BlueStone tweaks product mix, store model as gold prices reshape demand

Bengaluru: BlueStone Jewellery and Lifestyle Ltd is reworking its entry-level jewellery offerings and testing new retail formats as rising gold prices reshape customer demand. The strategy comes as the retailer’s September-quarter (Q2FY27) revenue rose 43.9% year-on-year, even as same-store sales growth moderated from the preceding quarter. Its shares fell about 11% on the BSE on Friday.

The company’s consolidated revenue came in at ₹745 crore, matching Bloomberg’s estimate. Its consolidated net loss stood at ₹4.37 crore, wider than the estimated loss of ₹3.23 crore, though narrowing significantly from a net loss of ₹52.10 crore in the corresponding period of the previous fiscal year. Meanwhile, operational efficiency improved as Ebitda margin expanded to 13.2% in Q2FY27 from about 8.4% in Q2FY26.

BlueStone is adjusting its product mix as rising gold prices weigh on affordability. It has redesigned its entry-level range, is seeing greater acceptance of 14-carat jewellery, and is considering testing nine-carat products. The company is also expanding its store network and piloting a franchise-owned, franchise-operated model to reach more customers.

Same-store sales growth (SSSG) was 28% in the September quarter, compared with 39% in the June quarter. The company attributed part of the moderation to a shift in the festive calendar, with Navratri falling in October this year compared with September last year.

“I wouldn’t call it muted,” founder and chief executive officer Gaurav Singh Kushwaha said about the SSSG performance. He said the shift in festive dates was one reason not to read too much into the sequential moderation, adding that the company focuses on longer-term trends in customer behaviour. For the first half of FY27, SSSG stood at 32.9%.

The retailer’s focus on entry-level products reflects the pressure that rising gold prices have put on affordability. “Over the past year, a key focus area has been our entry-level price points, where gold price inflation dislocated our offering,” the company said in its management commentary. “Our redesigned range is now taking more shelf space in our stores, and this quarter we saw early signs of that effort paying off.”

The changes helped bring more new customers into the business, though average order value moderated to ₹77,290 from ₹78,081 in the June quarter. “The average order value definitely falls. That is not necessarily a bad thing,” Kushwaha said, arguing that the average ticket size alone was not a sufficient measure of the strategy’s success.

BlueStone is also exploring lower-purity gold jewellery to offer customers more price points. Kushwaha declined to disclose the revenue contribution of 14-carat products, citing competitive reasons. On nine-carat jewellery, he said the company did not yet have firm conviction about the opportunity, but added that it was “worth testing out”. A wider rollout has not been confirmed.

BlueStone crossed one million customers during the quarter, reaching 1.024 million, up 19.3% year-on-year. Repeat customers contributed 56.3% of revenue, compared with 51.4% a year earlier. The company said a growing customer base and higher repeat-purchase frequency could support longer-term growth at individual stores as they mature.

Network expansion

The company added 27 stores during the quarter, taking its network to 379 across 146 cities. It aims to reach 400-410 stores by the end of FY27, with expansion spanning new markets and additional stores in cities where it already operates.

BlueStone is also testing a franchise-owned, franchise-operated (FOFO) model, under which franchise partners provide the capital and run stores themselves. “I think FOFO is not something that we have tried so far,” Kushwaha said. He said the company believed local ownership and operational involvement could improve performance in selected locations, but would assess the results before deciding whether to expand the model.

The company has historically used a franchise-owned, company-operated model for some outlets. Kushwaha said most of these stores are expected to transition to company-operated formats over time as agreements expire, with the process unfolding over roughly five years.

Growth targets

BlueStone is targeting revenue of around ₹12,000 crore by FY30, up from ₹2,441 crore in FY26. Kushwaha said many of the company’s stores were still relatively young, with revenue expected to rise as they mature. This could help the company generate operating leverage against its fixed costs.

On demand, Kushwaha said it was too early to draw firm conclusions about the festive and wedding season since many major shopping days lie ahead. However, early demand remains in line with the company’s expectations, he added. He also cautioned against drawing direct parallels with other consumer categories, saying jewellery had its own cycles and did not necessarily move in tandem with broader discretionary spending.

BlueStone is also looking to strengthen the link between online discovery and physical stores as more than 80% of its sales originate online, according to its earnings release. Kushwaha emphasized that online and offline channels should not be viewed in isolation. Because fine jewellery is a high-consideration purchase, he explained, customers can research designs online but often want to see a piece in person before buying.

BlueStone’s board approved a private placement of non-convertible debentures (NCDs) to raise up to ₹300 crore. Kushwaha said a significant portion of the proceeds would be used to refinance high-cost debt, with the rest available for other business requirements.