Ladies and gentlemen, good day, and welcome to the Go Fashion India Limited Q2 and H1 FY twenty-five earnings conference call. This conference may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on 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, and there will be an opportunity to ask questions after the presentation concludes. Should you need assistance during the 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. Gautam Sarawgi, CEO of Go Fashion India Limited. Thank you, and over to you, sir.
Yes, thank you. Good evening, and a warm welcome to everyone presenting on the call. I have along with me Mr. R. Mohan, our Chief Financial Officer, and the SGA Investor Relations 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. I'm happy to share that we have successfully sustained our growth momentum despite the ongoing challenges in the apparel retail sector. In H1 FY 2025, our revenue reached INR 429 crores, a growth of 13% on a YoY basis. Our EBITDA stood at INR 136 crores, a growth of 12% despite a softer demand environment.
Our EBITDA margins have roughly stayed in line and stood at 32%, which is due to the improved product mix and high focus on maintaining operation and cost efficiency. Our full price sales accounted for 95%, with an average selling price of INR 759 for H1. Unfortunately, we made an error in the investor presentation. We are mentioning at INR 742. INR 742 is actually the average selling price for quarter two. For full H1, the average selling price is INR 759. In a challenging demand environment, this underscores strong customer loyalty and excellent acceptance of our product and its pricing. Our brand's ability to not only rely on discounting sets us apart from our peers. Our unique product offering, combined with quality and competitive pricing, positions us favorably in the industry.
As demand begins to normalize, we expect the mass premium segment to lead in terms of growth. From our internal study this quarter, we discovered an important insight, which indicated that sales were shifting from the smaller stores to the larger stores, as the very small stores cannot accommodate our full collection. In response, we made a strategic decision to not renew the leases of these very small stores, due to which we have closed 13 stores. In these 13 stores, about 9-10 stores are pertaining to these very, very small stores, which are probably lower than 200 sq ft. Over the past next two quarters, we see ourselves closing 15-20 stores of this manner. We are confident that sales from the smaller stores will transition to a larger store in line with this approach.
In H1 FY 2025, we opened 54 stores, new stores on a gross basis, and on a full year basis, on a full six months, H1, we opened 41 stores at the net level. On a full year basis, we aim to open 120 to 150 stores on a gross level and look to open about 100 stores at the net level. Our A&P, our A&P spend as a percentage stood at 2%, which is in line with our previous commentary. Coming to working capital and cash flows, we at Go Fashion strongly believe in sustainable growth backed by cash flows. Against the backdrop, we achieved a strong pre-interest operating cash flow of INR 55 crores in September 2024, which is due to strong focus on inventory and supply chain efficiency.
Going forward, we aim to convert 50% of, more than 50% of our EBITDA into pre-interest operating cash flows. On the inventory front, we have maintained our focus on efficient inventory management, which has led to a further reduction in our warehouse inventory levels. As a result, our inventory days have decreased from 104 days in March 2024 to 97 days in September 2024, mark showing a 17-day reduction. As we approach the festive season, we are witnessing encouraging improvements in footfall across our Go Colors stores, fueled by growing, improving customer sentiment. With our wide selection of bottom wear, we are confident in our ability to capitalize the momentum and anticipate a strong recovery in SSG and improvement in our P&L hygiene. On way forward, our first step is to achieve low single-digit SSG, forward which we are on track towards.
Secondly, we would grow our footprint by increasing the number of stores in our portfolio. Lastly, we continue to focus on inventory optimization, where it can be done to further improve our balance sheet. We expect our inventory to remain in the range of 90-95 days by March 2024. To conclude, although retail demand in India is currently looking subdued, we expect it to pick up in the coming months. Several factors supporting this outlook, including the festive season ahead, which typically boosts consumer spending, a gradual recovery in economic conditions, and a return to social events and weddings. Additionally, improving consumer sentiments and increased urban mobility are likely to drive footfalls in retail stores. These factors combined make us optimistic about a rebounding demand as we move forward. With this, I would like to hand over the call to our CFO, Mr. R. Mohan.
Mohan, for the update on Q2 and H1 2025 results and financials. Thank you.
Thank you, Gautam, and good evening, everyone. Despite the challenging business environment, the company continues to witness a strong operating performance. First, I'll give you financial highlights for Q2 FY 2025. Our revenues for the quarter stood at...
INR 209 crores as against INR 189 crores in Q2 FY 2024, a growth of 10% YoY. Gross profit stood at INR 132 crores, a growth of 15% YoY, with a GP margin of 63.1% for the quarter. Our EBITDA for the quarter stood at INR 64 crores, as compared to INR 57 crores in Q2 FY 2024, a growth of 12% YoY. Our EBITDA margins stood at 30.5%. Profit after tax for the quarter stood at INR 21 crores, and this is a growth of 3% YoY. Tax margin stood at 9.9%. Coming to the H1 FY 2025 performance, revenues stood at INR 429 crores in H1 FY 2025, as against INR 329 crores in H1 FY 2024, a growth of 13% YoY.
Gross profit stood at INR 268 crores, a growth of 15% YoY, with the GP margins of 62.4% for the half year. EBITDA for H1 FY 2025 stood at INR 136 crores as compared to INR 121 crores in H1 FY 2024, a growth of 12% YoY. Our EBITDA margins stood at 31.7%. Tax for H1 FY 2025 stood at INR 49 crores as compared to INR 46 crores in H1 FY 2024, a growth of 6% YoY. Our tax margin stood at 11.5%. ROCE and ROE, excluding India impact, as on FY 2024, stood at 20.7% and 16% respectively. Cash and cash equivalents stood at INR 238 crores as on 30 September 2024. With this, we will now open the floor for question and answer.
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 use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahul Agarwal from Ikigai Asset Management. Please go ahead.
Yeah, very good evening, and thank you for the opportunity. Firstly, just a clarification, you said, 50% of EBITDA conversion into cash flow going forward, pre-interest, is that correct?
Yes, correct. Pre-debt EBITDA into pre-debt operating cash flow.
Okay, perfect and so EBITDA is after tax, right?
No, EBITDA is before tax. Before depreciation, interest, and tax.
Yeah, because [crosstalk]
No, no, no. Operating cash, pre-debt operating cash flow after tax.
Yeah, that's what. So you were. Okay.
Yeah.
Sure, I get it.
Yeah, yeah. OCF after tax. Yes, absolutely. Yeah.
Okay. Secondly, you know, just wanted to get some sense around this, the entire consumer demand, right? And there's been contradictory feedback across lot of consumer products we are getting this quarter. Some, you know, maybe urban is slowing down, rural doing better, some pockets do better than the other around India. Just in your experience, how have you seen demand flowing through for your products across India, regionally, pricing-wise, you know, new products, where is the demand shifting really? Any color on demand and competition will be really helpful.
Yeah, thanks, Rahul. So see, demand has been very slowed down, and, I mean, honestly, we've not seen any real improvement. In fact, July, August, we have seen decent improvement in demand. In fact, we were having a single-digit recovery also by September first week. But unfortunately, September was a very weak month, with slight early start as well. And, you know, the entire recovery, what we had in the first week of September, just kind of became flat by September end. So the demand has been a little slow. As far as regions are concerned, see, I mean, look, our majority of our networks are present in urban locations. So we have not seen a very big outlier, urban versus rural.
But if I take so from a geography perspective, South has been a little slower than usual. Otherwise, West, North, and East has been pretty much steady. South has been a little slow.
What would you expect in your internal analysis going forward into the next four months? Because it's very critical for these festival days actually to turn out better, so any sense on that?
See, we are working towards 15%-20% growth. Currently, last first quarter, we delivered 15% growth. This time we have delivered 10% growth. So on a H1 basis, we have delivered about 13% growth. So moving forward, our company aspiration is going to be that we want to achieve growth between 15%-20%.
Got it. Thirdly, I saw an announcement about Mr. Vijay Srinivasan getting appointed as a head of MBO sales. Any thoughts around this, as in, is the company really planning something big here? Because I thought that was not a focus area.
See, look, rightly when you said our focus area is EBO, LFS, and online, more towards the online stream. But when we look around, a lot of brands are doing really well in MBO. See, many of the modern retail stores, the family stores across regions have graduated, and they become a lot organized. There our presence is very weak. So we feel if we do selectively MBO well in these family stores, in the local family stores, right? I think there is a huge potential. So I think that business over a period of time can become a small channel. Right now, we are doing about INR 6 crores a year, which is next to nothing. So our idea would be to build it into a decent channel in the coming years.
But doing it selectively, you see, our idea is not to go gung-ho and go very big in MBO, because there are many risks in that business, like discounting. So we want to do it in a very calculated manner. I would put it that way.
You know, let's say INR 50 crore business in, like, three years out, is that what you're doing, or you're going to be very [crosstalk]
No, very difficult to estimate right now, Rahul. I think, look, right now we've just appointed a head, so probably over the next couple of quarters, we'll get a sense of a business plan what will come out from this.
Got it. And just one, just the background of Mr. Srinivas. You mentioned the industry in the press release, but, what was he doing previously?
He was into FMCG, and he worked earlier in many FMCG companies, and he has a very good experience in the MBO and distribution. He has earlier worked in TTK, and he's also worked in Britannia as well. So he's very familiar with FMCG and general trade.
Got it. Lastly, just on the stock pledge, any update from the family side, as in what's really happening around that please?
Right now, Rahul, no updates. I mean, honestly, we wanted to clear the pledge by December, what we had committed to everyone, but as of now, we don't have an update. We're working on it. The pledge is absolutely safe. There is no risk on the pledge. I would like to reconfirm that. The pledge is absolutely safe, but from a timeline perspective, I'm unable to give a guidance right now, unfortunately.
Sure. So essentially, what we should expect is even that gets delayed or whatever happens, like by March, we should at least expect the pledge to go down to zero, right? There is, you know, that much we can expect.
March, see, I'm unable to commit March. I'll tell you the reason why I don't want to tell March, because every time I've given a timeline in the past, you know, we've not met the timeline. So for me, giving a timeline right now is very difficult, but I can reassure you on one thing, it's on the top priority of the family to clear at the earliest.
Okay, perfect. All right. Thank you so much for answering my questions, and have a great Diwali.
Thank you. And wish you the same, Rahul. Thank you.
Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Thank you. The next question is from the line of Prakash Kapadia from Spark Capital. Please go ahead.
Yeah. Hi. A couple of questions from my end. You know, Gautam, we were very hopeful of that 4%-5% SSG, and, you know, now, if we look at some of the other consumer businesses, commentary has not been positive. So are we still, you know, hopeful, confident of H2 being far, far better and, you know, upcoming season would get us there? What has been the volume growth in Q2? And, you know, I think, we have been alluding we'll open around 120 EBOs , 125 EBOs also. How much have you opened in the first half, and, you know, what would be the CapEx for that? And in case we see the muted demand continuing, would that continue or would you reduce the EBO expansion? Those are my questions.
Sure.
Thanks.
Sure. Thank you. Thank you, Prakash. So I think, Prakash, you know, we were very. I also just mentioned earlier that we were very optimistic in the middle of Q2, but unfortunately, September was quite a low month. And the, you know, the low single digit SSG, what we had of two or three, 2%-3% in the beginning of September, just flattened out by the end of September. So it's unfortunate that September was weak. But look, we are very positive. I mean, look, what I've been hearing around, you know, is that many brands are saying that this quarter is going to be a good quarter. So I'm very optimistic, and we are going to be looking and targeting a growth of 15%-20% on an overall basis.
And I think, hopefully H2 should be better than H1. I don't see any reason why it shouldn't, and I think the mood among brands has been very positive. So I think, you know, we are working towards a growth of more than 15%. As far as ASPs, as far as SSGs are concerned, so our, for Q2, our SSG was 0.54%. On a volume basis, it was -0.6%. And for H1, our SSG was 0.46%, and on a volume basis, it was -0.59%. As far as store openings are concerned, we, on a net basis, have opened about 41 stores in H1, and we are falling short of the guidance what we've given on a net basis.
Actually, what has happened in H1 in Q2, we've realized as our product collection has increased, our average store size is around between 300 sq ft and 500 sq ft. In our network of stores, there are still some stores which are very small. Some stores might be 150 sq ft, 190 sq ft, and those stores are not able to accommodate the range what a 300 sq ft or a 400 sq ft store can take, and what we've realized that many of the customers, when we did a small research among customers, many of the customers are finding it very difficult to shop, and they are organically migrating to a larger store in the same market, and because some of these smaller store leases were coming to an end.
In Q2, we decided not to renew them because we didn't want to get into a future commitment if we store the goods. So we have shut about ten stores in Q2 pertaining to size. So on a net basis, we've added 41. In H2, we are targeting to open about 60-odd stores on a net basis, and on a gross basis, we are going to try adding about 50 stores. So on a net basis, we will be at around 100 stores net for the full financial year, against the original guidance of 120 sq ft -150 sq ft . So we have fallen short of that, but right now we are quite confident that we'll get to over 100 stores on a net basis by March.
Okay. Okay. And what would be the CapEx, if you could, quantify?
See, it will be anywhere in the range of between INR 25 crores and INR 30 crores, but, since we are generating healthy No, INR 22 crores , yeah, it will be around in the range of INR 20 - INR 25 crores, since we are generating healthy operating cash flows in the line of more than INR 50 crores, I don't think, cash-
I'm sorry to interrupt, sir, but can you please rejoin the question queue for a follow-up question?
Since our operating cash flow is more than INR 50 crores, it is INR 55 crores for H1, I think. CapEx will be well supported by the cash OCF or OCF of the business.
Okay. Okay. Fine. Understood. Understood.
Thank you very much. The next question is from the line of Ankit Kedia from Phillip Capital. Please go ahead.
So first question is on the LFS category. We have seen a strong growth this quarter as well on a very, very strong base of Q1, but your receivable days have also increased. And if I look at Reliance, which is 90% of your business, they are under pressure from their results. So what's happening on the LFS front, and how much of the inventory we have pushed for the festive, because receivable days have increased?
So Ankit, I think receivable days are a little increased because we've added more number of stores in H1, and because we added a good number of new stores, the sales in those counters would not have really reflected, but we've placed inventory which is better than our books. So I think because of that, slightly inventory days would be higher. As far as festive is concerned, we have not done a lot of festive stock pumping at the LFS end. I think the kind of base stocks what we maintain at an LFS level has been pretty decent, which will take care of festive. So we've not done any large number of dispatches as far as festive days are concerned for quarter three.
As far as Reliance Retail and other LFS is concerned, I think if I take an average out of Q1 and Q2, I think the performance of Reliance Retail and overall LFS for, if I look at it from an H1 perspective, pretty decent, and we are expecting good, decent performance in H2 as well.
Sure. My second question is on the store closure. While this year you'll be closing around thirty-five, forty stores of the smaller size, can we expect next year also some store closures to come in, in the same proportion, or this will be it?
Well, maybe, maybe another 10 stores , 15 stores , maybe another 10 stores next year, but I don't see. I'll tell you what has happened. We've covered majority of the stores this year, the very small stores. It will, even if it happens next year, it'll be low single digit, maybe four, five stores, but it's not going to go to be as big as this number.
So, can we expect 130 stores -140 store additions next year on the gross basis?
Yes, absolutely. Yes, absolutely. In fact, I think next year we don't see too much of store closure. So on a net basis, we see ourselves adding 120 + stores next year for sure.
Sure. My last question is on the A&P spends. While in the first half we have done, you know, 2% spends, and you alluded that the second half could be better off as the demand comes in, and you're hopeful that the demand will come in. So can we expect the higher A&P spends in second half?
Not really, Ankit, because see, usually A&P spends are accelerated just before festive. We've kept our A&P spends in check because the overall environment is very weak. So in a very weak environment, when you spend too much on advertising, it does not really affect your performance too much. So we're maintaining the same hygiene level of 2% spend even in next year. So marketing sales spend as a percentage of revenue will not change.
Sure. And if I can just, one more question on gross margins. We have seen strong gross margin expansion in the quarter. Is it a one-off or we are seeing the low-cost inventory now really hit the system and we can expect this trajectory to continue for next few quarters?
Ankit, it's a combination of two things. One is obviously the lower cost inventory. That is one reason. The other reason is that there are certain products. See, usually all our products carry the same GM, but there are some products which are slightly having a higher GM, and those products have done fairly well in Q2, and that is why you have seen a very strong GM of 63.1%. So I think on a steady-state basis, Ankit, you can expect a GM of about 61%-62%. It will range in that bracket.
That's helpful. Thank you so much, Gautam, and Happy Diwali to you and the team.
Yeah, we wish you the same, Ankit. Thank you.
Thank you very much. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Yes, hi, sir, thanks for taking my question. Just a small follow-up on the previous question. Which are those products that have done well for us, Gautam, if you can, this quarter, which have higher gross margin?
See, there are few products in the pants category, and there are few products in the leggings category, which has slightly higher gross margin, and because of which it is reflecting in our view.
Understood. And any new innovations that we have done for the upcoming festive wedding season, any interesting new launches that we have done?
See, we are continuing to strengthen our pants and leggings category, and I think look some few product additions which we bring through there, but we've not done anything really, we've not really come up with any special range, like how we had come up with the range earlier last year. It's, there's no special range which is come up for festive, but we continue to strengthen our pants and leggings portfolio by coming up with new colors and some new products as well.
Understood. Gautam, second, you're indicating that focus is on relatively larger stores, 350 sq ft -400 sq ft. I guess, just want to check on store productivity perspective. These stores will be having higher productivity, right? Versus the earlier smaller stores that we are closing now.
In recent times, I've definitely seen that the 300 sq ft -400 sq ft stores do better. Because from a shopping experience perspective, customers just prefer shopping in a slightly larger store, because our color range and our product mix also has increased. The very small stores really don't are not really working very well. See, there are some stores which are continuing to do well. What we have done is, we have taken a call in those markets where we have a slightly bigger store and a smaller store, we have shut the smaller store. That does not mean that completely our small store network will go away. That's not going to be the case.
So wherever we feel that by shutting the smaller store, the sale will move to another store in the same cluster, we have done it on that basis. So eventually, we don't see a loss of sale by shutting these small stores, what we've done this quarter.
Understood. Just a small follow-up here, so that twenty thousand to twenty
Sorry to interrupt, sir, but can you please rejoin the question queue for a follow-up question?
Sure, yes.
Thank you. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Hi, good evening, and thanks for taking my question. Most of them have been answered, so just wanted to ask this. On the soft demand environment and challenging environment for the apparel retail that you mentioned in the opening comments, now, a segment of the market which is value fashion, whatever data we have indicates that they are doing well. So I just wanted to understand how are you concluding that it is an overall demand environment which is soft, and we are not losing any share to, let's say, the other organized players, and the confidence that the festive will revive this, where is this coming from?
See, so Sameer, I think you see, we at Go Colors are operating in the mass premium range. Value retail might be doing well, but from a mass premium segment, things have been slow for quite some time. I think, from a category perspective, the mass premium category is something we've always targeted. I think, you know, when I speak to the other retailers and all, then all the retailers are having a positive mindset that this time festive might be good. That narration is probably coming from there. We are quite optimistic that this time, Diwali and post-November, and Christmas and New Year's also will do a good number. The narration on the slowdown was more from a mass premium segment, yet pockets of value retail are definitely doing well.
Our customer is a Mass Premium customer, so a value retail customer will not really equal to our sales as such.
Just a follow-up here, Gautam. So one,
Sorry to interrupt, sir, but can you please rejoin the question?
Ma'am, it's a follow-up on the same questions, ma'am.
Okay, sir, go ahead.
Gautam, I just wanted to understand this. So Mass Premium is doing slow. First of all, how do we conclude this, that it's the overall market which is a problem and not only some of, you know, Go Fashion or some other retailers? And second is that, isn't, like, are we sure that the consumers are not down-trading to the more value retailers kind of a thing?
See, in retail, Sameer, there is a premium segment, there is a mass premium segment, and there's a value segment, right? And there is a customer for each of these three segments. When I evaluate the other brands in the industry, everyone has been complaining about a little bit of slowdown. Of course, there are some exceptions there, and that's always going to be the case. But when I speak to most retailers, the sentiment and the commentary is very similar. So I'm somewhere deriving that conclusion from what little bit of research and the chat what I've been having with the other folks.
Got it. And, down-trading question?
See, on the down-trading question, for the kind of product we have, we are priced at the bottom of the pyramid. So I don't see value retail eating into our share. The customer who wears the kind of product we give, they will definitely come back to a Go Colors or any other brand in the mass premium segment, if they have a similar product offering.
Sorry, you mentioned that you cater to the bottom of the pyramid. Didn't get that, sorry.
The bottom of the pyramid as far as mass premium is concerned, because the kind of product offering we have in terms of specs, our pricing is the lowest, is one of the lowest. So I think for the kind of value offering what we are giving, I don't think value retail should eat into our food. I don't see that happening.
Got it, Gautam. Thanks. I'll come back for any follow-ups.
Sure. Thank you, Sameer.
Thank you very much. The next question is from the line of Gaurav Jogani from JM Financial. Please go ahead.
Yeah. Thank you for taking my question. My question was regards to the inventory bit. You know, you alluded in your opening remarks something on the why the inventory was down. Didn't really catch it. If you can just repeat it, if you don't mind.
No, see, actually, Gaurav, historically, we were carrying very high inventory in the books, in terms of number of days. So over a period of time, we have rationalized inventory. So we had about, if I'm not wrong, we had about 120 days or something of inventory earlier, and we have brought it down to 97 days. In Q1, we had 87 days of inventory, and now we have about 97 days. Obviously, inventory days have slightly gone up from Q1 because we are entering the festive season, so we are carrying slightly higher inventory. On a steady state basis, we see ourselves carrying inventory anywhere between 90 days and 95 days. So compared to earlier quarters and years, we rationalized our inventory a lot.
Sorry. Thank you. And the next question, you know, is with regards to the overall, again, the demand bit only, but it's more on the regional side. You know, I think the data that suggests, you know, your most of the sales is coming from the southern part of India. So are you seeing, you know, and the store opening is also in that region itself. So any particular reason of opening more stores in the southern part of India and not the other parts of India? Anything that you can, you know, allude on this front?
See, our expansion strategy has not really so much to do with how a region is particularly doing in a particular period, right? See, for us, if a city has a potential where we feel we can have multiple stores and the city's from a consumption perspective, we could be open in that city, regardless if that region is weak or not. So I think, our city selection has nothing to do with current trends. We go on the basis of size of city, and then we decide.
So, no, the question was because, you know, we have been seeing that, you know, you said that the North, West, and the East has been relatively stable versus the South, which has been a bit slower, and hence, you know, wouldn't it make more prudent sense that the demand conditions are more steady to open more stores there?
No, we are trying to. Definitely, North and East is definitely one of our focus areas, and you know, because the base is big, because the base is low there, our growth rates also have been very encouraging, so we are opening in North and East, but at the same time, when we are getting very good store options and opportunities in the South, I think it's a good time to take it, because when demand picks up, then we'll end up having a good location also in the market.
Sure, Gautam. Thanks. That's all for me.
Thank you, Gaurav.
Thank you very much. The next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead.
Hi, thank you for the opportunity. The first question is on ASP decline. What is leading to that ASP decline, on for top
No, actually, actually, Prerna, there was a correction I mentioned in my opening remarks.
Right.
In the investor presentation, we actually, by mistake, showed only the Q2 ASP. The blended ASP for H1 is INR 1,050. So there's actually a 1% increase in ASP on a year-by-year basis.
Okay, I missed that. I joined in a little late. Okay. And, sorry, I missed the number again.
7:59. It's 7:59.
Okay, 7:59. Okay. Now, that makes sense now, because I'm worried on the-
Yeah, yeah. We just ended up noticing last minute, so sorry.
Okay.
Apologies for the mistake.
No problem. No problem. I also missed the opening remarks. So second question is on which... where is the demand, you know, better in terms of categories? And where are we faring well? You mentioned jeggings and pants, but what about the core category of ethnic wear? And how do you compare it with your western wear portfolio?
No, see, our core is doing very well, so we've not seen any real decline or anything in our core category. Core categories like leggings and churidar has been our historical product, and we will continue to do well. Just as a company, because the sales over a period of time have started shifting more towards the specialty bottom end, like pants and jeggings, our focus also is more on those kind of product segments. But as such, our other categories, like leggings and churidar, we've not seen any as such decline.
Okay. One more question, if I may. Just wanted to understand on how is the SSG, what is the kind of SSG that you're building in for this 15%-20% growth that you are looking in? I mean, what are your expectations with respect to the festive season? And generally, we see some demand contraction also after festive season. So how could this be?
See, without being very, very overly aspirational, I think we are working towards the 15%-20% numbers with the medium low to mid single digit SSG. So I think we are working towards that. So we are hopeful that we'll be able to achieve that in the coming quarters.
Okay. Thank you, Gautam. All the best.
Thank you, thank you, Prerna.
Thank you very much. The next question is from the line of Saurabh Munda from RK Advisory. Please go ahead.
So my first question is on your application. I've seen that in Play Store, and the rating is very low. I think it's around two star, and most of the problem says that they have problem with logging in or making accounts. So can you tell me
No, actually, what happened is we've not really launched our application officially yet. We had actually launched that application more from an internal training perspective, but because it was on Play Store, many customers downloaded as well. So we've actually not officially launched it yet. Over a period of next few months, we are going to be launching our app soon.
Oh, okay. Okay, that's answered the question. Now, the second question is, how do you do the omni-channel sales exactly? Like, when the customer visits the store and then they did not find the right fit or right color, and you take the number or email and you do messaging or give them an email or how did it happen?
Typically, what happens, Saroj, so I'll, I first start with the online part. In the online aspect, when a customer places an order, the closest store in that region will deliver the product. So our aspiration is to, if a customer is placing an order, then do a local delivery through your network, and can we deliver it within 24-48 hours, is our target. That is as far as website is concerned. As far as store is concerned, since we carry so much of inventory at a store level, the likelihood of a customer not finding their color and size is usually little less. But in that cases, sometimes we try converting the customer into an online customer.
So then and there, we have a tablet, we convert that customer into an online customer, and then the closest store in that particular region will dispatch. So these kind of omni-channel initiatives is what we are doing currently.
Oh, okay. My third question is, our products are competitively priced and widely appealing, including in smaller cities across various regions. Even if could you clarify where there isn't a greater focus on expanding beyond the existing cluster and region. I know you are opening stores beyond your cluster, but, you know, why not in each cluster and go beyond the cities where you are not present?
No, we are going now. In fact, we are actually doing that now. We are trying to go beyond our clusters and open stores in new cities, and that is something which is one of our key focus areas, and we will see a lot of that come in the coming quarters, but I think even if you do that, I don't think our ratio of, you know, our, you know, top ten cities and the tier two, tier three. I don't think that ratio really changes, but a focus, definitely a strong focus is definitely there in cities where we are not present.
Okay, that answers the question. I was actually saying that because, you know, we are kind of taking on marketing initiatives through store opening. That's why I'm saying that. But, that answers my question. Thank you.
Yeah. Thank you so much.
Thank you very much. The next question is from the line of Abhishek Budholia from Narnolia Financial Services Limited. Please go ahead.
Hi, good evening, sir. I just wanted to ask that your inventory INR 82 crores and your debtor was INR 79 crores. So your debtor days come about 159 days. So, why is it so high? Can you take only 60 days or debtors?
See, uh-
Because to stores.
Yeah, actually, see, the thing is, the debtors, which is in our books, is actually inventory on the shop floor. The unsold inventory is because of accounting standards, is debtor in our books. So that's why the number of days has always ranged between 150 days to 155 days. So, on the overall company revenue basis, our debtor days is between 27 days and 40 days. But, on a store level, it is high because the unsold inventory there is booked in our books, because the LFS partner will pay us only after they have sold it. It's on SOR basis.
Okay. You were speaking with around INR 200 crore of cash and you make around INR 50 crore of cash half-yearly. So what's really stopping you from rapidly opening stores? I mean, next year also, you have given target of INR 120 crore gross stores only, which has been constant for about multiple quarters. Even your cash flow generation has declined from H1 to H1. So can you elaborate on the cash management strategy?
See, H1 to H1, the cash flow looked declined because last year was the year when we had reduced a lot of working capital and inventory. So last year, effectively, the cash flow was a lot stronger. This year we've not really reduced too much of inventory or working capital. So whatever EBITDA we have generated is converted into operating cash flow. So one of the reasons why H1 this year versus last year H1, OCF might look really different is because last year only we had reduced working capital. As far as opening more stores rapidly is concerned, see, real estate sometimes can be very tricky. So we don't want to be in a hurry and open wrong stores.
That's why, see, usually I've told in the past also that if we evaluate 1,000 locations, we end up opening 120 stores to 150 stores because we have a 12% interest. We're trying to increase the number of stores we evaluate, and we formed a good business team. We're trying to improve that larger number of stores and end up opening more. But in real estate, we have to be very careful. If we do a very strong and fast expansion, we can sometimes end up opening wrong stores as well. We want to maintain a quality hygiene as far as store expansion is concerned.
Thank you very much. The next question is from the line of Akhil Parekh from Centrum Broking. Please go ahead.
Hi, Gautam. I just have one question from a competitive landscape perspective. If I look at Tier 1 city stores in Tier 1 cities, right? So have we done some kind of study in terms of what percentage of Jio stores are there in close vicinity to Go Colors? Because a year back, you know, even kind of DMart acknowledged that their apparel segment is getting impacted to some extent because of increased competition and because of players like Jio, and we continue to see the footfall in Jio remain very strong, even during last three months, basically. So that is one. There's a competitive intensity in the Tier 1 city, but in Tier 2 and beyond, we have almost 35%-40% of the stores.
Meesho, which operates in those geographies, has given an update that their sales have grown by 40% during first three weeks of the festival season. So is there some kind of impact which probably we are not acknowledging in these two geographies, basically, which is Tier 1 and Tier 2 and 3?
See, we are largely more top ten cities. Majority of our network is there more in tier one and top ten cities. So for us, our experience has been very consistent, honestly. I mean, our presence in rural is not very high. So we've not seen a very difference in experience between rural and urban, honestly. As far as opening locations are concerned, see, look, Jio has been doing well, and there are many other retailers who are also doing well, so we follow all such retailers.
No, my question is, is the competitive intensity because of Jio is impacting our sales in Tier 1 city?
Uh-
Is the competitive intensity because of Meesho is impacting our sales in Tier 2 and beyond as I said?
Okay, okay, sorry, I misunderstood the question. See, Jio or any other large format store will not impact our sales. We are a very specialized bottom-wear brand with so many color options and product options. So for us, competition would be really someone else who is doing bottom-wear in a dedicated manner. So that is, that will be an apples-to-apples comparison. So right now, we don't see any of the large format stores out there eating into our shares.
Okay. Then same, same, same holds true for Meesho as well, you're saying?
As I see, honestly, online players are not competition for us, because online is a completely different ballgame. So, for us, like I mentioned, a dedicated brand in bottom-wear, selling online or offline would be real competition. Meesho is still again a marketplace. So it... The same example for LFS and Meesho go hand in hand from that perspective.
Okay. That's all from us. Thank you, sir.
Yeah. Thank you.
Thank you very much. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you, and over to you.
I'd like to thank everyone for being part of the 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. Wish you, everyone a very happy Diwali and happy festival. Thank you all.
On behalf of Go Fashion India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.