• Private label recovery: Gross margins declined to 24.5% as private label contribution fell to a five-quarter low of 20% following reduced employee sales incentives and packaging-related supply delays. Management expects the downtick in private label share to be arrested in the current quarter, with margins normalizing as product availability improves and branded sales grow.
• Store expansion plans: MedPlus added 146 stores in Q1 and remains confident in meeting its target of 800 store additions for the financial year. The company is experimenting with a franchise model to overcome the staffing bottlenecks of company-owned stores and enable future scaling of 2,500 to 3,000 stores annually.
• Quick commerce strategy: Management views 10-minute medicine delivery with deep discounting as unsustainable under current economics. If the model proves viable, MedPlus plans to leverage its network of 400 to 450 stores per city by converting them into dark stores.
• Diagnostics vertical recalibration: Diagnostics growth has trailed internal targets of 300,000 to 400,000 subscription members in Hyderabad due to slower B2B client acquisition, prompting a pause on radiology expansion. The vertical will be managed to operate profitably without further major capital investments until the model is refined.