Go Fashion India FY26 Q3 Earnings: Revenue Challenges, Store Strategy, and Market Insights

Ladies and gentlemen, good day and welcome to Go Fashion India Limited Q3 and 9 months FY26 earnings conference

call. Before we begin, I would like to remind participants that this conference call may contain forward-looking

statements which are based on the beliefs, opinions, and expectation of the company as of today. These

statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to

predict. As a reminder, all participants line will be in listenonly mode and there will be an opportunity for you to

ask questions after the presentation concludes. Should you need assistance during this conference call, please

signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is

being recorded. I now hand the conference over to Mr. Gautab Sarawagi, promoter and CEO of Go Fashion India

Limited. Thank you and over to you sir. >> Yeah, good evening and a warm welcome to everyone present on the call. I have

along with me Mr. R moan our chief financial officer and SGA our investor relation advisors. I hope you have all

received our investor deck by now. For those who have not, you can view it on the stock exchange and the company

website. Q3 has been a challenging quarter for the apparel industry mainly due to lower footfalls. During Q3 FI26

revenue stood at 194 crores with gross margins of 464.3%. IBITA stood at rupees 52 crores and PAD

stood at rupees 7 crores. However, the company has demonstrated uh resilience in its core operational fundamentals

such as food price sales ratio, items per transaction and and customer conversion rates uh which have remained

stable reflecting uh continued consumer relevance and disciplined execution. The overall retail environment remains

subdued with discretionary consumption witnessing moderation across categories. Factory uh factors such as uneven

festive demand, selective consumer spending and lower footfalls resulted in a slower sales store sales growth during

the quarter. The softness was largely industrywide in nature. The company continued to prioritize full price sales

ratio by maintaining a sales ratio more full price sales ratio more than 95%. The discip this disciplined approach

helped us maintain uh healthy gross margins at a stable 64.3% in Q3 FI26 which further highlights the strength of

our pricing of our brand. Q3 FI26 was deeply impacted by a slowdown in our LFS channel. One of our key LFS partners had

a pause of fresh inventory intake across bands which affected our LFS sale by 30%. We continue to engage closely with

our LFS partners and expect this channel to normalize as we continue to supply uh inventory to them. We continue to engage

with our LFS partners to ensure that uh these kind of interim issues what we have faced we don't face again to drive

improved uh same source sales growth. The company has undertaken focused initiatives around customer engagement

and new product launches. In parallel, we had recently collaborated with a leading influencer to showcase our

bottom collection and enhancing the brand visibility and relevance among younger a younger audience. Such

initiatives are expected to support stronger customer traction and improve store level performance over the coming

quarters. Over the time, we have strengthened our position in the non-leggings category

and it has further strengthened. Today a non-legging bottomware category gives us a 65% contribution in our sales which in

earlier times used to be less than 50%. Moving over to the operational metrics of Q3 FI26, our store expans expansion

strategy continues to remain calibrated and selective with a clear focus on entering high potential markets.

As of 9 months of FI26, the company has added 49 stores and we expect to close FI26 with a net addition of 60 to 70

stores. Our approach to network expansion remains very disciplined with emphasis on store level profitability

and strengthening band savings. We continue to keep a close watch on inventory levels with inventory levels

being at 114 days as of December 31st 2025. Our inventory uh on the inventory fund we have seen an increase in our

inventory for our new concept daily concept which had increased our inventory marginally from the earlier

times. For the full year FI26, we anticipate in inventory levels to stabilize in the

range of 100 days, ensuring operational efficiency and healthy working capital management.

Our strong focus on inventory and working capital efficiency will help us achieve the target of converting more

than 50% of our IIDA into pre-India operating cash flows. on our new initiatives including our

international uh store in Dubai. Our daily and our daily concept are are demonstrating healthy unit economics in

early stages and we remain excited about their performance in the coming quarters. As of now we have opened six

stores for our daily concept and we look to scale make it about 10 stores by March 2026.

In line of our commitment to shareholders, we've announced a buyback this quarter of 14 lakh 13,000 shares at

a price of 460 rupees per share with a total size of Rs 65 crores. Way forward smaller format stores the

small size stores has been uh witnessing a sharp decline in performance because the today's consumer is looking to shop

with in a larger store experience. So in line with that we had we had consolidated some of our smaller stores

last year and we will look to continue some of our remaining smaller stores in the quarters to come. The company is

taking a cautious approach on new store expansion with a clear focus on strengthening sales sales growth. Our

priority is to improve performance across the existing store network through better uh execution, enhance

customer experience and operational efficiencies. Our immediate objective is to move from negative same store to

sales growth to flattish and then eventually taking it to low single digit supported by improvements in store level

productivity and throughut. This will be this will not only be driven by external factors but even by sharper uh execution

at a store level introducing new products and better engagement with our new audience.

Second, our foot our footprint expansion will be driven by careful selection of highquality locations through uh picking

and choosing the right location with strong unit economics. Lastly, recognizing retail is fundamentally a

balance sheet business, we remain sharply focused on cash conversion, higher inventory turnover and discipline

capital allocation ensuring business remains profitable and is a very rosy centric business.

With this I would like to hand over the call to Mr. Armo for an update for Q3 and 9 months FI26 results and

financials. Thank you. >> Thank you Godam and good evening everyone. First I'll give the uh Q3

financial numbers. Our revenue for the quarter stood at uh rups 195 crores. Gross profit stood at rups 125 crores

with a gross GB margins of 64.3%. Our AIA for the quarter stood at rupes 52 crores. EITA margins is at 26.7%.

Pat for the quarter stood at 7 crores. Pat margin is at 3.7%. Coming to the 9 months FI26 performance

revenue is at 642 crores. Gross profit stood at 46 crores. GP margin at 63.2. AITA is at 187 crores

with AITA margin at 29.2%. PAT stood at 51 crores with a PA margin of 8%. ROC and ROE excluding India's

impact as on 9 months. FI26 stood at 13.1% and 10.3% respectively. Cash and cash equivalent stood at 256 crores as

on 31st December 202. With this now we'll open the floor for the questions and answers.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press

star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you

may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will

wait for a moment while the question Q assembles. The first question is from the line of

Devanchu Bansil from MK Global. Please go ahead. >> Yes. Hi Gautam. Uh thanks for taking uh

my questions. Uh firstly sir wanted to understand uh how should we read uh your SSG performance. Uh we were flat for a

fairly long period of time but uh now reporting in the negative trajectory for last three quarters.

uh though you mentioned that from a retail parameter perspective uh footfall is the only challenge. Um but my concern

was that even footfall uh we are attributing it to weak consumption but is there a certain level of

deterioration of brand strength so that it is not attracting the relevant or amount of footfall. So uh your color on

this will be very helpful. >> Yeah. No, I think see Danchi from a brand perspective I don't see that uh

yes we want to as a brand uh increase our younger audience uh as a customer base but from a brand strength and

relevance perspective I think uh we are very much there see from a product perspective if you see today 65% of our

sales are coming from the other value added products and that's how the market the bottom market is heading in

direction so I think from a from a brand relevance and product relevance perspective I don't think is an issue. I

think uh the the overall footfalls in Q Q3 has been very weak. See we've done many channel checks also and we have

seen uh similar uh kind of trajectory in other places as well. Uh so the overall macro scenario obviously has had to do a

lot the footballs issue has had to do a lot with our SSG. uh other thing which I mentioned in my

speech uh our SSG in are in a very small so see today what has happened because the bottomware market has become a wider

market with so many products the very small stores from an experienced perspective uh becomes a little bit of

an issue and we have seen softer and larger degrowth in SSD in those very small stores.

So I think the larger attribute to a negative SSD is obviously the the overall macro scenario and footfall and

these small stores which have degrown a lot more than normal because of the size.

Uh fair enough Gotham but uh this footfall uh issue uh is it also related to consumers sort of preferring to show

up more online or via quickcommerce channels uh where our presence is very limited. Right. So are you also thinking

on ramping up our presence in these channels because uh footfalls etc may remain weak right. So if the consumer

preference is shifting towards other channels uh or maybe uh through formats where they are getting the entire

wardrobe rather than preferring to go for a standalone bottom wear store. So how are we sort of focusing on capturing

such consumption of agents? Yeah, see in fact uh yeah I mean rightly said Danchu I think look online and quickcommerce

has always done well and for us because we are having a very small contribution so that's a channel for us to build so

our online channel has seen decent traction our quickcommerce also we have been live on blinket and zero and we've

seen very good traction there so I think as that channel picks up speed for the apparel category our share also in the

ecom space will organically grow so from an ecom and quickcommerce perspective we are there present with our sales and

inventory across all channels. I think it's just a matter of time once it picks up speed it will also start reflecting

in our revenue numbers. >> Fair enough. Fair enough. And uh lastly got them few uh clarifications on the

MFS side uh our re revenue mix has improved uh towards EBU right so it is 80% EBU this time around versus 74% last

year. uh the gross margin for this channel is about uh in my understanding 3540% better versus the NFS channel

right but if we see from a companywide perspective uh this should have reflected in 250 300 bits better gross

margin on a bio basis but this is flat right in this quarter so is this largely due to deterioration in gross margin

profile of LFS channel as well so what explains that so uh Yeah. >> Yeah. See, we are also studying that and

I will come back to you on that. But at the outset when we we are looking at it right now. Last year we had started EOS

is a little late at the EO level. This time we had started a a little earlier where usually we start. Last year our

USS start date itself was late. So because the quarter 3 had a weak 10 days of uh more USS week that could have had

an impact on the EBO gross margins which is not reflecting in the upside of the overall company gross margins because of

low LSS. We anyway studying this we'll come back to you with more clarity around it but at the outset it looks uh

because of the start of early USS which is by a week 10 days. >> Okay. And uh from a model perspective is

your LFS sor based or uh as in the partners can return the inventory in case they are closing the store or how

is it? >> Yeah. So so usually it is like this uh so it is based on sor. So what we do as

per India standard is on because it's on sor uh we show it as dattors in our books. We show it as sale when we

dispatch the goods. So it is in our books but because it is sor as per India's 115 we have to put a provision

for sales return >> based on historical trends. So whatever is the last three years of historical

trends of return we provide it on a quarterly basis. So the provision of sales return is inbuilt for any stock

which is coming back through the year. >> No that's fair but what happens in terms of store closures right. So we have had

>> so yeah so if Yeah. Yeah. Yeah. For example, yes, your question is right. Suppose today an LFS decides to shut 20

stores. Uh those 20 stores stock will come return and it'll be booked as a sale return. But what happens? Uh such

uh increase in return will reflect in the next year's provisioning because you tend to usually take a three-year

average of for a provision of sales return perspective. But to your question uh if NFS shuts 30 40 stores or whatever

stores the stock coming back will be shown as a sales letter. >> Fair enough. Uh thanks for taking my

question. Sorry I'm sorry. >> Thank you. >> Thank you Danu.

>> Participants who wish to ask a question you may press star and one at this time. The next question is from the line of

Gorav Jugani from JM Financial. Please go ahead. Uh uh hi thank you for taking my

question. Uh my first question is again with regards to the LFS channel only. This quarter we have seen uh 137 odd LFS

getting shut QQ. So one what is uh you know uh what was there anything specific this quarter that we saw such large

closures and uh how do we look for expansion in LFS going ahead? Yeah. So see uh Gorov this uh stores are

largely one of our key LFS partners they have changed the format of that store and they changed it they rebranded and

changed the format of the store. So when that happened uh all the external brands had to move out of that of that of those

particular stores including us. So the reason we have exited this role is because uh that key partner had decided

to change the format uh and uh and rebrand it. Now moving forward uh LFS expansion from a store edition

perspective uh we will whenever we do get an opportunity for adding new stores we will selectively choose which

location makes sense and then we will select uh like in pantaloons we have been expanding and adding stores over

the last few quarters. Even in Reliance we are getting new stores. So selectively on the basis of what is

being proposed to us we will select those locations and move forward. As far as quarter 3 is concerned our quarter 3

revenues were deeply impacted because for one of our key LFS partners uh we were not able to dispatch stock for

about close to 45 days. uh they were not taking inventory across brands for a period of 45 days and because of that we

were not able to dispatch stock and that is why we've lost 45 days of dispatches which has resulted in 30% drop drop in

sales and that's why our Q3 numbers overall numbers have got deeply impacted because of this dispatch issue which

happened in November and little bit of December as well >> so can we expect this to you know come

back in Q4 in from uh because of >> you see not really because uh see what

happened that one and a half months which we have lost your act see what happens how do we recognize stock at an

LFS store right we keep a base stock we decide a maximum stock level now based on the maximum stock level and the

closing stock at an LFS store you're basically only sending the difference at the at so in January or February it's

not that you're going to be sending additional stock. You're going to be sending stock only to the extent of the

maximum stock level. So the 45 days what we have missed out that increase in number will not see in January and

February. >> But if that 45 days we have missed out uh they would have you know again sold.

>> Yeah I understand but see ours is a you see lot of ours is a replenishment business. the sales will happen you keep

replenishing the your sales will happen you keep replenishing the uh store right but your maximum based off is only to a

certain level so if you have not replenish 45 days you have you you have to a large extent lost out on a lot of

secondary sales now we will not be able to recover those secondary sales in the coming months so technically you're

sending only that much stock which is there in the base stock >> I haven't gotten just uh some reading on

thating part so how many LFS now we can model into you know open uh at least for Q4 and the rest of the the couple of

years going ahead. >> See it's difficult to say uh it's difficult to give a guidance on how many

LFS stores we will be opening next year. It all depends on how our partners expand and in that proposal of expansion

what we think would be relevant. So it's going to be very subjective to what is being proposed to us. See sometimes a

partner can uh decide to add 70 stores 80 stores but certain key markets you wouldn't want to be part of that market.

So it's very subjective to what is being proposed to us. So I think that we will be able to only know next year as we are

proposed with the list of stores >> and goam coming back to the EOS are you seeing any recovery uh in the momentum

uh of any sorts in the uh the a month past five January to indicate you know that from a negative 4 and a half% SSG

that you're witnessing deeply probably uh you will go flattish uh of that sorts or it continues to remain as it was I

Think I think see we seeing two trends Goro I think what is happening is our midsize stores our stores which are

slightly higher than 500 ft 600 ft see because see our product range has increased right 65% of our sales are

coming from the non-leggings category the value added categories so today the consumer wants display and experience of

shopping when you're seeing so many products so we are seeing two trends right uh the smaller stores the very

small stores are obviously seeing a decline because we are not able to display all the new products. The

slightly larger stores which are the 600 700 ft stores, they're seeing good increase. Some of the stores are

actually showing very good positive SSD as well. So I think over a period of time as our small stores uh phase out of

the system and the newer stores what we cautiously add becomes of a relevant size you will also see improvement in

SSD from that perspective. But largely the improvement of SSD is going to be obviously relating footfalls. So I think

both these things hand in hand will play a very important role in the recovery of the SSD from being negative to a mids

single digit of positive. >> But Gotham in this scenario that you know the completion uh then there could

be possible drag on the margins because you know cost will keep on escalating at a certain pace. So would it be fair to

assume that you know at least uh over the next three four quarters you might see a decline in the AITA margin just

because of the negative leverage. >> See I'll tell you what we are planning to do as a company right now we are

being very careful with expansion. So right now we are prioritized and thinking how do we get the SSD back to

positive. Today we are at minus 5%. Our aim is to get to mid single digit to 5%. Right? So from minus 5 we have to take

it to plus 5. So all our efforts right now as a company is to see how we can fix this and get this into posit. Of

course the overall footfalls is going to make a very big uh contribution to this but we are also going to be putting in

smaller efforts at a at new products uh looking better looking stores to fuel that. So our first priority over the

next one year is to definitely put entire focus on improving SSC and maintaining margins. So on the expansion

fund we are going to be very selective in our expansion in the coming quarters. So that because of expansion there

should not be a IDIA hit in the P&L because what happens when we areing new stores immature stores which are not

matured they are a load on the P&L because you're paying the full rent and salaries without the store being

matured. So we are taking one step back and saying look hey we will be very careful in our expansion not go

overboard with the expansion so that margins don't get compromised during this recovery period.

>> Sure. So then can we expect the store opening to even come down next year in the APO format versus the 6070 that

we're expecting this year? See uh honestly gor we are not guiding we are not giving uh unlike like earlier

times like earlier times we used to be very clear with our guidance on how many store openings this time we have seen

that our margins because of uh flattish by because of negative margins have taken a hit. So and as a management we

have taken a conscious call to slow down the store expansion and do it selectively. See that does not mean that

we will not expand. See wherever we are getting a very good opportunity and where we should feel that we should be

there we will also expand. But we are not setting ourselves a target. We at during this recovery period of taking

SSG from minus 5% to plus 5%. We don't want to compromise on the health of the PL.

>> Got it. Go. Thank you. And that's okay. >> Thank you. The next question is from the line of Ankit Kadia from Pillar Capital.

Please go ahead. >> Uh Gotham just continuing from the previous question. Is it fair to assume

next year stores opening could be around you know sub 50 stores or even lower than that because this year with 60 70

stores also your margins have been hit and next year also the recovery is question mark. So definitely the stores

opening would be below 50. >> Um so Ankit I know where you're coming from and honestly it's very difficult

for me to give a guidance right now. It all depends uh when does the SSG pick up speed right and suppose if things go

well and next year by I'm just giving a hypothetical example by next year middle or maybe the second quarter we come back

to positive SNG then maybe we we also start increasing our footprint as well so it all depends on the recovery of the

SNC so it's very difficult to give a number for next year whether it will be below 50 or above 50 it's very difficult

to predict but as management we feel that we will not go to an extreme of not opening also like for example if we get

a good mall which is coming up in in a Mumbai or a Bangalore or any other city where it's a prospective mall or very

prospective high street we will definitely go and open there but we will not go overboard and try to open

everywhere also at the same time so we keep a good blend >> so given that it take 3 months to 6

months to open a store and today with you at minus 5 6% like for like growth next 6 months store opening will be

muted at least that we can assume Yes, it will be muted that that but so it's difficult to give a number but I can

tell you it will be muted for sure because we're going to be very cautious in our approach.

>> Sure. Uh second is on >> also sorry just extending to see we'll also be doing a lot of relocation

market. So what will happen sometimes like I explained to you right we have some sometimes very small stores which

are not doing well today the consumer wants a slightly better experience. So in the same market we might start the

older store and open a new store. there might be some V locations which will have a positive impact on the revenue

number as well. uh Gotham we would appreciate if you can share the uh area of the stores today

you know at a 800 900 store network we don't know what is the area given that bulk of the store closers of smaller

stores are behind us and now we opening >> yeah so what I'll what I'll do now in the next probably after this earnings

call once we have calibrated the entire data uh we will share the data with everyone key how many stores are there

which are the smaller stores so everyone has clarity on that >> and how How many more store closures are

remaining for the smaller stores and can you just share uh the decline you are seen in the smaller stores?

>> Yeah, we will share first we are calibrating the data. So once we have calibrated the data we'll be happy to

share. >> Okay. No, because on the previous question you said that the smaller

stores are significantly uh negative. SSG are declining. So at least some data you would have to pass that comment

right. See we have seen see we've seen no I'll tell you like for example where our company average level is minus 5%.

The smaller stores we have seen a slightly higher deg growth of more than 9 10% efficiency and sometimes numbers

are not fully respected. Even when we are visiting stores and when we are interacting with the consumers the

consumer feels that okay in a slightly larger store of a 600 500 600 ft the newer bottles the newer style are better

on display. So it becomes easier to shop. In a very compact store of 200 square ft, it becomes very it it becomes

very difficult to display all the items to the consumer. So from an experienced personal perspective also it hampers.

No, >> I agree because your core mode was a smaller store, high throughput, high

margin business. Now that is getting disrupted because your average store size is becoming 600 at least

incremental store. See the no no see uh okay the unit economics of a 600 ft² store and a 300 ft² store is not

different even a 600 ft store from a unit economic perspect perspective comes under the same category as well so it's

not that my EU unit economics will go down because I'm opening a 500 600 ft store see if today I would have gone and

opened say 2,000 3,000 ft² store that's a completely different unit economics but stores which are sub0 ft a similar

unit for economics for a 200 ft² also and for a 55600 also >> at least last 3 years since uh we

started opening bigger stores sales per square feet has declined. Um if you see uh now that could be due to market

environment or it could be due to loss of market share or could be due to loss of footfalls. It could be either of it

but at least on the face of it we have seen a decline in sales per square feet. >> So uh yeah so your question is right

uncle. So the sales per square feet would be more because of the footfalls in the overall macro scenario. It is not

because we have gone into a larger store and the unit economics are not as good as a smaller store. It's not because of

that. >> Sure. Uh my second question is on LFS. U you made a comment that the one of the

large retailers is switching the stores which had third party brands to private label brand. Now um correct do we have

visibility that uh next year that won't happen from the retailer or it's going to continue and we have been said that

few hundred more stores could uh be closed in the medium term. We are we are also trying to get that

clarity on it but honestly if you ask me the truth I don't know uh can it happen next year maybe yes so we are also

speaking to our partner and trying to get that clarity so that we are also prepared uh on if there are going to be

such uh you know format changes at their end we will know about it so uh we are trying to find out the minute you know

you know I have some clarity on that maybe in the next earnings call or maybe in between that I'll definitely guide

everyone on that. >> Sure. And uh you know on the inventory part right uh

>> our gross margins have expanded but uh you know with the change in format and other things uh how are the commodity

prices placed today and uh with the GST you know pricing being more favorable at least for higher price points about

thousand rupee products uh going forward do you feel the need to reduce the discounting uh which we are giving to

the consumer or the new labels have come up uh how will that pricing change and how are the commodity prices

uh honestly uh Ankit for the you're talking about the GSC reduction right those products you're talking about

right >> yes >> yeah so we were uh we were giving the

benefit to the consumer we have not changed our MRP for such products so we are continuing to give the benefit to

the consumer uh there might be time where we feel instead of taking a price hike for those products we just removed

the discount what we were giving for the GST benefit. So in short we have not taken the price hike but we'll get the

benefit of that eventually but when we are going to start doing it we are we are deciding it internally once.

>> So we to answer your question we are not changing the MRP of those products where the GST was reduced wherever the GST was

reduced we were passing on to the consumer eventually instead of taking a price hike of those products which were

due we would just remove that benefit without taking a price hike. And in the other products sub thousands

rupees where the discount was not available uh 5% remains 5%. Where are you considering picking up price

increase? >> No no not right. See uh uh uncle we are in a volume business right. So our

entire company focus is to drive volumes. I have reviewed the products under thousand. We have made very small

correction in certain products where we have increased the pricing because it was under price to begin with but those

are very very few products largely we have not touched anything uh under thousand because we feel we are well

priced. Uh last question is on the&p spend. uh do you think uh at this point of time

you need to be aggressive in ENTP because previously you always said when demand is not there you don't want to

spend because it is demand is not there consumers not going to walk in but has that uh you know mind shifted that you

have to go aggressive at this point >> see I think I think no I don't think we have to spend more honestly so I think

that logic of 2% of revenue still holds good this time it shows a little more because our revenue this year has stayed

flat but we had marketing budgets allocated for a growth revenue right so that's why as a percentage of of revenue

so slightly so higher but from how much we want to spend I don't think that number will increase we we are just

transitioning our digital marketing to a very different methodology where we are reaching out to uh the younger audience

and the millennial audience by different different type of personalized marketing see our marketing team to begin with was

a very old school orthodox type of marketing. It now changed over a period where it started pivoting towards more

and more digital. So I think the way of marketing is going to evolve but from a spend perspective I don't see our spend

increasing. We used to spend two 2 and a half% or two two to 2.2% we going to be around that number. So as a as a quantum

of spend it's not going to increase. >> Sure. And uh can I ask another question since I've taken a lot of time? Um it's

just not the top it's just not topware given that bottomware is under pressure which is a pop bread and butter. Do you

think it's prudent now for you to continue to expand topware uh you know aggressively or concentrate more on

bottomware? No no see uh see I'll tell you the top pair project what we have done the

everyday concept that's just a pilot and I cannot see the pilot needs its time right so now we've opened six stores so

we that will take its own journey and that is that decision making and that pilot is independent of bottom so we are

not going to speed up that in any way uh to show growth so that that pilot will go in its full speed uh It's going to

take some time and it's for the future. As far as bottom is concerned, see we are very very bullish on the on the on

the category. Yes, this has been a time this has been a very tough time for the category and the brand where we see

headwind and the it's not reflecting in numbers but our conviction in bottomware is very much there. Even our recent

technopath study also emphasizes that how large that category is. So even from a short-term, midterm and long-term

perspective, our entire energy and strategy for bottom there is very much intact

>> draw over the next couple of so so over the next couple of years anit if you have to show growth and the numbers have

to come it has to come from bottom there. We cannot expect the pilot to take care of the gap of growth. The

pilot is there and it'll take the pilot in its own sweet time. We cannot we cannot rush the pilot otherwise we'll

make we won't do justice to that project as well. Bottom is our main business and we'll fix it and we'll bring it to we

very bullish. >> Noted noted. Thank you Gotham. >> Yeah.

>> Thank you ladies and gentlemen. In order to ensure that the management is able to address questions from all participants

in the conference please limit your question to two per participant. The next question is from the line of

Vashnavi Mandana from Anandrai. Please go ahead. >> Hi uh thank you for taking my question.

I just wanted to understand that how much of this SSG decline can be attributed to the entire store size

issue that we faced because you said that the uh smaller stores saw a relatively negative SSG or rather the

larger store saw better SSG performance versus the footfall in general being weaker.

See I would personally very it's very difficult to quantify it. I would say this largely this SSG is negative

because of the slowness and footfall and the overall uh weak environment. It's very difficult to quantify but I would

put it more towards the overall macro macro scenario. So what I'm trying to get to is is that

let's say in H2 right where we I think almost shut almost 40 to H2 FI25 we shot I think almost 40 to 50 of the smaller

store formats we gave us we we said that the store closures are almost done but again now in this quarter we're coming

up and we're saying that we're still seeing the performance of the smaller stores not being up to the mark which is

why we're shutting them again so I'm just trying to understand where are we coming in this entire buy a small store,

large store, medium store and how should we look at this in terms of our performance as well.

>> See uh the stores what we shut last year uh yes we did shut those stores and we have seen that when we shut those

smaller stores the revenue moved to the nearby larger stores. So we saw that it didn't have a very big impact on SSD

because 40 stores as a base on such a large number of stores will not move the SSD needle so much. Now as far as uh how

many stores we are going to be shutting uh we are calibrating the data of the smaller stores because we can't just

shut those stores just like that. We'll have to also see when are the resale renewals coming up. So as we get more

clarity on that we'll definitely guide the market on how how many such stores in the smaller bucket is there and how

many of the smaller stores will be uh shutting in the short term. We will also guide that once we have calibrated the

entire data. So and uh from your end you'll also have clarity on what's happening.

>> All right. And one more thing if uh we can also get some more inputs in terms of how does the unit economics etc move

for the slightly larger stores like what the earlier participant was also suggesting uh because when

>> very similar very similar veh and I'll tell you why see you understand in in a I'll tell you why a 500 600 is very

similar to a 2003 300 I'll tell you why when we sign a store we sign on a rent to revenue ratio so if the rent to

revenue ratio is in our budget whether it's a 600 ft² store or whether it's a 200 ft² store your AIDA prior to staff

expenses will be the same. Now coming to staff expenses because that is the real difference between a 600 ft² store and a

200 ft store. In a 600 and a 200 the number of people you employ for managing the store are the same. Your operating

expenses also are pretty much the same. So a 600 ft² store from a unit economics delivers the same unit economics what a

200 will deliver. The difference always what happens is when you go past 1,000 square ft suppose you open a 1500 ft²

the unit economics dramatically changes because the electricity cost dramatically goes up. The number number

of people you're going to be keeping in the store dramatically goes up. Then you'll have to keep separate

housekeeping stuff. the the entire mathematics on employee cost dramatically changes when it crosses

to,200 ft²,300 ft² sub,000 square ft² you're keeping the same number of people what you're keeping in a 2003 300 ft. So

the difference is really those other operating expenses in which the staff cost is the highest.

>> Okay, understood. Also one last question in terms of the newer stores that we're opening which are slightly larger in the

um size are they in the again in the nearby vicinity of the smaller stores or are we targeting different clusters or

in the same cluster? >> No no see that's that's see one more thing is see uh definitely during these

times for SSD so we are ensuring that we are not giving any room for cannibalization. So now when we are

opening stores we are very careful that it's in the we're trying to open in different clusters where even the

smallest remote chance of cannibalization should not happen and that is why we are extremely selective

and cautious in our approach of of sorop. >> Okay. All right. Thank you.

>> Thank you ladies and gentlemen. You are requested to restrict your question to two per participant. The next question

is from the line of PRA Junjunwala from LR Securities. Please go ahead. >> Thank you for the opportunity. Um I just

wanted to understand your revenue mix of this quarter you have given bifocation wherein um uh from non-legging sales is

around 65%. uh correct >> as a as a category uh that category is

not seeing that kind of difficult time in our opinion. Uh so I wanted to understand what is which which category

is seeing slowdown or is it an overall all categories are seeing decline at the same time or what is

>> how yeah I'll tell you I'll tell so P I'll tell you see the product mix change has

uh very little to do with the negative SSG and I'll tell you why when precoid when we had SSG of more than 15% of we

were double decency. Even that time the product mix was evolving and changing. See product mix is something which

evolves even when your SSG is positive or negative. So that has nothing to do with that. The real reflection of SSG

being negative is more to do with the footfalls. It the main reason is that it is not

because this product has gone down and this product has slightly improved that it is reflecting a negative SSG. The

main reason of Sency decline is because of of the decline in portfall. Suppose if we are having minus5% SSG today our

footfalls are down by minus 5%. So what directly correlates with ne negative SSG is the footfalls and not the product mix

because what we've seen in the past even in the good times when we had doubledigit SSG during precoid our

legging through our contribution was falling at that point of time and our other product sales was improving that

was something which we had envisioned that was anyways going to happen that legging as a category is going to

continue to decline even in the future. Okay. Um understood. And uh but then I'm just trying to understand because other

apparel players are not have not been declining every quarter the way you have been declining. So um

and football uh in this quarter especially given that you know uh the season has been decent and um uh you

know the foot uh the footballs have not been a complaint by many other categories in deficiency

u segment as well. So why would football be a problem for you for more than three quarters now?

See uh difficult to answer this question but see in quarter three of course our numbers are weak right so the first

thing what we do is we do some channel checks so we have seen uh we have seen a decline everywhere but the women's

category we've seen a bigger decline and this I'm saying about in general overall women's apparel irrespective of top wear

irrespective of bottom wear irrespective of whether it's ethnic western or fusion whatever little bit channel checks as a

company we've done we've seen slowness everywhere >> also isn't Any strategy change with

respect to ownership of stores because you you all your stores are on your books and any franchisee options that

you are evaluating so that uh employ >> see the the PCO model works very well for us uh and it gives us better control

from a hygiene perspective also we've realized that Poco stores deliver a much better customer experience because we

have SOPs in place. So for us we are largely going to go to the coco route. Uh franchisee route we are not against

but we will do franchises very selectively in in markets where we are not having operational control. Very

similar to what I have narrated earlier. From a uh Rosi perspective see as the business improves once growth comes back

onto the tables the margins improve automatically the ROSI will start showing a better figure than what it is

currently. But from a strategy of coco versus fo I feel we are going to continue with the coco because that's a

model that works for us because sometimes we feel from a coco perspective the store experience the

store look everything a look and feel everything can be well maintained in a cocoa model.

>> Understood. Thank you and all the best >> ladies and gentlemen. In order to ensure that the management is able to answer

all the questions from the participants, please limit your question to two per participant.

The next question is from the line of Risham Ma from Green Edge Wealth. Please go ahead.

>> Yeah. Um thank you for the opportunity. So uh the first question is basically on the market share data as per the latest

uh Technopac report. Can you call out what's your market share? >> Yeah. So uh the report says that we are

having the same 8% market share in FI24 what we had earlier and uh it shows that the branded market for bottomware is

about uh it's a 10,000 cr branded bottomware market as of 2024 in which we have a uh 8% market share.

>> Okay. And uh uh can you just call out the initiatives taken uh you know to drive footfalls uh as far as customer

engagement goes. Uh see I think uh driving footfalls to a very large extent is is determined on

the consumer sentiment. So that's not very much in our hands. So what best we can do from our end is to ensure that

our product mix is good, our stores are well located and our marketing uh our digital marketing is strong. These type

of levers are in our control but the overall consumer sentiment which is there in the market is something which

we'll have to wait and watch how that improves. these initiatives of just ensuring that we have the right product

mix and we're doing right digital marketing is what we can do at our end to ensure that we deliver uh best SSDs.

>> So when you say customer engagement what you're essentially referring to is the digital marketing.

>> Yeah I think we started a lot of personalized digital marketing works very well. See today uh a lot of our

digital marketing has moved to personalized customer where today a consumer who's shopping in a go colors

who's buying certain categories. We promote the other categories to WhatsApp to Instagram. So we our entire digital

marketing has become more personalized around the product with our with our existing customers and new customers. So

we are leading our digital marketing is more transitioning into product communication than just brand

communication. Like for example, if you're a user, you're a customer of Go Colors, you've

been buying X number of products, but you don't you don't know that this product is available at a go colors.

Through our data, we will know that X person is buying this. So what we've seen in recent past when we are

personalizing advertising communication for that person uh that person is able to see okay this product is also

available. So you are able to get that customer back to the store. So we are just creating our digital is moving more

personalized product link which works for us very well. So we do it direct and we also do it through influencer.

>> Understood. And uh you know you've made these uh product changes right uh

>> no madam uh no no madam please let let her continue. >> Okay

>> madam please let her continue. No problem. Yeah please go ahead. >> Yeah. So and you know with all these uh

new product launches uh you know which we can see uh out there in the stores right. Would you say like you know

you've spoken that okay uh brand uh dilution is not an issue you know uh uh other issues are not there but do you

see that somewhere you know the value proposition for the customer has you know become a little bit weaker because

if I see you know as we have westernized our portfolio right uh westernware is you know somewhere where there is a lot

of competition so if I just compare you know the merchandise for the new product launches that we have done with let's

say you know an offline store like a west side or even if we go lower you know on the value side you know zoo etc.

uh at least you know west side probably you know would have similar merchandise but at a much lower price point right so

then you know your customer is probably you know we're not seeing footfalls not because of other reasons but just

because you know the value proposition has weakened because >> you know yeah I understood your question

in fact I'll tell you this is something which we covered in the tech so in fact we added this in our presentation

recently so if you so we put a triangle chart in our in that updated uh slide on market size and our share in

that what the study says is that sub more than 500 500 to,000 and,000 and above contributes

to more than 2/3 or maybe more than 70% of the bottomware market. The less than 500 category is a very small category

compared to the mid premium and the premium category. See the bottomware category when you take the value added

products like trousers, palazos, it's very difficult to price it sub 500 the sub 500 to what I have studied is a very

leggings market leggings oriented market. >> No no sorry

>> even let me sorry to interrupt I'm not referring to the sub 500 market. Okay so now let me be very specific you know for

example the wider bottom denims right uh which have been launched right. So now for example you know we our MRT is let's

say 1,300 but if you know I similar merchandise in let's say a website it's priced at,000 right uh then you know

clearly you know uh I I mean this is just one example that I'm giving you right so then clearly you know the value

proposition for the customer becomes far superior you know with our >> oh you're saying from a competitive

pricing you're saying >> yes yes and this is just I'm talking about you know let's say offline

competition right and if we move to online you uh it's a different it's is a much wider world out there right with

plethora of options there right so then with that do you think uh you know let me put this differently that if let's

say if you were to drop your prices okay on some of your specific merchandise right like by x% do you think that is

going to boost footfalls or do you think that is that is not the case >> uh okay so I I understand your question

I'll clarify that see what we try doing is when we launch a product we try benchmarking it at what prices will a

like to like product or a similar product be selling in the market so maybe there's one product which you're

mentioning maybe we have over overpriced it by 200 rupees maybe that's a one product phenomena I'm not going into the

specifics of that product in general when we are releasing products we benchmark to see that we are not very

expensive compared to competition we should be either on par or maybe lesser and that's how our pricing strategy is

so a we we don't want to put ourselves in a situation where we've launched a product at a premium realize that it is

very expensive to competitors like other competitors what you mentioned and then we drop the prices so to to begin with

we are ensuring that we are not pricing ourselves so much higher than what is available in the market so I'll give you

another example what happened in our new concept what we opened the new daily wear concept so certain products of

men's wear uh what We launched in the licking road store and the other five stores as well. We we had priced it a

little higher. Then we realized that we had priced it a little higher than what is available in the market. We

immediately changed the pricing because that's a new category and segment for us. So we are also learning in bottom

where because we have done it over so many years we when we are releasing a product we keep studying what our

pricing is and versus what is there available in the outside. Maybe an exact product is not available but at least I

like to like a similar product what price it is selling. So we try keeping that price parity to begin with.

Sometimes we make mistakes like that one product maybe you mentioned we did go wrong. I don't want to be specific about

that product but in general it's a conscious effort that we get our pricing right from day one.

>> Right. So you don't believe that you know if we bring our prices down you know we are going to be seeing more

footfalls right? >> Not at all. Not at all. We have to begin with we are pricing our product very

sharply and it's in line with if that product is available out there it's in line with that

>> right yes I'll give you a basic I'll give you a basic example right let's take our legging product so you'll have

you'll have leggings of different price ranges for a product of our spec and I'm taking legging because right that

contributes to 35% of the business I'm taking that product as an example if you take a product of similar specs you will

see brands selling between 549 and 649. So we are somewhere in between we at 599. So we are very mindful of that how

we price ourselves. We want always ensure that okay we are giving good comfort and quality but the pricing

should be sharp >> right and I and I you know I do acknowledge you know the um you know uh

the fresh merchandise and you know the new product launches they're very much visible in your store. uh in Mumbai at

least right so I do acknowledge that right and and I have one more question if I can squeeze in

>> sure good please go ahead please go ahead >> thank you that's the last one so you

know a lot was spoken about the store sizes right uh uh so typically we've been in that 300 to 600 square ft uh uh

kind of store size >> uh so now the new stores that you know whatever calibrated u muted store count

that you know we would be opening we are all at thousand plus and also related question that when you say small stores

I mean do we have definitions of small medium large stores internally >> uh see so the new stores what we opening

for the bottomware stores uh I'm not I'm not talking about the pilot so for the new stores what we are opening for the

bottomware will be sub will be below thousand largely so it'll be in that range between 500 and th000 it will be

mostly in that range but we are unlikely to cross thousand unless it's a it's a very good rental deal getting but we

largely going to be in that bracket of less than thousand. Uh when I talk about a small store yes any store which is

effectively lower than a 300 or 350 ft² store uh comes down to being of a small store. So it also depends on the depth

and the width of the store but being without being too technical anything below 350 and 300 is regarded as a small

store where today we are not able to display those products in a very small store.

Sure. Uh we'll look forward to you know more granular data on the store sizes uh in your next presentation. Thank you so

much and all the best. >> Thank you. Thank you. >> Thank you. The next question is from the

line of Samir Gupta from IFL Capital. Please go ahead. >> Hi, good evening everyone. Thanks for

taking my question. Uh Goautam firstly on the LFS channel. Now even if we exclude the anomaly of this quarter uh

the growth or the performance in this channel has always been volatile. Some quarters it is up more than 20 30% some

quarters it is a decline. So if this is a replenishment model which you alluded to into an earlier participant's

question technically growth should be smoother like you know the the the way we witness in our EOS because that will

be the capturing the end level consumer and just a follow up on this again so the the LSS key partner that you're

talking about changes formats not buys for 45 days and they don't really inform us beforehand so that you can plan

better. >> Well, so I'll answer your your second question. Yes, we were obviously not

informed. Once festive got over, EOS were on hold. We couldn't uh send stock. It was a very uh it was something which

came up uh very uh you know we didn't know about it. We obviously couldn't foresee it. Uh as far as format changes

also concerned, I think look format changes is very common. Not for this one LSS part. It happens anywhere. Brands

are always informed only at a particular point of time. They will never be well informed in advance. But that's how

retail works. But on the PO part definitely we should have been informed that this was coming but we weren't.

Luckily we were able to solve those things post December 15th and as of now things are running smoothly and we are

also trying to work with the Delus partner to ensure that such operation issues don't happen in the future. Uh on

the volatility part uh Samir see I think look there are two things right where can we where can we have volatility in

NF one a if there is a fall in secondary sales because of footfalls or b we have not replaced the store so properly I

think the volatility in Q3 what we have seen was a point that we were not able to get the purchase order and we were

not able to replenish I think the volatility depends on uh on which aspect whether it is secondary

related or whether it is primary related. So this quarter we have seen that it was more around the perspective

of that we were not able to dispatch and that's why we saw a a fall in revenue in LFS. In previous quarters there were

some quarters where the secondary sales itself were low and we could only refresh based on what is sold. So I

think that was a very different reason altogether. This is this issue what has happened in

Q3 is more of a very direct operational issue rather than a I would say a consumer sentiment or market issue.

>> Got it. But the previous quarters are more reflective of the consumer consumer demand.

>> Consumer yeah that's why I'm saying it's not an apples comparison but yeah I mean at the outset it looks okay LFS has

grown. I think the the underlying reasons in what was maybe in the earlier quarters and what is today are

different. Fair point. Fair point. Uh second question again it's a follow up on an

earlier participants question. So brand relevance and strength. Now it's been 11 quarters of flattish same store sales

and you're confident that the this is brand strength is still very very relevant and strong and you alluded to

the brand market share is is intact at 8%. So the last three years then only two of these things can happen. One is

that people have stopped buying branded bottomware or they are basically shifting to unorganized. Uh is there a

third thing that I'm missing? See uh I feel uh I see I'll tell you from a brand relevance perspective no

see we are very closely in touch with the consumers who walking into go colors and buying right so we are very clear

whether we are meeting the needs of the consumer who's buying. uh the consumer who's coming in is definitely buying and

we are very very relevant. Yes, in the last few years when the overall footfalls have been low, our new

customer acquisitions have been slightly as a low slightly on the lower sides where the actual quantum of new customer

acquisitions have increased but because the base has increased the percentage has fallen slightly. So what we are also

trying to do as an audience is to push up how we can push newer customer and newer audience acquisition especially in

the younger age group. That is what we are focusing on. >> Got it. Uh wish you all the best for the

future. >> Thank thank you sir. >> Thank you participants. You are

requested to restrict your question to two per participant. The next question is from the line of

Akil Parik from BNK securities. Please go ahead. >> Yeah, thanks for the opportunity and uh

again my questions are around the competition and the gross margin part. Um uh uh also you know an interesting

comment made by uh one of the largest consumer pie fans yesterday on a television that there's a silent shift

happening in the consumer categories uh from organized listed traditional players to say unlisted agile smaller

players basically and this is happening even in the apparel category where he cited an example of uh a few uh unlisted

players like snatch soul store Bombay shorting rare rabbit these four brands combined have added 2,000 cr of revenue

in last here basically while some of the listed players are still struggling. uh so my first question is how are we

measuring this shift basically because I think there's something uh missing right because as as earlier participant also

highlighted last 11 12 quarters SSG has been mutish so there's definitely some sales is happening but that is being

taken away by uh some of this unlisted layer that is my first question second a corollary to it whether high gross

margin is is an issue uh uh uh uh for us basically being a listed player gross margins are very much visible in public

domain and have been on inclining trend for last five years now and we are seeing the similar trend happening in

other listed apparel retailer who has a very high gross margin basically and they are kind of struggling with the

sales growth so yeah those are the two questions from my side I think you're definitely right I mean see if you

compare pre-covid and postcoid right uh the number of brands in the retail industry whether unlisted whether listed

whether digital whether offline has significantly increased uh right No, and I'm I'm speaking this from a generic

perspective. I'm not talking about bottom wear, women's wear, men's wear. There is a lot more supply of different

different brands across different categories of apparel and the number of players today are far higher than what

it was. So that definitely makes an impact on it individual categories. As far as gross margin is concerned, see we

are in a high gross margin category is because of the kind of category we are in. We are in a very full face category.

So because we are able to achieve and keep that 95% of the sales ratio going that is very clear indicative in our

gross margins. So the gross margins what we are having is a very clear indication of full price sales ratio and lesser of

discounting. Now the question is whether we should reduce uh the selling price and push for volume. Even if we had to

reduce the selling price how much would we reduce? If we would have reduced probably by 100 rupees or 200 rupees

that does not really change the customer's decision to buy that product but then you'll end up taking a gross

margin. So from a product pricing perspective like I also me mentioned to we are

keeping the the price of the product very sharply priced it reflects in high gross margin because of lower or I would

say negligible discounting. Okay. But there's no way to kind of do the pilot project where we can kind of

cut pricing around certain products and see if that increases the footfall because as I said there is a similar

problem with one of the another listed player uh in apparel segment. >> See from a price deduction perspective

I'm very clear look we don't have to really rework on our pricing. our pricing is very sharp and maybe in a few

products u you know maybe maybe if we are overpriced by 100 rupees or 200 rupees and maybe those those exceptions

but largely I would say more than 90% of our products are very very sharply priced so I don't really think that we

need to take a price cut to boost volumes I don't think that is required >> sure that's all from my side and uh best

luck for coming thank you so much >> thank you thank you so Thank you. The next question is from the

line of Balaji Vinad from NFA Asset Managers Private Limited. Please go ahead.

>> Uh good evening. Uh you know uh you mentioned that it's a little difficult to guide on store openings. uh which is