Ladies and gentlemen, good day, and welcome to the Q4 FY 2024 earnings conference call of Go Fashion (India) Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gautam Saraogi, CEO, Go Fashion (India) Limited. Thank you, and over to you, sir.
Good evening, and warm welcome to everyone present on the call. Along with me, I have Mr. R. Mohan, our Chief Financial Officer, and SGA, our investor relation advisor. I hope you have all received the investor deck by now. For those who have not, you can view them on the stock exchange and the company website. The retail industry has witnessed a temporary decline in demand due to higher inflation and changing spending patterns. With prices on the rise, consumers are becoming more cautious with their purchases, favoring essential goods over discretionary spending. They've led to several retailers experiencing reduced footfall and impacting performance. Although the near-term outlook for the industry seems challenging, the underlying fundamentals still remain strong for the long term. Despite these industry-level challenges, our company achieved a 15% YoY growth in revenue to INR 763 crores in FY 2024.
EBITDA stood at INR 242 crores, witnessed a growth of 14% on a YoY basis. Our tax for FY 2024 stood at INR 83 crores, which was flat on a YoY basis. On the SSG front, we had a flattish SSG. Since inception, since inception, we have maintained a strong track record when it comes to full price sales. In FY 2024, full price sales had contributed 95% of the revenue. This underscores the brand's strong consumer loyalty and also highlights why Go Fashion stands out on preferred brand convenience within the apparel space. Our unique pricing strategy, combined with quality of products, keeps us at the sweet spot in the industry. Our ASP continues to witness growth and stood at INR 752, which was INR 727 during FY 2023. This growth has been driven by improving sales mix.
Our A&P spend stood at 2.1%, which is in line with our guidance. During the year, we added a total net of 84 stores, bringing our overall store count to 714 stores. While the net additions are lower than anticipated, it was a strategic discussion to close down stores that didn't rebound post the COVID-19 pandemic and were a drag. Going forward, we expect to return to a normalized store closure rate of single digits for the next year. For FY 2025, we aspire to add between 120-150 stores on a net basis.
Coming to the working capital and cash flows front, in line with our commitment to sustainable growth driven by cash flows, I'm happy to share that as of FY 2024, we have witnessed a multi-fold jump in our pre-Ind AS operating cash flows, which stood at INR 111 crores, which was INR 20 crores in FY 2023. This has been driven by strong inventory management initiatives, coupled with rationalization of inventory at a warehouse level. We have successfully converted 82% of our EBITDA to OCF during FY 2024. Inventory days as of March 2024 stood at 104 days compared to 126 days in March 2023, a reduction of 22 days. We continue to remain focused on enhancing efficiency as far as working capital front is concerned.
On the way forward, we want to achieve low single-digit SSG going forward through increasing our value-added sales. Secondly, we would want to grow our footprint by increasing the number of stores by 120 to 150 stores a year. To conclude, as inflation stabilizes and consumer spending habits normalize, we anticipate a gradual revival in demand across India's retail sector. Despite recent downturns, the market's inherent resilience suggests that as economic conditions stabilize, consumer confidence will recover, stimulating growth. This underscores the potential for a robust resurgence in retail demand, reflecting a promising outlook for the industry going forward. With this, I would like to hand over the call to our CFO, Mr. R. Mohan, for the update on Q4 and FY 2024 results and financials. Thank you.
Thank you, Gautam, and good evening, everyone. The company continues to maintain a strong operating performance despite of the challenging business environment. First, I'll give you financial highlights for Q4 FY 2024. Our revenues for the quarter stood at INR 182 crores as against INR 158 crores in Q4 FY 2023, a growth of 15% YoY. Gross profit stood at INR 115 crores, a growth of 15% YoY, with a GP margin of 63.5% for the quarter. Our EBITDA for the quarter stood at INR 54 crores, as compared to INR 50 crores in Q4 FY 2023, a growth of 9% YoY. Our EBITDA margin stood at 29.7%. Profit after tax for the quarter stood at INR 13 crores. Tax margin stood at 7.2%.
Coming to the FY 2024 performance, revenue is at INR 763 crores in FY 2024, as against INR 665 crores in FY 2023, a growth of 15% YoY.
... Gross profit stood at INR 471 crore, a growth of 17% YoY, with a gross margin of 61%, 61.7% for the full year. EBITDA for FY 2024 stood at INR 242 crore, as compared to INR 212 crore in FY 2023, a growth of 14% YoY. Our EBITDA margin stood at 31.8%. Tax for FY 2024 stood at INR 83 crore, which was flat on YoY basis. Tax margin stood at 10.9%. The ROCE and ROE, excluding Ind AS impact, as on FY 2024, stood at 19.1% and 16.2% respectively. Cash and cash equivalents stood at INR 198.4 crore as on March 31, 2024. With this, we will now open the floor for question 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. The first question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Hi, Gautam and team. Thanks for taking my question. I'll quickly squeeze in two. So firstly, typically, we have always guided for a 10% SSG growth, which is a mix of 5% or half and half in terms of volume and mix. I'm sorry I missed your opening remarks. You said some number, but I missed. But with the gradual recovery being eyed now, so for FY 2025, would you still hold a 10% SSG growth guidance, or this number typically should tend towards 10%, but overall for the full year, it must be settling somewhere, you know, at a lower level? Your thoughts here.
Yeah, see, thanks, Sameer. Thanks for the question. See, our initial target was 10%, but due to demand sluggishness in the last, few quarters, we've changed our guidance, guidance as far as SSG is concerned. See, this quarter, in quarter four, we have reported a 1% SSG. So our target is to slowly get to about 4% or 5%. So maybe by the end of FY 2025, we should be closer to 5%-6% of SSG, is what we think could be a fair number. And then maybe the years after that, we will get back to a normalcy. But from the way the demand is looking, the recovery in SSG is going to be gradual.
So where we stand at 1% in quarter four, we would want to go up to 5%-6% by maybe middle of the year or maybe end of the year. It depends on how demand shapes up.
Got it. Got it. So when you say 5%-6% by the end of the year, full year will be average somewhere in the middle, 2%-2.5%.
Very difficult to... No, very difficult to say right now, Sameer, because see, right now, demand has been fluctuating. It's, it's not shaped up very well.
Mm-hmm.
So honestly, I'll be able to guide on the full year SSG only once Q1 gets over.
Got it.
For Q1, for Q1, our target would be to do an SSG of 2%-3%.
Okay, fair enough. Secondly, I see that the LFS growth has been stellar in this quarter, and if I remember, there was some INR 99.9 crore of credit reversal in the base quarter. So if you adjust for that, the growth in the LFS channel is even higher at 66% YoY. So just wanted to confirm, are there any one-offs here, or the base had a one-off-
No.
- and, now it is correct?
No, no. See, the thing is, last year, Q4 LFS and this year, Q4 LFS has had a one-off. See, last year we had received a credit note from a, from an LFS party to the tune of about INR 9 crore, which was INR 8.5 crore-INR 9 crore, which you correctly mentioned, and this year we've received a credit note of INR 7.7 crore. Now, what these credit notes are, see, basically, with this LFS party, we participate in a discount promotion for the full year. Last year, we had overparticipated, and Reliance, which is our LFS partner, had given us the refund of the excess discount, and this year we had underutilized. So in both years, we've got a credit note from the party.
So, this year it was close to INR 7.7 crores, and last year I think it was around INR 8.5 crores. So if I net off that, our LFS growth would be about 30%.
Got it. So both years, it's a credit?
Both years it's a credit, absolutely.
Okay. But typically, it happens when the demand scenario is very robust, right? You don't really need credits or discounts. So in a scenario where, you know, demand has been pretty weak, why have we ended up with underutilizing these credits?
No, because, see, when demand... See, when the demand is weak, participating in any kind of promotion offers are not anyways does not make sense. See, anyways, the discount what we participate with this LFS partner, this is not product-level discounting, this is bill-level discounting. And I think the LFS partner also has actually not run as many offers like what they had run last year. So the underutilization is because of that.
Got it. I'll limit it to two at this point. I'll come back for any more. Thanks, thanks, thanks again for answering every question.
Thank you, Sameer.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press star and one. The next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead.
... Hi, Gautam and, Mohan Sir. Just wanted to understand your strategy for growth going forward. Like, what all steps should you be taking to revise growth in this year, which would help you to report SSG in terms of maybe product or pricing or, innovation? I mean, just trying to understand what will drive growth, because some brands are growing and some are struggling, so there should be some strategy in place to drive it.
No, I mean, look, see, this year, we just have to ensure that our product mix, we are coming up with some accessory products also in Q1, which will go live in June. And our product mix keeps evolving in terms of colors and what colors, new colors they include. So at a product level, look, we have to be up there from a mix perspective, otherwise growth will not happen. So at a product level, we have to really work hard. From a execution level, what we have decided internally as a management is that we are going to, incentivize the staff more, so that the top-line sales of that particular store can increase. Usually, the incentive payout what our staff gets at the end of the month is around INR 2,500-INR 3,000.
If we can slightly increase that, that will motivate the staff to do a higher sale. So we are trying to bring in a variable component to the staff so that the overall top-line sales can increase. So as a percentage, my cost does not increase because of that, because that will impact in higher sales, but it will definitely have an upside.
Okay. Anything on pricing? Or you mentioned that you are introducing some products in athleisure wear or accessories. I missed your-
No, accessory, athleisure, athleisure.
Athleisure. Okay.
Yes.
So, um-
See, from a pricing perspective, Trina, I think, look, we are not going to take any price hike, and that's always been a fundamental core belief. Yes, our ASP, we are visualizing that our ASP should grow at a rate of 4%-5% on a YoY basis because of product mix. But from a pricing perspective, we don't see ourselves taking any price hike.
Any price corrections that you see?
No, we are not, we are not, we are also not going to reduce any prices. Neither increase, neither decrease, but ASP will grow on the basis of product mix.
Okay. And the last question on gross margin. The gross margins continue to remain stable. That's a good, good thing, but do you foresee that increasing going forward, or it should not?
I think, see, I think if you compare FY 2024 with FY 2023, there's a 100 basis points increase in our GM. This is basically the lower cotton price benefit coming into the gross margin. I think moving forward, I think we'll see another 50 basis points increase in the next couple of quarters. So I see our GM steady at about 61.5%.
Okay. So it will, it will stay there at 61.5%?
No, I mean, look, I mean, see, very difficult to predict, because like I said, because we are in an inventory rationalization mode. You know, when we were not buying inventory, that time the cotton prices were low. Now, since we have started sourcing inventory a little bit, the cotton price is slightly increased. So it's very difficult to ascertain what our steady state increase in GM would be, but I visualize that another 50 basis points increase in our GM should happen.
Okay. And, EBITDA margin should also remain stable, largely because the GMs will largely remain stable, and since SSG growth, you are targeting at low single digit. And, I mean, I see EBITDA pressures going ahead as also at this, at this SSG level. So can you please help with-
See, I think, look, if we are able to achieve, you know, 3%-4% of SSG in H1 and over the years, I think, I guess we should be able to achieve an EBITDA. See, right now, our pre-EBITDA is about 17.7%. So I think at around... We will target at around 18%-19% of EBITDA for the full year.
Okay.
We will definitely target in that range.
Okay. And that is possible with mid-single digit SSG?
Yeah, it should be possible. If we are able to deliver 3%-4% SSG, I think EBITDA margin, we should be able to maintain at about 18%-19%.
Okay. And this year full, your SSG was flattish. Can you just help me with the number?
It was, it was zero. I can just tell you exactly. Just give me a second. One minute, Prerna.
Yeah, sure.
It was 0.02%.
Oh, okay. That's flat. Okay, I'm sorry. I thought maybe it would be some 1% or 1 odd % or something, so that-
No, no, it was 0.02%.
Okay. Thank you so much, Gautam. All the best.
Thank you, Prerna. Yeah, thank you.
Thank you. Participants, to ask a question, you may please press Star and One. The next question is from the line of Avinash Karumanchi from Equirus. Please go ahead.
Hi, sir. Thank you for that. I'd like to highlight that you have made this Pre-Ind AS differential that actually helps this quarter. I'd like to congratulate on that. And coming to that, so the rental costs have increased by close to 10% this year. So this is more or less significantly higher than what we have seen. Historically, it has grown at 6%. Any particular reason for that?
See, Avinash, the larger reason for rental cost going up is largely because of flattish efficiency. See, as we usually see, rent as a percentage of revenue. So if I take FY 2024, our rent cost for three years has been INR 118 crores versus INR 90 crores in FY 2023. So this increase in rent obviously is also because of new stores getting added and rent increments happening. But as a percentage of revenue, it's going up because of flat effect.
No, no, no. We, I'm asking like, like a per store rent, if I divide it by the average stores, divide the total rent. So then the per store rent that we are getting is somewhere around, INR 1.8 million per store, which was like 10% higher than what it was last year.
The rent number you have taken it, you have taken it from the presentation?
The Pre-Ind AS or lease liability payment that we get, right?
The thing is, the rent there will include head office, warehouse, our small, small satellite warehouses, everything. So that will not be the right number for you to divide it by the number of stores. I can tell you the exact number. Our rent for the full FY 2024 was INR 118 crore.
Okay, okay. Thank you.
But if you, even if you take INR 118 crores and divide it by the total number of stores, it will be a misleading number, because all the stores are not at, opened in quarter one.
Yes, I get it.
So, you, the denominator, has to be different then for you to arrive at rent per store.
Got it, got it. So that actually helps. 118 actually, matches my number. Okay, and, the other question was that, this year we have seen a lower number of store additions, but the CapEx was actually higher than what it was last year. So what was the actual difference, like, the CapEx from the, cash flow statement?
Yeah, see, we've had INR 43 crore mentioned in the cash flow. So, in that, see, we have opened about 84 stores, net addition, but we've had some relocations and renovations.
Okay.
To the extent of about, if I'm not wrong, your relocations and renovations should be about 15 stores or 17 stores. Plus, we've also bought some equipment for our warehouse also in Tirupur. That's why the CapEx shows you higher. That's it.
Oh, okay. Okay, okay. Thank you, sir, and-
Because stores are the net, 84 stores are the net addition. We would have done some store relocation, and we would have done some renovations. So that would have also played an impact on the CapEx slightly going up.
Okay, okay, okay. So next year with the normalization of the what... Go ahead.
One minute. Warehouse expansion is also there in CapEx.
Yeah, so in our existing warehouse in Tirupur, we are just buying new equipment and slightly extending the space there. So maybe that's also one of the reasons for the higher CapEx. But that will be a that will not be a significant number, because largely the entire CapEx goes towards.
Okay, okay. One last question, sir. So next year, are we guiding for, like, what would be the guided number of stores addition? So this used to be around 120 last year, and we thought of upping it to 150 if the cycle turns positive for this year, but still the cycle is weak. So what would be the numbers that you'd like to add next year?
No, see, I'll tell you. This year also we added good number of stores. It's just that we've had, since we've had 23 closures, it brought our net number below 100. See, what has happened is out of the 23 store closures, 13 stores are closed because of COVID, and it was loss-making. The balance 10 stores are, some of them are kiosks, which we didn't want to continue, because over a period of time, ours is a complete store format. Our historical kiosks of 2014 and 2015 are running, which are not adding too much value. So those three, four kiosks, we took a call. Three, four airport stores, we took a call, where the footfall in certain terminals had gone down, and it was not adding advertising mileage for us.
So we have taken a strategic call of shutting those three or four airport stores. But out of the 23 stores which have closed through the 12 months, 13 stores are actually pertaining to it, for it being loss making because of COVID. And that store we have taken a call. Next year, we don't have any such stores, so next year our closures are going to be in low single digits, and we see ourselves delivering between 120 and 150 stores.
Okay, okay. Thank you, sir. That's all from my end. Thank you for answering.
Thank you. The next question is from the line of Shreya Baheti from Anand Rathi Institutional Equity. Please go ahead.
Hello. Hi, sir. Thank you for taking my question. Hi, am I audible?
Yeah, please go ahead, Shreya.
Sir, I just wanted to understand, like, is what interest expense are in for quarter four, our expense is increasing by 36% year-on-year and 10% on quarter-on-quarter basis, and even for full year, it is increasing by 37%. So why is that? And if you could provide the breakup for the, interest expense.
This, you're saying on the reported number or the Ind AS number, Shreya?
The reported.
It is Ind AS, Gautam.
Ind AS. See,
It is full Ind AS.
Yeah, see, so Shreya, the right way of looking at it would be looking at the rent from a Pre-Ind AS number, because when the rent gets capitalized, it gets capitalized into interest and depreciation. And when renewals come up the sixth, because of Ind AS 116 takes a larger rate than the Pre-Ind AS. So the right way to look at it would be looking at rents before EBITDA, rather than looking at it as interest and depreciation.
No, no, she's asking about interest, Gautam. Interest is only Ind AS effect. There is no, because we don't have any liability, we don't have any interest-paying things.
Sir, if possible, could you give me a breakdown, like, how much interest on these liabilities, how much it has increased, if you can give me a breakdown of the finance part?
No, Shreya-
I'll tell you. I have the number here. So the interest cost because of rent, Ind AS basis is for quarter four is INR 8.05 crore. And the depreciation on the basis of Ind AS rent is about INR 20.88 crore, for quarter four.
And, um-
Shreya, Shreya, if I'm not mistaken, you are asking about the INR 38.39 crore interest, correct?
Yes, sir. Yes, sir. My question is that-
The entire INR 39 crore, out of INR 39 crore, only 1 lakh is relating to that interest, that too, a kind of, interest working, something like that. 39, INR 39 crore is because of indirect. That's what I'm trying to repeat.
Okay. Okay. And also, sir, I just wanted to know, the same question for employee expense. I just wanted to understand that the employee expense has been increasing by 22% year-on-year for quarter two, and for full year basis, it is increasing by around 27%. So, like, can you please-
It's because of, see, our employee costs, sales largely front-end. So these are basically employees at our COs and at LFS. So one of the reasons for the employee cost as a percentage to look sharp is because of muted sales.
Okay.
So it's largely increased because of expansion and increments which was given last year. So these are largely front-end employees. So this, the reason as a percentage it looks higher is because of muted sales.
Thank you, sir.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press Star and One on your touchtone phones. The next question is from the line of Raj Shah from Ambit Asset Management. Please go ahead.
Hi, sir. So, one question that I had was that if we see currently your store location, so majority of the stores are currently in metros and Tier One, so around Mumbai has 70 stores, Ahmedabad has around 25-30 stores. So of course, we follow a cluster-based approach. But going forward, do you see that there is a congestion in the metros and Tier One, so that going forward, a higher number of stores will be opened in Tier Two, Tier Three, and eventually, because of that, the rent expense might come down, but also the revenue per store might also come down?
No, I don't see that issue. So even in the coming year, we see ourselves doing the same way, that 50% of the stores are going to keep coming from the metro cities, and the balance would be from Tier 2/3.
Okay.
I don't see that changing much.
We have adequate space still available in the metros to...
Absolutely. Absolutely.
Okay. Okay, and so second question would be, so currently, in, so across the different categories, what would be a category mix between loungewear and denim? So what would be the contribution from the newer categories, like denims and loungewear, et cetera, that we have started recently?
See, denims and loungewear are still smaller categories because we are selling very large volumes of the other categories, so this is still low single digits.
Okay.
Our mix is still churidar leggings is 45%, and the balance, value-added products contribute to about 50-55%. This will be low single digits. The denims and loungewear, which you're specifically asking about, would be low single digits.
How has the growth been in these categories, the newer categories of the-
No, very, very encouraging. I think denim, when we launched in, Q1, Q1 of this year, it has been selling very well for us. So very encouraging.
Okay. Thanks a lot.
No.
Thank you. Participants, you may press Star and One to ask a question. We have the next question from the line of Vikas Jain from Equirus Securities. Please go ahead.
Yes, sir. Thank you so much, sir, for the opportunity. Sir, my first question is with respect to the demand trends, is, when we say that the demand has been sluggish, is it a phenomenon that we are witnessing across the price points, or it is something where probably, there's some downtrading that is happening, or probably preference for some, lower price points brand or unorganized brand that is gaining some market share, or even they are also struggling. What's your thought on this?
No, I think, look, I think the demand has been sluggish across all, all segments. I don't think mass is doing any better than mass premium or premium is... I think it's been sluggish anywhere. Of course, there are a couple of players who have done phenomenally well in the mass segment, some large products who have come up. But otherwise, I think the sluggishness we see in, across everywhere, across all mass, mass premium. So that's why even this year, having a muted selling, selling environment, our ASPs have still grown. If it was more to do the mass product, our ASP actually would have come down.
Understood. Understood. But then, if we talk about in terms of pricing, means, of course, while the ASP accounts for the pricing across our product portfolio, but for the core leggings part, is it the pricing has actually remained stable, or it is expected to remain stable, or is some lower price point also that you're planning to introduce probably to get?
No, no, no. No, no. See, we are at about INR 599 per unit for leggings and churidar. And, we, as I had also mentioned earlier, see, we are in the bottom of the pyramid as far as pricing is concerned, for the kind of product we have. And you see, you can find a legging for even INR 199, but the product, the quality, everything is different, right? If you go into the market, you can find a INR 199 product also... But our pricing for the kind of quality we are giving is very, very competitive. So we are at the bottom of the pyramid as far as pricing is concerned. And we don't-
So, so-
Price coming. We don't see this price coming down, neither increasing.
Got it. Got it. So what, essentially we are trying to say that if any change that might happen in FY 25, that will be largely driven by product mix changes only?
Absolutely. We are not looking to increase prices anywhere. If the ASP is to be grown, it will be grown through product mix only.
From the current levels, and given the product mix that we have at this point in time, how much is the expectation that this ASP can grow on a steady-state basis?
See, I mean, look, it's on a steady-state basis or from past track record, we have seen it. It grows at a YoY basis at about 5%. So our aspiration is that if we are able to maintain at 4%-5%, we'll do well. And like I'd also mentioned earlier, we don't want our ASPs crossing 1,000. We want it to be sub-1,000 on a steady-state basis.
Got it. Got it. All right, sir. Thank you so much. I'll join back the question.
Thank you. Participants, if you wish to ask questions, you may press Star and One on your touchtone phones. The next question comes from the line of Manan Madlani from Kamayakya Wealth Management. Please go ahead.
Yeah, hi there. Thanks for the opportunity. So, I just want to know what, I mean, how many SKUs we are having, if you were to talk about just athleisure and Denim?
See, Denim would not be having too many SKUs. We have about 3 colors and 5 sizes. So I think Denim does not have too many SKUs. Overall SKUs, we are closer to 4,000+, but Denim as such, we have 3 colors and 5 sizes each. So we don't have too much, too many SKUs as far as Denim is concerned.
Okay, and will it be the same for next 1-2 years or any plans?
We, I mean, see, we might introduce a couple of colors, but the number of SKUs from a Denim perspective is not going to dramatically.
Okay. But there will be some change in athleisure, as you mentioned?
Yeah, we are introducing some new products in athleisure in Q1. We are planning to introduce it by May and June. So, you know, hopefully... And we are introducing those three-four products. We are not introducing a range as such because we already have some athleisure products. Three-four new products we are introducing in May. We're hopeful that it will do well.
Okay. So, I know you mentioned, for this year, your projection for SSG, 3%-4%, or let's say 5% on a company level. But if you were to ask, what would be the SSG for athleisure and, this, Denim, then that would, that number would be?
We are currently not tracking SSG at a product level for the newer category, because these are very new categories, the numbers will look misleading. At a company level, like I mentioned, our first target is to achieve a 2%-3% SSG in Q1. Once we reach that kind of a number in Q1, we'll be able to guide for the full year, because right now it's too early to ascertain how the demand for the full year is going to be.
Okay. Yeah, fair enough. Yeah, and the last question would be, are you planning to, you know, onboarding any, celebrity for this, branding?
No, not at all. See, for the kind of product and brand we have, we really don't require a celebrity. And our ad spends also this year has been around 2%, and we see ourselves having similar type of ad spends even in the FY 2025, of about 2%.
Okay. Yeah, that's it from my side. Thank you so much, and thanks again.
Thank you. Thank you, Manan. Yeah. Thank you, Manan.
Thank you. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Hi, and thanks again for taking this question. So just wondering, like, are there any plans to increase online presence? I still see this in a low single digit number for some time now. And overall, most customers in retail across other players are moving towards an omni-channel experience. So they basically browse on the net and then they come to the store or vice versa. And in any case, since loyal customers are familiar with products and sizes, why do they need to come to the store? So any plans you can share on spicing up this online piece?
See, yeah. So Sameer, see, we definitely are putting in a lot of effort as far as online is concerned. We have a separate team, who looks at digital and online. But, this number, what we are at, about 3%. See, in India, largely full price sales are happening in the offline level. And especially for a product like us, we have so many colors and sizes, customers prefer to buy it, you know, in person. They want the touch and feel of the product. So considering this, our online sales is always going to be low single digits. Or maybe, or maybe eventually, once the overall online ecosystem evolves from discount to full price sales, I think this will become high single digits.
So in the short-term future, our goal is to take this to about 5%. So today it's at about 3. As we keep working on our omni-channel, this will go closer to 5.
But Gautam, fine, I mean, this, discounts as I get, but that is mostly on third-party channels. Why can't you, as a company, come up with the Go Colors app or, you know, a little bit of more of tech innovation, and you don't really need to do discounting over there, right?
... No, I, I agree with you. I completely agree with you. Because the thing is, majority of customers in the online world have the mindset of buying online for discount. See, the convenient shopping factor in the online world is still a very low percentage compared to the people buying for discount. After COVID, it has changed. That's why in our numbers also, you are seeing that our numbers have gone from 1%-3%. But as in the future, the mindset of the customer changes of buying on more on full price, our number also will keep increasing. Having said that, we are putting in a lot of effort. We are also having plans to come up with an app. We are putting a lot of effort on our online piece.
But, for it to become a significant contributor in revenue, it will take a very long time.
Fair enough. I just-
In fact, we have done a survey also once among our existing customers.
Mm-hmm.
It was just about a year back, we did a survey, and some of our loyal customers, we had sent out a survey asking, you know, whether you want to buy online, whether offline. We did an entire survey, and the results came out very interesting, that the customer said, "Look, I, I would prefer to go in person and have a physical touch to the product before buying it." So, so the survey results are very interesting.
But is an app such a big deal, as in, it requires a lot of effort or a lot of bandwidth, etc.? Or, I mean, it's just not a priority right now.
See, we will definitely build an app. From a convenience factor, we will even give the app to the customers to use by putting it on the App Store and, on the Android, play, the Android app center. But, we are not going to be pumping crazy amount of marketing dollars to promote the app. That is not what we are going to do. We are going to give the app, our loyal customers and customer base, whenever they want to access the app from a delivery and ordering perspective, they can do it. So it's not going to be that expensive to develop or build the app from our, from our side, actually.
There is no app right now. I mean, even a bare basics small app is-
No, we have a website.
Oh.
We have a website, which is doing well, and in this financial year we'll come out with an app.
Among the 2.9% sales, how much is via that website?
One third would be from the website.
Sorry, INR 1 crore?
One third, one third.
One third, okay.
One-third of the 3% would be from our website.
Okay, got it. Cool. Thanks, Gautam. Thanks, thanks for taking this. Yeah.
No problem. Thank you, Sameer.
Thank you. The next question is from the line of Rajiv from DAM Capital. Please go ahead.
Yeah. Good afternoon, Gautam. Can you, can you help with the, let's say, if you have month-wise, like for like, just want to gauge whether have you seen any improvement in, let's say, latter part of the quarter? Because, I mean, yesterday only-
Actually, yeah, you know, Rajiv, it is very surprising. I'll tell you, so in 2024, January and February, like to like, were negative. March was very good. So see, I, I track like to like month-wise, but it does not help. It's actually best looking it as a quarter.
Sure. No, what I'm saying is because yeah, please go ahead. Sorry. Please go ahead. No, what I'm saying is because yesterday only, I mean, another LFS partner of yours, has called out that March was very good, and April is also, you know, sounding, I mean, they sounded very confident. So I was wondering, are we seeing some up move, in, let's say, latter part of this quarter and then in April as well?
See, April has been, April, I wouldn't say it's great. April has been decent. March was. See, April definitely was higher than March as an individual month. On a month-on-month basis, April did better than March, for sure. But when I compare with April versus last year, it's been decent. I wouldn't say great. But for me to really evaluate how the FFG has been, I, we'll have to see the full quarter. But if I have to gauge how April is, April has definitely been better than March on a month-on-month basis.
Sure. And with regard to, I think, Sameer's first question on underutilization of these offers by the LFS partners, how does it, how, I mean, how does it impact the, let's say, the full price sell-through in the subsequent quarters? Does it impact at all?
No, it doesn't. See, see, full price sales ratio, what, is for us, very much standard. I see this, discount with the LFS partner also is actually not at a product level, Rajiv. What happens is, most LFS partners, they run, they run bill level discounts. So for example, buy 2, get 30% off, or buy 3, get 1,000 GVs. So that basket not only has our product, but it, it also has the products of other brands.
Mm.
So it does not really impact the full price sales ratio of our individual brand. So in a year, what happens is, with the LFS partner, we usually commit about 10%. So last year was 10%, more than 10%, so we got a credit note from the LFS partner. This year it has been lower than 10%, so we've got the credit for the balance.
Okay, great. This, this store closure bit, are we done with it or there is still some vestiges left for looking at that?
I mean, look, it's, see, in 2023, we're seeing where stores which were loss-making, and these were the old COVID stores, and 10 stores where multiple reasons which had necessarily nothing to do with loss-making. Those 10 stores were some of the airport stores which are not adding any mileage to us because certain terminals, the passenger traffic has come down dramatically, so we took a call. Like, I'll give you an example. We have a store in, we had a store in T1 Mumbai. Now, that store was there in T1 on the ground floor. The passenger traffic was good, but the store was too small, so it was not able to perform to its potential and it was not adding mileage. So we took a call on that store.
So certain airport stores and kiosks we shut for strategic reasons, which is around 10 stores, but those loss-making stores were actually 13. So in the coming year, I see the loss-making store closure would be low single digits, like how it was in the previous year.
Sure. And you had called out this INR 1,000, your ASP to increase by INR 2,000 in the previous quarter, right? Do you have a, let's say, year in or timeline in mind in terms of when do you get there?
No, not really.
Because I think in your slide-
For it to go close to 1,000 will take a long time. See, our idea is to grow our ASP by 5% on a YoY.
Sure. Sure. And I think this CapEx-
ASP is driven. To drive any ASP by product mix takes a very long time, because we don't do price hikes, no. So for it to go closer to 1,000 will take, will take some decent amount of time.
So, in your slide 12, right? You have mentioned that, you know, 85.3% of our products are retailed over 10549. I think, what was this number, let's say, 2-3 years back?
It would have been, I would say... See, I don't have it handy what it was two years back, but I remember pre-COVID it was close to 90.
Okay. Okay, sure. And, and this, this, CapEx-
The two years back number, I'll share it with you offline. I'm not, I'm not having it handy. I'll share it with you offline, the minute I get it.
Sure. No, that's fine. On this CapEx number, I mean, for the last two years, consistently, it has been going up, and you mentioned about the, the warehouse as well. Ideally, it should be like INR 1.4 million per store, plus or minus, right? And now it is trending towards INR 4 million.
What has happened also, Rajiv, the cost of building a store also has gone up now. See, what we are seeing now, it takes the CapEx for a store takes about INR 17-18 lakhs. The cost of CapEx also in the last 18 months has gone up significantly. So this increase of, CapEx in our cash flow is a combination of many reasons. It's obviously, we've done little bit, equipment buying at the warehouse and slight extension we are doing for that. The CapEx cost has gone up. Some stores we have renovated, some stores we have relocated, then we have 84 net addition. So it's a combination of many reasons why the CapEx has gone up.
So, outside of this, let's say INR 1.7 million or 1.9 million, if per store you take, outside of that, what is the maintenance CapEx, let's say, for modeling purpose, we should consider in?
Very little. Very, very little. See, for us, any repairs and maintenance at a store level, we book it as P&L expense. It does not get capitalized. It does not... It comes, it's absorbed in the P&L. Any repairs and maintenance we do at the store level. So only if a store is getting renovated, then only, the new store's interiors get capitalized, and the older store's interiors are written off in the P&L. In an ongoing store, if there are any repairs and maintenance, it's booked in the P&L as an expense item.
Okay. Great. Thanks a lot, Gautam. That's all from my side.
Sure, Rajiv. Thank you.
Thank you. Ladies and gentlemen, you press star and one if you wish to ask a question. We have the next question from the line of Priyank Chheda from Vallum Capital. Please go ahead.
Yeah. Hi, am I audible?
Yeah, please go ahead.
Yeah. Hi, Gautam. Gautam, you have been kind enough in explaining the toughness of the market over the last four quarters, but I would like to again, you know, reflect back to the 0% SSG for the full year. And it has been very unique where, you know, excluding COVID, we used to grow at double digits, right? And then we position ourselves into the bottom of pyramid, where the consumer seldom thinks about to spend INR 599, INR 699 rupees leggings, and on the other hand, we are seeing consumables growing at 30%-40%, right? And this is at the time when, you know, the casual and office wear kurtis have seen a mass adoption. So what is the actual risk that, you know, is hitting our SSG growth?
Maybe you can reflect back to the store addition strategy, or would it be... Yeah.
Yeah, I know. I'll tell you. I'll tell you. No, it's a valid question. See, Priyank, I'm not, I'm not worried too much from a market share or market gain perspective. See, it's not that I'm losing market share to my competitors. See, today, we track two types of data. We track SPSG and we track SSG. Why do I track SSG? I track SSG purely from a cost perspective. The, one of the biggest, risks of an EBO business is that if your SSG continues to keep declining over years, your margins in the P&L will start falling. It will take a risk. So for us, we look at SSG, from a cost perspective, and we look at SPSG from a market gain and sales perspective.
So if I take the last one year, even in a tough environment, our SPSG has been actually at about 10.2%, and our volume SPSG has been at about 6.5%. So when I look at these two data points, I'm very comforted that my business is doing well from a sales perspective, from a hygiene perspective. Customers are coming to me. I'm not losing market share to, to competitors. So from a sales perspective, when I look at my SPSG data, it comforts me, yet SSG is definitely concerning from a cost perspective. So we, when we grow in clusters also, we keep in mind that we should at least deliver 5%-6% of SSG so that the increase in cost and the increase in revenue are in line.
Right. So in case SSG does not revise back to 5-6%, what would be the change in the strategy required from the Go Fashion end? Because we can't chase the incremental sales at a higher cost, which is SPSG difference to SSG, right? So what is the exact strategy required in place?
No, no, it's a good question, and I'll explain. See, I am very confident that the SSG number will slowly and gradually get to that 5%-6% number. It will not happen overnight, it will not happen over one quarter. Slowly and steadily, it will start increasing and coming back to that 5%-6% number. If in the case of scenario, if it doesn't, which I don't think will happen, but if it doesn't, then we will have to control our growth in clusters and grow more wide in terms of adding more cities. That will be a different approach. If in a situation that happens.
And the growth focus outside the clusters would be the what? What-
No, see, today what is happening is, today, in today's situation, we are growing at a cluster base. Tomorrow, we will be doing a limited cluster base, and we will adding more number of stores in newer cities, so that approach will change. But if that will happen only in the case where my SSG does not recover, that is going to be the, that. And it's a decision for us to take at that point of time. As of now, how things are and I'm seeing in the market, I'm very confident that this number will come back.
Perfect. My second question is again on a very strategic level thoughts, where, you know, do you see any kind of a risk coming out, because of the larger brands selling co-ord sets or full kurti sets, wherein the trend of, you know, the pants or the leggings, itself, becomes a risk? Any thoughts on that would be great.
See, I don't see that as a risk because co-ord sets and kurti sets are usually occasion-based buys. For every day wear, the ladies prefers to buy the bottom and top separate. So I don't see a situation where it will become a market where everything is sold in co-ords. It will not happen. Co-ords are mostly for occasion buying, so it... I don't think that's going to be a, have a very big impact on it.
The strategic question why I thought was, is that a reason why we are pivoting towards the athleisure kind of a wear, or are we planning to add any other kind of SKU categories horizontally?
See, the thing is, we are a bottom wear brand. Now, today, as far as bottom wear is concerned, the customer should be able to find any type of bottom at our store level. Now, athleisure also, what we are adding, we are adding three-four styles of, athleisure bottom, not too many. So our positioning and strategy is that we are a one-stop shop for all our ladies' bottom wear. So whatever products we introduce, we, we introduce it from that umbrella product.
Right. And when we add these new products, which is athleisure wear, denims, loungewear, which are the products where these new products get replaced? And which would be the existing products which, you know, the sales space would go out, would be helpful?
No, see, for us, see, for us, when we are introducing a new product, we have to introduce it in very small quantities across our top stores. Slowly, what happens over a period of time, as the sales of those new SKUs keeps increasing, the sourcing and the inventory quantity increases. Organically, at that point of time, some colors where the sales are depleting, so some, these products will replace those colors which are going out of the roster. So it interbalances within itself, is what I'm trying to tell you. So it's not a fine day that, okay, I'm bringing a new activewear product, it, and I have to decided to take out four colors to accommodate this new activewear product. It does not work like that.
Initially, when I'm introducing it in smaller quantities, I don't have to pull out any product from my existing shelf. As the sales for the newer product increases and some older color sales are depleting, it will just replace them organically and automatically.
Sure, that's helpful. Just a last, again, a clarification. The total SKUs of 4,000 SKUs that we have would be divided across how many sizes and colors, if that's, if that's handy?
It varies. See, our highest colors, what we have is close to 100 colors, and we have about 6 sizes. That's in one product. We have umpteen number of colors in different, different products, but the highest colors we have for a product is about 100 colors and 6 sizes, 6 to 7 sizes, right, yeah.
Oh, got it. Thank you.
Thank you, Jay.
Thank you. The next question is from the line of Dev Shah from DAM Capital. Please go ahead.
Hi there. Thank you for taking my question. Can you share with us the absolute volume growth for the quarter and the full year, also the volume SSG?
Yeah. So Dev, the volume SSG for, just give me a second, for Q4 is -1.45%.
Okay, and
For the full year, full year SSG, SSG volume is -3.45%. -3.46%.
Sure.
The overall company volume is, for the full year, about 9%.
Sure, sir. Thank you.
Thank you. Thank you, Dev.
Thank you. Ladies and gentlemen, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
I'd like to thank everyone for being part of this call. We hope we've answered your questions. If you need more information, please feel free to contact Mr. Deven Dhruva from SGA, our investor relations advisor. Thank you.
Thank you. On behalf of Go Fashion (India) Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.