V-Mart Retail 2.0: From acquisition pains to retail gains

In a challenging economic environment marked by global trade tensions and domestic uncertainties, V-Mart Retail has emerged as a resilient player in India’s value retail sector. Despite initial setbacks worsened by the pandemic, the company has navigated through acquisitions, financial challenges, and operational adjustments to position itself for sustainable growth and profits.

Retail expansion and operational strategies

V-Mart Retail, known for its extensive network of nearly 500 stores across India encompassing 4 million sq. ft, specializes in value apparel targeting mass consumers. The company’s resilience amidst economic disruptions underscores its robust operational strategies. Despite the pandemic-induced slowdown, V-Mart persisted with its expansion plans, albeit cautiously, focusing on enhancing store efficiency and geographic footprint.

The acquisition of Unlimited from Arvind Fashions in 2021 marked an important move towards strengthening its presence in South India. The acquisition, valued at Rs 150 crore, included 74 stores integrated into V-Mart’s operational framework. By rebranding and optimizing these stores primarily located in Tier-I cities, V-Mart successfully aligned Unlimited’s operations with its value-focused retail model. This alignment has yielded promising results, with Unlimited reporting a 10 per cent same-store sales growth (SSSG) in Q4 FY25, outperforming V-Mart’s 7 per cent SSSG during the same period.

Digital expansion and turnaround efforts

In a bid to boost its digital footprint and tap into evolving consumer trends, V-Mart acquired Limeroad in FY23. This acquisition aimed to synergize digital capabilities with its physical retail strength. Despite initial challenges, including EBITDA losses, V-Mart’s concerted efforts in optimizing Limeroad’s operations have shown promising signs. By reducing advertising expenses and enhancing integration with V-Mart’s sales channels, Limeroad’s EBITDa losses halved to Rs 6.5 crore in Q3 FY25, showcasing a significant turnaround path.

Financial performance and debt management

V-Mart’s financial journey has been characterized by strategic investments and prudent financial management amidst rising debt levels. Over three years, the company invested approximately Rs 900 crore in CAPEX for acquisitions and store expansions, significantly impacting its debt profile. Despite this, V-Mart has demonstrated resilience in improving operating profits and managing working capital efficiencies.

Table: V-Mart’s performance and growth

The company’s shift towards profitable growth strategies, including store consolidation and inventory optimization, has contributed to reducing inventory days from 129 in FY23 to 92 as of December 2024. This operational efficiency has increased working capital pressures, reflecting V-Mart’s commitment to sustainable financial health.

Future outlook

Looking ahead, V-Mart Retail remains optimistic about its growth prospects driven by recovery in rural demand, supported by favorable monsoons and government stimuli. The company plans to add 60-65 new stores in FY26, increasing its footprint and capturing emerging market opportunities. With a focus on increasing store productivity, category expansion, and digital integration, V-Mart aims to sustain its growth momentum and strengthen its market position.

Thus V-Mart Retail’s journey from adversity to resurgence exemplifies its resilience and adaptability in India’s competitive retail market. Through targeted acquisitions, operational efficiencies, and prudent financial management, V-Mart has not only navigated challenges but also positioned itself for sustained growth. As the company continues to innovate and expand, its commitment to value retailing and customer-centric strategies sets a promising trajectory for the future.