We missed this earlier: FirstCry’s parent company, Brainbees Solutions, shut down 38 Company-Owned and Company-Operated (COCO) stores in the recent quarter, executives disclosed during the company’s Q3FY25 earnings call.
Rationalising this decision, FirstCry Managing Director and CEO Supam Maheshwari explained that the performance of the particular stores fell short in two metrics. “We have a certain expectation at a multi-channel level, the wallet share of the customer as well as the footfall; we had reasons and data to believe that in those 38 stores, we were not at the level we would have wished”, he added. However, Maheshwari clarified that the closures were not city-specific but aimed at optimising store location, size, and overall performance.
What caused the store shutdown?
Elaborating further, Maheshwari noted that long-term construction activity like the development of metros impacts footfall. While the company receives insights about the pin codes most suitable for opening a physical store, most locations are “wide” in terms of the physical territory. Consequently, the company faces challenges in terms of the “right catchment” and store size. A combination of all these factors caused a “suboptimal outcome” in these stores, he claimed.
Analysts also raised questions about the role of quick commerce competition in the company-wide “store cleanup”. Countering these assumptions, Maheshwari stated that comparing quick commerce with FirstCry’s offline stores is inaccurate due to differences in product assortments. He concluded by agreeing that the “real estate suitability in a particular catchment or micro market is a bigger reason than any competition”.
What about competition?
The company addressed queries on competitive intensity multiple times during the earnings call. Painting a picture of India’s competition scenario, Maheshwari remarked that “everything becomes sober beyond a certain point”. Without naming competitors, he noted that while they engaged in heavy promotional activity post-launch, its long-term sustainability remains uncertain.
Next, analysts sought greater insight into the brand’s defence strategy for tackling competition from horizontal players with ample “cash to burn”. To counter this, FirstCry will bank on its moats, like enhancing the quality of customers acquired and of its home brands, alongside expanding the latter. Additionally, the company seeks to better its merchandising, tech platform, and operational leverage concerning personalisation for ranking high in the perceptions of “discerning customers”. These specific references are related to the company’s international operations in the UAE and Saudi Arabia.
Is the battle in the Middle East worth it?
Investors and analysts also voiced concerns over whether the battle in the company’s international segment was worth continuing. These issues were propelled by floods that ravaged the UAE in the first quarter and the aggressive activity of new horizontals (competitors) in the third quarter of the financial year 2025. Responding to this, executives noted that while competitive intensity has increased, FirstCry looks to improve its bottom line performance to counter it. Since a similar situation has occurred in India before, the company remains confident in its long-term capabilities and will not base its outlook solely on the past two quarters.
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Why has the margin expansion slowed down?
FirstCry’s adjusted EBITDA for its India multi-channel business grew from 8.8% in 9MFY24 to 9.5% in 9MFY25, a 70 basis points (bps) increase This fell short of the company’s projected expansion to 150 bps in the coming years. Explaining this, Maheshwari noted the delayed winter in the country moderating the sale of winter wear and the cleanup of 38 COCO stores causing expansion to be left out.
FirstCry also attributed the stagnation in order values to the delayed winter. Since Indian families, primarily kids, upgrade the sizes of their winter wear every year, the order frequency and the average order value (AOV) could have improved, if not for the delayed winter.
Benchmarking against Page Industries
In response to an ideal benchmark for revenue, margins, or profitability, Maheshwari claimed that he admires companies like Page Industries and aspires to be at its bottom line level. Speaking on challenges to make FirstCry like the former, he explained that a combined effort of all teams would be required for a “detailed execution” rather than a strategy revamp.
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