The founder says that the company is targeting sustainable 20 to 25 per cent annual growth with meaningful profits as it moves closer to its Rs 1,000-crore revenue milestone
Stanley Lifestyles is sticking to its organic growth strategy, with a focus on profitable expansion, even as it sees India’s luxury market entering a long-term growth phase. The premium furniture retailer expects profitability to recover meaningfully from the second half of FY27 after completing most of its investments in leadership, systems and store expansion, Founder Sunil Suresh said.
In an interview with BW Retail World, Suresh noted that the company is targeting sustainable 20-25 per cent annual growth with “meaningful profits” and is in no rush to achieve its Rs 1,000-crore revenue milestone. He believes rising affluence and aspiration will drive India’s luxury consumption over the next decade, making the country one of the most attractive long-term opportunities for premium brands.
Suresh said Stanley will continue to pursue measured store expansion while remaining disciplined on capital allocation, with no immediate need to add manufacturing capacity for the next three to four years. He also sees opportunities emerging from premium residential developments, while reaffirming that the brand will stay focused on the luxury segment as it expands into complete home interiors. Edited Excerpts:
FY26 was clearly an investment year, revenue remained broadly stable, but profitability came under pressure as Stanley invested in new stores, leadership and systems. At what point do you expect these investments to begin reflecting meaningfully?
We are around 80 to 85 per cent complete in terms of our major organisational changes and what we have done in terms of getting the new leadership team on board. Store maturity levels have also started to slowly improve. From H2 onwards, we will see very robust profitability come back. Having said that, we have opened the year with the highest ever order book this financial year. In terms of the way we are going to build forward, I would believe that we might be a bit stressed in Q1 and also a bit in Q2. From H2 onwards, which is our season, we are preparing much better.
What does a mature Stanley store look like in terms of sales productivity and how long does it typically take for a new outlet to reach that level?
For us, by 18 to 24 months, the store has to start breaking even. Between 36 months and a maximum of 40 months, we have to get our entire return on investment (ROI). We look at our metrics differently because we are not a trading retailer like everybody. We do not sell off the floor. We take custom orders. 75 to 80 per cent of our business is custom orders. In my view, if the store is in the right location, it has to have an ROI around 36 months. When I say ROI, we calculate the entire return on investment along with the interest.
By when do you expect to become the Rs 1,000 crore brand? Is there any timeline?
We have always mentioned that we are on a trajectory to do that. At the moment, what has really also happened is two things. One is that there have been macro headwinds, which have delayed a lot of project handovers. Now, for the last three, four months, there have been further delays. We want to start growing at a very healthy 20, 25 per cent year on year with substantial, meaningful profits.
Our trajectory is very clear. We are an organically growing company. We have already put in 30 years and we are in no rush. We are not building a company for one or two quarters. We are building it for the next couple of decades. That is how we are wired.
How do you see the current status of the Indian luxury market and what is the outlook?
What really happens is India is always looked upon as a mass market, but you must understand that even if it is a very small percentage, even if you just talk about 2 per cent of India’s population, there’s a very large population that is aspirational and moving towards premium and luxury consumption. People do not understand the business of luxury, especially the investors. They always want quarter-on-quarter growth. Sometimes when you build a legacy brand, you cannot start yesterday and say, I am a luxury brand.
If look at Europe, they have a USD 600 billion luxury product industry. India has still not made any kind of a foray into luxury products but I believe that the next 10, 15 years, the demand for luxury products in India is only going to increase. The investors have to look at it from a different lens.
You manufacture your products in-house. As competition intensifies, how much of your competitive advantage comes from manufacturing versus branding and retail experience? Do you see the need for another manufacturing facility over the medium term?
100 per cent of our products are manufactured in-house because we made a very clear decision around four, five years ago. We do not white label our products. We do not outsource because the entire quality assurance we provide to the customer is completely different. Since we play in that premium and luxury segment, customisation becomes a very important factor, and that is how we end up manufacturing 100 per cent. We are a fully integrated backward as well as forward integrated company.
As of now, we are quite clear that we have an adequate manufacturing facility for the next three to four years. We do not need to do any expansion in the back end, but very meaningful and organic expansion in the front end.
India’s affluent consumer base is expanding, but luxury consumption has become far more selective. How does this align with your expansion roadmap?
We are not in a race to expand for the sake of expansion. We are very measured and very calibrated. We understand that between the six major metros of our country, which are Delhi, Mumbai, Bangalore, Hyderabad, Pune, and Chennai, almost 80 per cent of the luxury and premium housing happens. Post IPO, we started with the home market only, but we have actually taken control of all the other five markets by acquiring franchisees. Today, we own company-owned, company-operated (Coco) stores in these six metros.
If you look at the track record of the last five years, there have been thousands of projects that have been sold out and they are all going to start coming to market for fit-out in due course over the next three to four, five years. Having said that, we are also correcting some of the older stores where the catchment areas are already filled up. We have closed a couple of stores and we might even close one or two more stores. But that is a very meaningful and measured method of going forward because the city dynamics are changing.
Some of the catchments which were very active four or five years ago are not active now because they have already been filled up and the cities are expanding. You do not have space to expand outside Bombay, with the sea on one side. However, in mainland cities such as Pune, Hyderabad and Bangalore, we have opportunities to expand.
Developers are increasingly selling premium residences with fully designed interiors and furnishing partnerships. How significant could the B2B and developer channel become for Stanley over the next few years?
It is now definitely maturing to a certain extent. There is also pressure on certain builders in certain markets because there is definitely an oversupply now. Their sales are not as brilliant as what it was last year. They are now trying to associate and come with meaningful brands.
Again, at that level, if somebody is paying Rs 10 crore or Rs 15 crore for an apartment, they need to know who is doing the furniture. You cannot have some carpenter just do furniture and give it. I feel that is the next phase of our growth. We have been requested by some builders to do their mock-ups and so on and so forth. We are in discussions. We have not yet taken a call. We want to first stabilise as a B2C brand.
We prefer to be a B2C business, where we believe that we are able to directly give the products to the customer. There are limitations because home is a very individualistic property of the owners. They do not like to have the same thing shared with multiple apartments. Our company is very well poised because we have a very wide and deep collection of products. Builders will be able to offer our products to these consumers and they can customise it the way they want.
Stanley today is expanding beyond sofas into wardrobes, kitchens and complete home interiors. Does your long-term vision see the company competing with modular interior specialists, or do you intend to remain firmly positioned as a luxury furniture-led brand?
We will always remain as a luxury-led brand, for the premium and luxury end of the market, while we have actually developed our skills to become a complete home solution provider. We have added the cabinetry business, which is definitely modular, but very high-end modular. We are probably one of the rare companies where a homemaker can come and get furniture for every room of the house. That is how we have positioned ourselves.
After the IPO, investors naturally expect disciplined capital allocation. Over the next three years, where will Stanley deploy the bulk of its capital: new stores, new categories, manufacturing, technology, acquisitions?
All three are happening in parallel, but we are going to be extremely measured. We are going to be very disciplined in our capital allocation. We are going to be open, but it all going to be very measured. We believe that we have an organic growth trajectory, there were multiple changes required in the system to go into the next orbit. That is what we promoters have done and we continue to own the majority in the company and drive the company forward.
