Spencer's Retail Q2 FY26: Navigating Growth with Online Momentum and Strategic Optimization

Spencer's Retail Limited, a prominent multi-format retailer under the RP-Sanjiv Goenka Group, recently unveiled its Q2 FY26 performance, showcasing a strategic pivot towards online growth and operational efficiency amidst a dynamic retail landscape. The company reported consolidated revenue from operations of INR 445 crore for the quarter ended September 30, 2025. While this represents a robust 7% quarter-on-quarter growth, it marks a year-on-year decline from INR 518 crore in Q2 FY25, primarily attributed to a deliberate reduction in its store footprint. Despite external challenges like GST-related supply chain disruptions and unseasonal rains, Spencer's demonstrated improved gross margins, reaching 21.0% in Q2 FY26, up from 17.3% in the corresponding period last year. However, the company continued to report consolidated PBT losses of INR (-)64 crore, reflecting ongoing investments in its online ventures and the costs associated with its strategic restructuring.

The quarter's performance was a tale of two segments: the burgeoning online business, Jiffy, and the optimizing offline stores, including Nature's Basket. Jiffy, Spencer's 30-minute quick delivery service, emerged as a significant growth driver, exhibiting an impressive 30% QoQ growth and over 50% YoY growth. This online platform has rapidly scaled to over 100,000 monthly transacting users, processing approximately 8,000 orders daily. Notably, Jiffy achieved positive unit economics at the order level in August and September, boasting an average order value (AOV) of over INR 750, which surpasses industry benchmarks. This success underscores the company's foresight in adapting to evolving consumer preferences for convenience and speed. In parallel, Spencer's offline stores are undergoing a rigorous optimization process, with a focus on enhancing sales per square foot (SPSF) rather than aggressive expansion. The company has strategically exited high loss-making regions and stores, aiming for an SPSF of INR 2,000+ this fiscal year and INR 2,200-2,300 by the end of the next.

Strategic Initiatives and Market Dynamics

Spencer's Retail is not just reacting to market shifts but proactively shaping its future through several key initiatives. The 'My Spencer Rewards' loyalty program has gained significant traction, enrolling over 40,000 members in Q2 and contributing a substantial 20% to overall sales. This program, offering discounts up to 6% on monthly purchases, boasts an impressive 80% month-on-month return rate, highlighting its effectiveness in fostering customer stickiness. For Nature's Basket, the company has migrated its app to the more robust Jiffy tech platform, aiming to enhance its online proposition and address the challenges posed by increasing online competition in the gourmet segment. The 'Elysium' membership program for Nature's Basket, launched on Independence Day, is also designed to cultivate loyalty among its high-spending customer base.

Despite these strategic maneuvers, Nature's Basket faced a flat sales trajectory quarter-on-quarter, impacted by the broader consumer migration to online platforms and specific supply chain issues affecting international gourmet products. The management acknowledged these external pressures, including the flux caused by GST changes impacting international suppliers, which led to availability challenges. However, the company's disciplined approach to cost optimization, evidenced by a significant reduction in overall expenses compared to the previous year, provides a strong foundation for future profitability. Marketing spends have been re-prioritized towards CRM and membership programs, moving away from traditional advertising, a clear sign of strategic resource allocation.

Outlook and Future Trajectory

Looking ahead, Spencer's Retail is optimistic about the upcoming Q3 FY26, anticipating a boost from the festive season, including Diwali and year-end celebrations, particularly in the high-potential West Bengal market. The company aims for Jiffy to achieve 10,000 orders per day, translating to INR 21-22 crore in monthly turnover, and expects continued growth from there. The offline segment is targeted to achieve EBITDA positivity within the next two quarters, signaling a clear path towards operational breakeven for its traditional retail format. While the online business will continue to require strategic investments, the management is committed to scaling it as the primary growth driver while meticulously managing associated losses.

Spencer's Retail's Q2 FY26 performance reflects a company in transition, strategically optimizing its physical assets while aggressively expanding its digital footprint. The focus on online momentum, coupled with disciplined execution in cost management and customer loyalty, positions the company to navigate the evolving retail landscape effectively. The strategic clarity and proactive initiatives underscore management's commitment to long-term sustainable growth and enhanced shareholder value.