspective

The Indian quick commerce sector is scaling rapidly, though sustainability of unit economics remains critical. Spencers is participating through JIFFY, built on a store-led fulfilment model that leverages its existing network instead of dark stores, enabling faster delivery with lower capital intensity.

JIFFY focuses on curated, high- frequency categories, supported by integrated backend systems that improve order processing, fulfilment efficiency and delivery reliability. The platform is also evolving through brand-led monetisation initiatives, creating additional revenue streams beyond transactions.

Expansion remains cluster-led and demand-driven, allowing Spencers to scale efficiently while maintaining cost discipline and improving unit economics in a competitive landscape.

Indias retail sector continues to witness steady growth, supported by rising consumption, increasing formalisation, expanding urbanisation, and improving digital adoption. Core categories such as food & grocery, fresh products, apparel, and daily essentials continue to remain key drivers of organised retail growth.

Tier II and Tier III markets are increasingly shaping Indias consumption landscape, driven by improving connectivity, rising disposable incomes, and growing penetration of digital commerce.

At the same time, the convergence of offline and online retail formats, including quick commerce and hyperlocal fulfilment, is transforming customer expectations around convenience, accessibility, and delivery speed.

Supportive policy measures, improving retail infrastructure, and increasing preference for organised retail are expected to further strengthen the sectors longterm outlook. In parallel, evolving consumer preferences across both value-driven and premium product categories are creating opportunities for differentiated retail formats and stronger customer engagement.

Going ahead, retailers with efficient supply chains, strong regional relevance, omnichannel capabilities, and focused customer propositions are expected to be better positioned to capitalise on the evolving organised retail opportunity.

Key Performance Highlights (FY 2025-26)

2025-26 was a year of operational stabilisation and gradual recovery for Spencers, marked by stronger execution, disciplined cost management, improving customer engagement, and visible momentum in the second half of the year. While overall sales for the year remained broadly stable, the business demonstrated a clear turnaround trajectory across regions and categories during the second half of the year.

Gradual Recovery across the Business

Despite a relatively challenging operating environment during the early part of the year, impacted by subdued consumption trends, weak summer demand, temporary category availability issues, and transition-related disruptions, the business demonstrated visible improvement in momentum as the year progressed. Strengthening customer traction, improved category execution, better availability, and focused operational interventions supported a gradual recovery across markets and categories.

The East region remained largely stable during the year, while East UP witnessed stronger recovery momentum supported by improving sales trends and sharper execution initiatives across stores.

Strengthening Customer Engagement through Rewards Programme

A major milestone during the year was the successful scale-up of the My Spencers Rewards (MSR) programme, which emerged as a key customer retention and engagement driver. The Company added over 97,000 members during the year, with members contributing nearly 314 Crore in sales. Member frequency remained significantly higher than the overall customer base, supporting improved retention, repeat purchases, and higher average monthly spends.

The rewards-led engagement model also supported stronger omni-channel behaviour, higher customer stickiness, and increased wallet share across categories.

Continued Focus on Cost Discipline and Operational Efficiency

The Company maintained strong focus on operating discipline during the year through tighter cost controls, inventory optimisation, space productivity improvement, and leaner store operations. Store controllable costs and overall operating expenses were reduced meaningfully versus the previous year, despite continued investments in growth initiatives and digital capabilities. Operational initiatives across merchandising, assortment optimisation, inter-store transfers, stock freshness management, and planogram execution further improved store productivity and inventory utilisation across the network.

Omni-Channel and Digital Momentum

Spencers continued to strengthen its omni-channel capabilities during the year, with growing contribution from digital channels and improved fulfilment efficiency. JIFFY continued to scale through a store-led fulfilment model focused on faster deliveries, better customer experience, and disciplined expansion. Digital engagement, online ordering behaviour, and omni-channel customer participation continued to improve during the year.

Category-Level Performance Improvement

Liquor and Staples emerged as relatively stronger-performing categories during the year, supported by premiumisation, improved assortment, and stronger customer demand. Fresh categories also demonstrated gradual recovery during the second half, supported by better availability, pricing initiatives, and sharper execution.

General Merchandise, Fashion, and Electronics businesses focused on improving margins, reducing inventory, and strengthening category-level profitability through sharper merchandising and inventory optimisation initiatives.

Building a Stronger Operating Foundation

The year also saw continued progress across frontline execution, digitisation, employee engagement, and operational agility. The Company strengthened execution discipline through integrated platforms such as DISHA, improved store readiness processes, higher UPI adoption, and better coordination across functions. Spencers also continued to invest in people initiatives, training, and employee experience to support long-term organisational capability building.

Operational Review

Operational Metrics	2024-25	2025-26
Revenue from Operations (Rs. in Crores)	1,995.20	1,799.99
Gross Margin (%)	19.60	20.5
ORIPL (GMV Rs. in Crores)	278	197

Financial Review

Standalone for the Year Ended March 31, 2026

Financial Metrics	2024-25	2025-26
Turnover (Rs. in Crores)	1700.92	1522.54
Return on Equity (%)	NA*	NA*
Net Asset Value per Share (Rs.)	(32.55)	(47.60)
Earnings per Share (Rs.)	(20.50)	(14.82)

*As the net-worth is negative as of March 31, 2025 and March 31, 2026.

Consolidated for the Year Ended March 31, 2026

Financial Metrics	2024-25	2025-26
Turnover (Rs. in Crores)	1,995.20	1,799.99
Return on Equity (%)	NA*	NA*
Net Asset Value per Share (Rs.)	(7340)	(101.29)
Earnings per Share (Rs.)	(27.33)	(27.66)

*As the net-worth is negative as of March 31, 2025 and March 31, 2026.

Standalone Ratio Shifts

Particulars	2024-25	2025-26	% Change
Interest Coverage Ratio	(0.73)	0.00	(100)
Operating Profit Margin (%)	(3.11)	0.00	(100)
Net Profit Margin (%)	(10.86)	(8.77)	(19)
Earnings per Share (Rs.)	(20.50)	(14.82)	28
Return on Net Worth (%)	NA*	NA*	NA*
Debt-Equity Ratio	NA*	NA*	NA*
Debtors Turnover (Days)	5.34	5.64	6
Inventory Turnover (Days)	38.45	34.47	(10)
Current Ratio	0.25	0.31	24

*As the net-worth is negative as of March 31, 2025 and March 31, 2026

Consolidated Ratio Shifts

Particulars	2024-25	2025-26	% Change
Interest Coverage Ratio	(0.96)	(0.79)	(18)
Operating Profit Margin (%)	(4.11)	(4.46)	9
Net Profit Margin (%)	(12.35)	(13.85)	12
Earnings per Share (Rs.)	(27.33)	(27.66)	(1)
Return on Net Worth (%)	NA*	NA*	NA*
Debt-Equity Ratio	NA*	NA*	NA*
Debtors Turnover (Days)	3.98	4.38	10
Inventory Turnover (Days)	39.98	35.90	(10)
Current Ratio	0.26	0.26	0

*As the net-worth is negative as of March 31, 2025 and March 31, 2026.

Risk Management Approach

Spencers operates in a dynamic and evolving retail environment and remains focused on proactively identifying and managing risks that could impact performance and continuity. The Companys approach combines operational discipline with forward-looking assessment, enabling timely response to emerging challenges while safeguarding business resilience. Through structured monitoring, strong internal processes and continuous review mechanisms, Spencers seeks to mitigate risks and sustain stable, long-term growth.

Risk Domain	Description	Mitigation Approach
Inventory Risk	Imbalance between demand and supply may impact availability and working capital.	Meticulous demand planning, regular stock reviews, and efficient replenishment cycles to maintain optimal inventory levels.
Pricing and Demand Risk	Variations in pricing environment may influence consumer purchasing behaviour.	Balanced product mix, value-led offerings, and periodic pricing reviews to help align with demand trends.
Competitive Intensity	Increasing presence of organised retail, e-commerce, and new formats may impact market share.	Enhanced focus on assortment, private labels, and customer engagement initiatives to strengthen differentiation.
Supply Chain Risk	Disruptions in logistics or sourcing may affect product availability and cost efficiency.	Resilient supplier network, streamlined logistics coordination, and diversified sourcing strategies to ensure continuity and cost efficiency.
Customer Experience Risk	Inconsistent service or product quality may impact customer retention.	Standardised operating procedures, sustained staff training, and ongoing monitoring of service quality across stores to elevate customer satisfaction.
Technology and Integration Risk	Increasing reliance on digital systems may hamper performance consistency and integration in periods of high load or disruptions.	Persistent system upgrades, improved data tracking, and integration of online and offline operations to amplify operational efficiency.

People and Culture

Spencers nurtures a capable and engaged workforce that enhances operational efficiency and delivers consistent customer experience. With a persistent focus on learning, accountability, and inclusivity, the Company elevates employee potential and equips them to contribute effectively across functions.

During 2025-26, Spencers fortified its people practices through structured initiatives in learning, engagement, and performance management, sharpening the competitive edge of a responsive and . future-ready organisation.

Building an Inclusive Workforce

Spencers values diversity and equal opportunity. Hiring practices are aligned to attract talent across backgrounds and skill sets, supporting operational requirements across stores and corporate functions. As of 2025-26, the total workforce stood at 2,648 employees, including 541 women employees, reflecting continued progress towards a more inclusive organisation.

By fostering an inclusive environment, it augments employee efficiency and business outcomes.

Strengthening Skills and Capabilities

Spencers consistently invests in capability building through structured training and development programmes. These initiatives are designed to enhance functional skills, customer engagement, and operational effectiveness across levels.

During the year, programmes such as Foundation Training, Shoppers Delight and My Spencers Rewards training were undertaken, with participation from over 1,500 employees across roles. Moreover, the Company continues to focus on building internal talent pipelines aligned with business requirements.

Driving Engagement and Cultural Alignment

Spencers prioritises employee engagement and drives targeted interventions to fortify team alignment.

Activities such as Academia Internship Programme and Rising Star were complemented by a wider set of engagement initiatives, including International Womens Day celebrations, festive events such as Diwali and Christmas, and large- scale programmes like Spencers Premier League and the Biggest Loser Challenge.

In addition, wellness initiatives such as health camps, Yoga Day sessions and awareness programmes contributed to building a positive, inclusive and health-conscious work environment, supporting improved employee morale, retention and productivity.

Advancing Gender Diversity and Inclusion

Spencers continues to support participation of women employees across functions, while investing in their long-term career growth.

As of 2025-26, women employees represented approximately 20% of the workforce, with a focus on further strengthening it across roles.

Developing Future Leaders

Spencers strives to identify and develop internal talent through structured programmes. During the year, People Management Programme: Managing Self and Rising Star was conducted to support promising employees in taking on more responsibilities.

A total of 1,011 employees participated in the programme, with 137 progressing to the next stage based on performance assessments. Individual Development Plans (IDPs) were implemented to enhance growth and skill development. In addition, the Academia-Industry partnership initiative enabled deployment of interns, with 20 interns completing the programme during the year.

Enhancing Frontline Effectiveness

Spencers attaches significant strategic importance to the frontline teams as a crucial enabler of its retail operations and consistently invests in strengthening store-level capabilities.

Training programmes focused on communication, customer handling, and operational processes were conducted during the year, with approximately 39 employees/managers participating to drive improved store execution and service delivery.

Internal Control Systems and their Adequacy

Spencers maintains a robust internal control framework aligned with the scale and complexity of its operations, aimed at ensuring accurate financial reporting, regulatory compliance, and operational efficiency.

Defined policies and procedures govern approvals, authorisations, and transaction processing across functions, supported by periodic reviews to ensure adherence to internal guidelines and regulatory requirements.

An independent internal audit function provides oversight of financial and operational processes through regular audits and assessments, identifying control gaps and recommending corrective actions where required.

The control environment is further strengthened through process standardisation and system-based monitoring, elevating consistency, visibility, and governance across operations.

Spencers also emphasises adherence to ethical business practices. Structured training programmes and digital learning modules, encompassing the Code of Conduct and key regulatory policies, are provided to create awareness and ensure compliance across levels.

Cautionary Statement

The statements within the Management Discussion and Analysis section outlining Spencers Retail Limiteds objectives, projections, estimates, and expectations may be regarded as forward-looking statements. These include, but are not limited to, statements concerning the Companys growth strategy, product development, market positioning, investment plans, and financial performance. Such statements are based on certain assumptions and expectations regarding future events. However, there can be no assurance that these assumptions and expectations will prove to be accurate or materialise as anticipated. The Companys actual results, performance, or achievements may vary significantly from those expressed in these forward-looking statements.

Spencers assumes no obligation to publicly update, modify, or revise any forward-looking statements in response to subsequent developments, new information, or future events. Where relevant, certain disclosures required within the Management Discussion and Analysis have been incorporated into the Boards Report to avoid duplication.