Ladies and gentlemen, good day and welcome to the Go Fashion (India) Limited Q2 and H1FY26 Earnings Conference Call. 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. The statements are not the guarantee of future performance and involve risk, 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 for you 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gautam Saraogi. 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, Chief Financial Officer, and SGA, our Investor Relations Advisors. I hope you all have received the investor deck by now. For those who have not, you can view them on the stock exchange and the company website. During Q2 FY 2026, revenues stood at INR 224 crore, a growth of 7% on a YoY basis. EBITDA stood at INR 67 crore and witnessed a growth of 5%. PAT stood at INR 22 crore and witnessed a growth of 6%. We are seeing signs of recovery, which have extended well into Festive season. The response during the Festive season has been positive across key markets, reflecting an improvement in consumer sentiment and strong traction across our core categories. The ongoing government measures to stimulate consumption are also aiding a broader revival in demand.
During the first half of FY 2026, we added 36 new stores on a net basis, taking our store total to 812. We followed a selective and measured approach to expansion, focusing on high-potential locations aligned with evolving demand trends. While the pace of expansion in the first half was moderated, we expect H2 to remain measured as well, and we plan to open around 80-90 stores on a net basis for the full FY 2026. Our approach to store expansion remained disciplined, prioritizing profitability, catchment quality, and brand salience. During the quarter, our same-store sales growth remained muted. We are currently channeling our efforts towards strengthening our design and product development capabilities. As part of this, we have structured our design function to treat bottom-wear and top-wear as two distinct segments, each supported by their own dedicated design teams.
The sharper focus will help us drive greater innovation, variety, and consumer relevance within each category. We are also in the process of refreshing our product portfolio with new size in bottom-wear and category extensions that align with the evolving customer preferences. Several exciting launches are planned. Several exciting bottom-wear launches are lined up for the second half of FY 2026, which are expected to further enhance the appeal and relevance of our collections. Moving to new businesses, we are encouraged by the early response we have received and are excited about their potential. Both the pilot launches in new categories and our international stores foray in the Middle East are witnessing promising traction. Way forward, our first step would be to achieve low single-digit SSSG and improve store-level productivity and throughput. Second, we would be to grow our footprint by increasing the number of stores in our portfolio.
In FY 2026, we aspire to open 80-90 stores on a net addition basis, which was earlier 120. Looking at the market conditions, we have revised it to 80-90 stores for FY 2026. Lastly, our focus would be to maintain strong check on inventory levels, leading to a healthy balance sheet and trying to improve overall ROCE and efficiency of the company. Our strategy continues to revolve around positioning Go Fashion (Go Colors) as a one-stop destination for women's bottom-wear, catering to a diverse range of age groups and style preferences, from everyday essentials to occasion wear. The steady improvement in our ASP reflects our evolution into a holistic bottom-wear brand with a strong message across categories. With this, I would like to hand over the call to our CFO, Mr. R. Mohan, for the update on Q2 and H1 FY 2026 results and financials. Thank you.
Thank you, Gautam, and good evening, everyone. First, I'll give you the financial highlights of Q2 FY 2026. Our revenues for the quarter stood at INR 224 crores, as against INR 209 crores in Q2 FY2025, a growth of 7% year-on-year. Gross profit stood at INR 140 crores, a growth of 7% YoY, with a GP margin of 62.6% for the quarter. Our EBITDA for the quarter stood at INR 67 crores, as compared to INR 64 crores in Q2 FY2025, a growth of 5% YoY. Our EBITDA margin stood at 29.7%. Profit after tax for the quarter stood at INR 22 crores and witnessed growth of 6% YoY. PAT margin stood at 9.7%. Coming to the H1 FY 2026 performance, revenues stood at INR 447 crores in H1 FY 2026, as against INR 429 crores in H1 FY2025, a growth of 4% YoY.
Gross profit stood at INR 289 crore, a growth of 5% YoY, with a GP margin of 62.8% for the half-year ended. EBITDA for H1 FY 2026 stood at INR 135 crore. Our EBITDA margin stood at 30.3%. PAT for H1 FY 2026 stood at INR 44 crore. Our PAT margin stood at 9.9%. ROCE and ROE, excluding in-day impact as on H1 FY 2026, stood at 16.4% and 12.7%, respectively. Cash and cash equivalents stood at INR 259 crore, as on 30th September 2025. With this, we will now open the floor for 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. The first question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Hi, thanks for taking my question. Gautam, checking if you can share some takeaways from the industry study that you mentioned in the previous quarter, maybe some insights around your growth comparison versus the industry, new entrants, market shares, any change in consumer preferences in terms of pricing, products, channel of purchase, any incremental thoughts?
Yeah, thanks, Devanshu. So, Devanshu, the study actually got a little delayed, which we were supposed to receive. We have received it now, and we are just internally studying it. As far as that Technopak report is concerned, maybe after a couple of weeks, I'll be able to give better clarity on that particular report as far as market share and other market studies are concerned. From what we have been noticing over the last few months.
Sorry, Gautam, your voice is breaking. Maybe is it a problem [crosstalk]?
Is it better now?
Yes, Gautam.
Yes, sir.
Yeah. So, I was saying, Devanshu, the market study, what we have done through Technopak, we have just received it, and it got a little delayed from our end. We are studying it. Maybe in the next couple of weeks' time, we'll be able to give better clarity on specific data like market share, other brand studies related to bottom-wear. I think we'll be able to come back on that study in a couple of weeks' time. From what we've been looking at as management, what we are seeing in the industry, I think demand has revised. Some players actually have done well, and the responses in the industry have been mixed. We've been speaking to many LFS partners and other brands as well. Some of them have actually done well over the last couple of quarters.
There is definitely some sort of improvement in the overall demand scenario.
Sure. Thanks, Gautam. Secondly, Gautam, if you would be uploading this research study or if you could, it's a request, if you could share that with the public domain so that it remains helpful for analyzing the industry.
I'm not sure about that, Devanshu. Let me just check internally and come back to you.
Sure, sure, sure. Gautam, you've mentioned a strong start to the Festive, checking if you've seen some improvement on the volume front as well. The volume specifically has been weak for quite some time. This strong Festive, is this sort of resulting into better volumes also for us? Wanted to check on that.
Yeah, it is actually shown on volume. See, this Festiveal has actually been good in certain pockets. Some states have struggled also during Festive, and some of them have done well. Like example, Tamil Nadu has done fairly very well for us during Festive. Some key markets during Festive have done well. We have also seen that positive impact on the volumes as well. It is just not driven by ASP. It is also reflecting on volumes.
Sure. Last bookkeeping question from my end. Mr. Mohan, there is some INR 15-16 crore increase in other current assets in the balance sheet. This increase was not there last year in H1. Any specific thing that has led to this, if you could help us better understand that?
Which one? On the other current assets?
Yeah, other current assets. Yeah, other current assets have risen from INR 30.7 crore to INR 46.4 crore. I wanted to understand what is left with it.
Mainly, we have some advances for fabrics, which we'll be closing it now when the imports are being done. That is a basic difference. It will be done, which will be closed within a very short time.
Should this be treated as inventory investment, or how should we take this?
We cannot take it as inventory till the inventory is landed on us. It should be only advances. It is advances consisted in.
From analysis perspective on marketing, is this advance for inventory or for capital?
Yeah, yeah, it is advance for inventory.
Okay, got it. Thanks.
Thank you. The next question is from the line of Gaurav Jogani from JM Financial. Please go ahead.
Hi, thank you for taking my question. My first question, sir, again, is with regards to demand conditions. You have given a quite upbeat outlook in terms of demand, especially for the Festive season. Would you mind to share what has been the growth for October month for you? That gives us to better appreciate the growth that you are seeing.
Yeah, see, October, we are still analyzing because this time, Post-Diwali this year and last year were in the same month. This time, Diwali came a lot earlier by a week or two. Post-Diwali, we've seen a sharp fall in sales. The real way we'll be able to come down to a conclusion as far as Festive is concerned is after we analyze 45 days of data. I think the real picture of Festive, we will know post-November 15th. However, like I was telling Devanshu, in certain markets, key markets of ours, we saw very good positive uptick in sales during Diwali. Like I gave the example of Tamil Nadu. Tamil Nadu has done fairly very well. Maharashtra also did fairly very well for us. Certain markets have done well, and certain markets were average.
I think we'll get a clearer picture about Festive post-November 15th.
Okay, okay, sure. Sir, my second question is more a bit bookkeeping kind. We have seen during this quarter that the depreciation actually has come down, and also the interest cost has kind of come down. In addition, we have also seen the rentals also not increasing that much. Would you want to highlight any initiatives that you have taken, maybe closure of some loss-making nonprofit stores have led to?
See, Gaurav, whatever consolidation we did last year, and maybe a little bit in quarter one and ending of quarter four last year, that has started reflecting in the P&L of the business. I think rent cost in general has stayed stable purely on the basis of the consolidation we did last year. Also, as management, we've got many initiatives where we've actually reduced rent also with certain landlords. That has also helped a little bit from a rent stability perspective.
Sure, sure. Should we expect these levels to sustain, I mean, going ahead, this kind of savings that we are seeing now?
See, from a rental, absolute rental perspective, absolute rental is going to definitely increase because we are adding stores. The percentage of rental as a revenue-to-ratio, we are trying to reduce by increasing and pushing our revenue. Once we are able to push our revenue and start getting positive same-store sales growth, the employee cost and the rental cost as a percentage of revenue will start stabilizing. To your direct question on absolute rental, the absolute rental will definitely increase because we are adding new stores.
Sure, sure, sure. My last question is on your two new initiatives. One on the MBO front. We are seeing the MBO revenues also growing quite handsomely. On the other hand, your initiative on the top-wear and the men's side. If you can highlight something there.
See, I think, look, the MBO part is doing well qualitatively. We're growing the business, and we are seeing healthy double-digit growth in that business. It is early days because the base of the MBO is very small. The initial responses, what we've got, has been quite encouraging. I think that business will do well in the future. Our aim was to obviously acquire customers through the MBO market, and it's been working very well for us. Early signs of MBO are doing well. We have to keep waiting and watching how it keeps growing. As far as the new concept, what we had launched for everyday wear, essential wear, basically for women and men, we've opened two stores. Both stores are in Chennai, where we've expanded our current store. The second store opened just a couple of weeks back.
The first store opened in the middle of August. We have had two months of good data to see. The signs are very good. We are achieving more than INR 1,000 per sq ft of sale per month, SPSF, which is the number we targeted. We are doing higher than that. The response has been very encouraging. Hopefully now the next set of pilot stores which we launch will see similar responses.
So, and this INR 1,000 per sq ft, I'm assuming it's the per- month number?
Yes, it's a per- month number. So, annualized will be INR 12,000 per sq ft.
Okay, but would that also, because this has been open during the Festive season, would there be some seasonality also within this or what [crosstalk]?
We have to, no, see, in Festive, we did a lot higher than INR 1,000. I'm taking this basis on the number of what we've achieved in September. On the September number, we have seen that we have done slightly better than INR 1,000, which was our initial target. Of course, Festive being Festive, I can't take October number and give it too much of importance because that will obviously be a much higher number. September number was quite reasonable and met our target. This business, we have to see a full cycle. We have to see how this does on a quarter-on-quarter basis and a YoY basis. I think the next nine months will give us very good clarity of how this concept is doing. It's still very early days.
Sure, okay. Thank you. I think that's all from me.
Yeah, thanks, Gaurav.
Thank you. The next question is from the line of Avinash Karumanchi from Motilal Oswal Financial Services Limited. Please go ahead.
Hi, sir. Good afternoon. My question is regarding the store additions. We have trimmed down our store guidance from 120 odd stores to 80-90 stores. What was the reason for that?
Yeah, see, so Avinash, we saw that obviously you can see in our sale numbers also, growth has been very slow. When growth is slow, we have to be a little careful because we do not want to add stores which can create a big impact on the P&L as well. We are being a little measured in our store expansion. We have added about 36 stores in H1. In H2 also, we look at as a 40-45 number, so we will be around that 80-90 store mark. Once we start seeing some recovery in our revenue numbers, then I think we will ramp up the store expansion. At the same time when we are doing expansion, we want to be very qualitative. Looking at growth, we do not want to damage the P&L margins. We are being a little cautious and measured.
In the coming quarters, once we start seeing some kind of growth levers coming in and SSSG improving, we will definitely ramp up the store expansion. That is why we revised our 120 estimate to 80.
My question is that, I mean, is it like the growth ratios are lowered or are we going to see further store closures on this level?
No, no, no. I do not think we will see any store closures. I think majority of the consolidation what we have done was completed last year. I do not see any major closures. Whatever closures will happen, which happen in the normal course of business, but we are not going to see any consolidation type of closures. As far as additions are concerned, we will be measured and we will be very careful of what we are going to be adding, at least for the next couple of quarters. We expect that in the next quarter and the quarter after that, I think our growth rate should be back. I think the business also will start doing very well because we are introducing also new products, new bottom-wear products, which we are very excited about.
I think the next couple of quarters, I think business will start revising.
Got it, sir. This is in general regarding the industry. I mean, when we have done our channel checks, even at the competition level also, the core leggings as a category is witnessing some kind of slowdown, while the rest of the categories, be it nightwear or tee, denim, these are doing well at the store levels. Is it like, I mean, the category is going into any turnaround scenario? What is the situation right there?
No, I think, look, our leggings sales, leggings and churidar sales, even in quarter two, have given us the same kind of percentages, proportion share what it was giving earlier. We have not seen a dip in our leggings and churidar sales. Having said that, our other value-added products, which have been doing very well for us, they have also done really well. I have not really seen a dip in our main core leggings business.
Okay, sir. Okay. Got it. That's it, sir. Thank you.
Yeah. Thank you, Avinash.
Thank you. A request to all the participants that restrict yourself to two questions only. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Hi, good afternoon, everyone, and thanks for taking my question.
Hi, Sameer.
Now the same store sales has been kind of flat for 10 consecutive quarters. This is a large period, and I'm sure you would have analyzed data over this period. Any consistent trends that you can highlight where the problem area is a little more exaggerated? Is it an older vintage store which is not doing well? Is it Metro Tier 1 where there is a disproportionate difference between the rest of the pack? Is it geography, south and west, anything on that? Is it price points, entry-level price points are not doing well versus mid and premium? Any data that you can share, I'm sure you would have also tried to slice and dice data over the period to get to the.
Yeah, so I'll give you some data points, Sameer. I think it will be very helpful. What we do basically when we arrive at SSSG, right, we look at it financial year-wise. Our oldest store, which started in FY 2014 or FY 2015, versus the newest store. When I see the data, our oldest store also is mid-single digit or low single digit SSSG. I think the SSSG is very uniform across stores of all the financial years. It's not that my newest stores are growing at 30% and my older stores are degrowing at 30% and having a flattish number. I think the number is very consistent across all financial years. Of course, the stores which have opened in the last two financial years will have a positive growth rate because they are new stores.
If I look at data keeping the last two financial years aside, and if I look at stores right from FY 2014 onwards, all the stores of each financial year bucket are in mid or low minus SSSG, which is actually not a bad thing because when tomorrow our numbers start picking up, it will be consistent across all the stores of all the financial years. That is one cut of data which we see every quarter. The second data what we are seeing is we see SSSG region-wise. For us, West India has consistently done well, like Maharashtra even now has been positive SSSG. Gujarat has been positive SSSG. North also has done well. For us, South obviously has been a little bit of a drag and slowness as far as like- to- like is concerned.
West India and North India have done fairly well, and they've done actually West especially has been positive on the SSG front, especially Maharashtra.
Okay, but anything on Tier price points?
See, I think from Tier 1 versus Tier 3, we've not seen much disparity. Like how I told you, we've seen region-wise disparity. From a rural versus urban, we've not seen disparity. It's not that price points have really made an issue. Our price points are pretty sharp even today. Our experience from a demand perspective, rural and urban has been very similar.
Within the suite of products that you sell, let's say the entry-level INR 500- INR 600 products versus, let's say, INR 1,500 products, any disparity there in growth rates?
No. It's been consistent, and both price segments have done very well for us in our data.
Okay. Got it. Anything on repeat and new customer data that you have, like repetition rates are going up over a period of time, which means new customer acquisition [crosstalk] is healthy?
No, new customer acquisitions are healthy and above 20% in our overall EU network what we have seen. Repeat rates are in that same range of 40-45%.
Got it. Got it.
The new customer [crsstalk] acquisition above 20% was up till June. Q2 is still yet to be updated, so we'll get the Q2 number in a few weeks' time.
Got it. No, Gautam, so see, the idea behind asking this question is that if we don't know or we are not able to diagnose the problem, well, we can't come up with a solution, right?
See, I think Sameer, what we have done, right, as management, we have been visiting so many stores over the last six months. We've also started getting a fair idea of what will work for us over the next couple of quarters. I think, look, our entire focus is bottom-wear because that is the main business. In bottom-wear, I think we have a lot of exciting new products coming up in the next quarter and the quarter after that. I think we have a good number of new products lined up. I think the kind of products which we are introducing in bottom-wear, that is going to drive certain amount of volumes or sale. I think over the next couple of quarters, we will see things turning positive for sure. I'm very bullish on that.
Got it. Fair enough. Best of luck on that. Just a bookkeeping question. Percentage of portfolio which is between INR 1,000-INR 2,500 price points?
From a sale perspective?
Yeah.
From a contribution perspective, 70-80% will be less than INR 1,000.
I'm assuming the rest will be below INR 2,500 in any case.
Yes. We will not have a we will never have an 18% hit on our product portfolio. That's unlikely because all our price points are much lower.
20%-30%, that price point is that.
Will be still under 5%.
12 to 5.
It's going from 12 to 5 times. Correct.
There will be some benefit which can be expected because of that, at least.
Maybe in the long run, yes. But as of now, the products where we had that change from 12% - 5%, we have passed on that entire benefit to the consumer.
Correct. Naturally, some volume can see an uptick, so it's a price cut for the consumer. At least some part of it will flow through in terms of higher volumes.
Yeah, I think in quarter three, we expected, I think once we finish this quarter, we'll get a very fair understanding of how those product portfolios which were above INR 1,000 and below INR 2,500 do. I think we should get a fair understanding. I think it should definitely lead to an increase in those products in this quarter, not only for us, but for the industry as well.
Got it, Gautam. Just one last clarification, if I may ask.
Yeah, please go ahead.
About the limit. You mentioned about the top-wear two stores. My understanding was we were just doing it as a pilot in existing large stores. I just want to clarify. Is it a store which is dedicated to top-wear that you have opened, or it's?
No, no, no. Just like what I had mentioned in my earlier call, in our existing bottom-wear store, we have made the store larger, and we've introduced a new category. So it's basically not a brand new store what we have built. It is that existing bottom-wear store where we have additional space. In that additional space, we have done additional CapEx and introduced the new categories.
Is the INR 1,000 per sq ft only for that particular area that you are dedicating?
Yeah, exactly.
How is our customer supposed to know that this particular store is now selling top-wear?
See, right now, I don't have an answer for that because, see, we've kept the same branding as Go Colors. Even if you see the pictures in our store, we've kept the same branding. From the outside, maybe customers will not be able to see. A customer who's coming in to buy bottoms, she's very easily getting converted into a top-wear buyer as well, then and there. Because this is a pilot, we are not creating a separate brand. Within the pilot, we're keeping it in the bottom-wear stores to see how it does. For now, the consumer will only—yeah, sorry. The consumer will only know that the top-wear products are there in a particular store only when she enters that store.
But Gautam.
Having said that, our pilot was anyways about 18-20 stores, just to see how this concept does. I think a lot of things we will understand once we open more stores of the 18 stores pilot.
Fair enough, Gautam. But then why am I seeing advertisements on Instagram, which is top-wear? Go Colors is now a top-wear destination as well because then it will create a resonance in the, yeah.
No, that's just that Instagram posts, sometimes influencers do post, Sameer. Basically, that's just trying to tell the customer that this product has been launched. See, from a positioning perspective, I would like to reaffirm that we are a bottom-wear brand. That is the main business. This is just a pilot.
Got it. Got it, Gautam. Thanks a lot for.
Yeah, because [crosstalk] even I'll tell you, in retail, we also don't want to create confusions in the mind of the consumer and create confusions around what [Go Colors] stands for. The idea here is that obviously Go Colors is a bottom-wear brand. These are just pilots what we've initiated. I'll anyways have a look at those Instagram posts, what you're talking about. If there's something wrong there, I'll probably correct it. The consumer is very clear that this is a bottom-wear brand, and we're obviously doing it as a pilot.
Got it. That's all from me, Gautam. Thanks again for answering each and every question in detail. I'll come back in the Q&A follow-up.
Yeah, sure, Sameer. Thank you.
Thank you. The next question is from the line of Resha Mehta from GreenEdge Wealth. Please go ahead.
Thank you. Can you just talk about that from the time of post-COVID resurgence peak to now, how has the average age profile of our customer changed? Has she become older, or has she become younger? Just some trend on that.
See, I think it's been pretty similar. I mean, look, prior to COVID, if I had to see who's my target audience from an age perspective, that lady would be a working lady between the age of 27- 33. I think we've seen that consistently stay the same. A majority of the consumers who are shopping with us are in that bucket of 27 - 33. Of course, we've also started having a lot of younger audience also who are in their early 20s coming into the store as well. From a proportion perspective, I think it has stayed stable that our average consumer age would be between 27 - 33.
In conjunction to this, how has our product mix moved? If I recall correctly, churidars and leggings used to be almost 50% of our revenues. Then we also had fusion wear, western wear, and so on and so forth. How has this moved over a period of time?
See, I think churidar leggings, historically, prior to COVID, it was 50-55% of the business. Post-COVID, it has slowly settled at being at about 35% because the other categories also have done fairly, the trousers category has done fairly really well, and it has picked up in volumes. I think it has stabilized at a 35% number for the last year, year and a half, which pre-COVID used to be more than 50%.
Would you say that the drop in churidar's leggings is not just because of the growth in other categories, but it's also got to do with the fact that there's been a fashion change for women in terms of.
I think a mix of both. I think in general, women have started wearing the trousers category products a lot more, which in rural leggings are still very strong. I think there is obviously a fashion shift towards trousers, which has also started reflecting in our numbers. I would not say there is a big decline in leggings and churidars. It is just that the other categories, especially trousers and pants, have done fantastically very well. I think the change in fashion from leggings to trousers obviously has played a huge role in this, for sure.
How do we see over a three - five-year period, assuming demand scenario becomes normal, what is the runway for opening stores? Incrementally, do we still target metros and Tier 1s, or are we also looking to get into Tier 2 - Tier 3? A related question, if we are getting into Tier 2 -Tier 3, at our price point, then would not value retailers also become our competition?
Right. I think from an expansion perspective, we do not see it. Earlier, we had given our guidance of 120-130 stores, and we revised that guidance to 80 stores this financial year out of the 36 we have opened. The reason we have revised these guidances is not because we are not able to find store locations. I think the runway to open stores is huge. It is just that we as a company, we have been a little measured and saying that, "Okay, we will open only good quality stores during a time when our SSSGs are flat or negative," because we also want to maintain P&L margins. We want to be very measured in our expansion as well. As far as finding new locations are concerned, I think the market is very big for opening new stores.
For me to give a next year's guidance or the year after that will be a little difficult. This year, we are going to be looking to add 80 stores on a net basis. Once SSSGs and revenue numbers are increasing, we will definitely ramp up and push the acceleration button as far as store expansion is concerned. That has been our strength for years to come, years earlier as well. For us to ramp up from this to the next level stores would not be difficult. It is just that looking at the market condition, we've been a little measured. As far as your second question on our price point in Tier 2, I think, look, our price point, an average selling price of INR 800- NR 900. We've been present with many value retailers.
We've been present across so many stores of Reliance Retail and many stores of B-Mart as well in Tier 2- Tier 3. We are seeing very good traction for our higher ASP products as well. Going into Tier 2- Tier 3, we do not see value retail pricing as a competition because our product from a product specs perspective also is very different because our price points are different. Selling in Tier 2- Tier 3 at an average ASP of INR 800-INR 900 should not be a problem. We have actually tasted decent success in all our Tier 2- Tier 3 experience.
Incrementally, the stores that we intend to open, the mix will per se remain at, say, 60-70% metro, Tier 1, and balance?
I think it will be a balanced approach. I think, look, metro cities, also the sizes of the cities are increasing. So I think it's going to be an equal split between metro cities and non-metros. I don't say that rural is going to be more than urban. I think it's going to be a 50/50 expansion between the two.
Lastly, with the demand slump over the last several quarters, what measures have we been taking internally from a store experience standpoint or maybe from a product standpoint or a proposition standpoint to revive footfalls, to revive growth, basically?
See, I think, look, we've been doing a lot of research, and I think bringing freshness to product categories is very important. We've also done that in our bottom-wear category as well. Like I was just mentioning to the earlier question also, once we start bringing in freshness, bringing new colors, bringing new products in bottom-wear, I think that will also definitely increase the footfalls in our current stores. Yes, we are also going to be very qualitatively spending on marketing as well. Our marketing budget is about 2%. We will maintain that 2% because we've seen spending about INR 20 crores a year in marketing is a good number to drive footfalls.
Spending that INR 70-20 crores, which is about 2% of revenue, and bringing in a new product category—not new, as in in the existing bottom-wear, bringing in newer products and colors and collections—that will also drive. It is going to be a mix of both. Also, opening new stores in newer markets will also increase our TAM. It is going to be a three-way approach: open in newer markets where we are not present, introduce new collections in bottom-wear, and also spending on marketing the right way so that we can drive footfalls to customers.
A last one, if I may, that why did we have to get into women's top-wear and menswear and also expand to international markets? Is it because we've been seeing that the growth has slowed down in our core market, in our core product, hence we had to kind of expand here?
No, I wouldn't say that. I think the reason we wanted to do that is because we wanted to have a growth engine also for the future as well, right? You see, bottom-wear is a growing category. Yes, our numbers have not suggested that for the last few quarters because SSSGs have been very flattish. We are very bullish on bottom-wear. Bottom-wear is here to stay, and it's going to be the growth engine for the business in the short term and the midterm. When I look at it from a very long-term perspective, today, if we do smaller experiments, maybe it will be the next leap of growth from a long-term perspective. Honestly, I think business's balance sheet health has been very good, right? We've been having decent working capital days with strong operating cash flow generation.
Considering the fact that our P&L and balance sheet health is very good, we felt doing smaller experiments will be very good for the long term. From a saturation perspective, we definitely do not think that bottom-wear has reached any sort of saturation. Yes, last few quarters, we have not delivered well on that front. From a bullishness perspective, we as a company are very bullish on the category of legwear and bottom-wear.
Sure. Just last housekeeping question. What is our, how do we measure our customer loyalty, and what's been our repeat?
Inaudible?
Yeah, audible.
Yeah, yeah. See, I think from, see, we don't have a loyalty program as such. But from what we've seen, our repeat purchase up to Q1 was between 40-45%.
Has that come down over the last two- three years?
Not really. It's been in the range of, I think each quarter it fluctuates. It's been in the range of 40-45.
Sure. Thank you so much.
Thank you.
Thank you. Our next question comes from the line of Varun Singh from Alf Accurate Advisors. Please go ahead.
Thank you. Most of my questions have been answered. I just wanted to understand, I think, on the problem of growth and maybe how we are looking to solve for it. I think you pointed out about venturing into top-wear brand on a pilot basis and maybe moderating the store expansion and accelerating it whenever the demand revises. You also pointed out about the freshness of the stock being one of the key drivers for growth. Maybe you can talk a little bit more about what you have done to work on this very proposition of the freshness of the store, what we are doing now compared to what we were doing maybe two years back. Anything you want to highlight or point out over here in the bottom-wear category first?
Yeah, thank you so much for the question. See, I think, look, solving the growth problem is going to be solved only by increasing the bottom-wear sales. The top-wear, what we have done, does not solve the problem for growth because it is a near pilot, what we have done, and it is only for the future. Yes, the pilot has its importance, but it is more from a very long-term perspective. The top-wear will not solve the problem for the growth of the company in the short term and midterm. The growth will come in only by revising our bottom-wear sales and bringing it up to speed and delivering healthy SSSGs. Now, one of the very big levers which is going to help us solve this bottom-wear SSSG is by introducing fresh collection. We have been doing a lot of research.
I feel by introducing this freshness in some collections, in some colors, definitely it will take a big uptick in our sales. How we are going to be doing is we have strengthened our product development and design team. Today, we have a very large team working dedicatedly for bottom-wear where they are thinking about newer ideas of what to introduce next. Yes, while doing this collection, we are not going to be moving away from the core format of how bottom-wear is. We are going to still be core. Being core also, coming up with newer and newer ideas in bottom-wear is going to solve this issue. This is going to be supported by the strong team we have in place. After a few quarters, we have seen that we have a very settled and a big wide team in our head offices here.
I think that freshness issue is going to be resolved by that.
Gautam, I actually meant to ask about more objective and measurable, maybe benchmark, for example, number of times you are dropping new products in the stores. Of course, I mean, having a good team, great team, big team is a business necessity. In terms of measurable targets, how are you looking at it? How are you assessing it? How are you maybe signaling to customers that, "Look, the freshness has arrived"? How are you giving more reasons to customers about whatever hard work that you are doing? If you can be a little bit more objective with regards to the problem that you are solving.
Yeah, see, I'll give you an example of Festive, right? I mean, after Festive, now we are launching some new products in palazzos and pants over the next few weeks. And those products, it's two- three products we have launched in smaller quantities across 200 stores, which is going to go into the shelf in the next two- three weeks. What happens is when we launch a product, it takes the front portion of our display when any lady walks in. When any lady walks in, it becomes very easy for her to know what is new in Go Colors because we position it in such a way where we put it in the first display or first shelf of the store. Secondly, our Instagram rollouts and social media rollouts also help us push these new product information to the consumer.
We also use many mechanisms like WhatsApp as well, which translates visual display information of sending product catalogs of what is new getting launched to our existing customers. By these means, we are able to drive new footfall and existing footfall to the store. Once the customer who's coming into the store sees the new product, when they see the new product, they also end up buying the other products as well. It's actually a balancing act. The new product drives the older products also to do well at the same time. For this quarter, we are planning to launch in November, we are planning to launch two-three very key important products in pants and palazzos category, which we are quite bullish about.
Maybe you can call out about at what rate the industry, the bottom-wear industry has grown. Maybe for FY 2025, if it's not quarterly number, you have access to. In front of that, I think that would explain a little bit more about how the growth that we are able to do for us. Yeah, I think that's it. That's the last question from my side. Thank you.
Yes, see, I think the rate at which bottom-wear category is growing, now once I think we are finalizing the study what we have done through Technopak, I think we'll be able to throw slightly better color maybe after a couple of weeks or maybe in the next call, I'll be able to throw better light at what rate the bottom-wear industry is growing with updated numbers. Probably in the next couple of weeks, I'll come back with more information around info around the category part.
Okay, sure. Thank you very much and wish you all the best, Gautam.
Thank you. Thank you so much.
Thank you. Our next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Mr. Devanshu Bansal, please unmute your line and go ahead.
Yes, thanks for the follow-up opportunity. I just wanted to say that realization increase has been pretty decent for us over the last 12 months. Do you foresee this realization to continue improving for us with better product mix, or now the product mix is sort of ideal and we should see the next few quarters?
I think the ASP, I think Devanshu, the ASP will grow at about 2%-3% on a YoY basis.
Okay. The driver is only product mix change or is it like price hikes also?
No, we have not done any price hikes. We've done in one-two products, we have done some price corrections, but those were lower volume products. They have not affected the ASP much. For most of our product categories, we have not touched the pricing. I don't think in the near future we are looking to increase the prices. Whatever ASP is going to increase is going to increase on the basis of new product.
Fair enough. Secondly, Gautam, wanted to better understand this INR 1,000 per sq ft. In our core category, the number is relatively higher, right, so versus this number. Is it like from an inventory per square feet perspective, this category is lower versus what we see in the other category? How should we see that?
No, no, it is just, see, see, right now, Devanshu said it is too early. I think you just had two months of data. I think once it processes, once one full year completes, we will have a lot more data around how that store is doing. From the two months of data, what we have seen—how do I arrive at the INR 1,000 per sq ft? The additional area we have allocated for women's top-wear and menswear, how much revenue does that additional area generate? That additional revenue divided by the additional square feet, and that is delivering more than INR 1,000 a sq ft on a monthly basis. When I have taken that INR 1,000 per month basis, I have not considered the bottom-wear space and the bottom-wear product revenue. I have excluded that.
No, that's fair. I understood that, Gautam. I was just checking from a return profile that we sort of see.
I think return profile perspective, it's too early to comment. I think three-four months down the line, once the store has five months of data or six months of data, we'll be able to better judge it. If I just want to understand how the response is, we had estimated and kept the target of at least doing INR 1,000 a sq ft, which we have well crossed. I think as management, we are quite happy with how the pilot has worked.
Fair enough. Thanks. Yeah, thanks for taking the question.
Yeah, thanks so much.
Thank you. Our next question is from the line of Ankit Kedia from Phillip Capital. Please go ahead.
Gautam, I don't know if you have covered this. There was an income tax search on the company a few weeks back. What were the violations which came out in this income tax search operations across our plants and offices?
Yeah, sorry, I'll be brief on this. Ankit basically came to our premises on October 7th. They had basically come to our office in Chennai, our office in Tirupur, the warehouse in Tirupur, and the warehouse in Bhiwandi. During this time, none of the store sales were interrupted because of the search. The stores were running in the normal course of business. In these four places, in these four, they conducted the search on the 7th, and they concluded, if I'm not wrong, on the 9th - 10th, they had concluded. As of now, from what we have seen and how they have conducted, concluded the search, there have been no major findings, nothing to be concerned about. We have not got any summons or any queries from the income tax department yet.
In case if we do receive any queries, as per law, we will reply and we will do the needful. As management, we have not seen any major or minor findings as much in the entire scheme of things. Luckily, things went very smooth and it concluded also smoothly.
Sure. That's helpful. My second question is regarding your pledges. Any light on when the pledges could be reversed?
Yeah, I'll give some light on that. We had increased the pledge about a couple of months back because of the fall in the price of the stock. We are on track to reduce more than 50% of the pledge soon. I think the reduction on the pledge will happen soon. Whenever it does happen, we will release it on the stock exchange. It should happen soon. We have already planned. Right now, about 56 lakh shares are pledged. We estimate about 30 lakh shares getting depledged, 2.5 lakh-3.0 lakh shares getting depledged soon. That is our estimate.
By soon, you mean few months or financial year?
See, difficult to give a guidance, but my try is going to be over the next few months to finish it. I do not want to push it to the financial year end, but my try is going to be to finish it within the next few months.
Sure. My last question is regarding your cut-in store opening guidance. This is the third consecutive year you have cut your guidance, sometimes in quarter three, and luckily this time in quarter two itself, given the visibility. In fact, we have increased our guidance a couple of quarters back, and now we have cut it. I just want to know the thought process at the start of the year, middle of the year, how is that changing from a strategy perspective? From a location perspective, also, you would be scouting, the team would be going out and scouting location and locking them because we are already in November. It would take three-four months for that to happen. Is it in hindsight we are cutting it because of locations or because of demand or is it something else?
No, no, not like that. I think, look, in between quarter one and quarter two, we realized that sales are not growing. SSSGs are weak. We did not want to take a pressure on the P&L as well. I think I also did not, to be very brutally honest, I also did not guide well, honestly. That is why I am also correcting it now. Next time in the future, I will be a lot more careful with the kind of store guidance, means what I give in the future. I think it was a little wrong guidance. Wrong is the wrong word. It was incorrect guidance what I had given. I will be a lot more careful in the future as far as guidance are concerned.
The reason why we have reduced this guidance is purely because we want to be more measured and qualitative in our openings over the next couple of quarters. Still, at least we start showing some kind of growth in our overall revenue and like-to-like sales.
Assuming this growth rate continues and we don't see a turnaround in the business, in FY2027, will we continue to open 70-80 stores, or will you again aim for 120 stores?
No, see, I think, look, I definitely am very bullish that over the next couple of quarters, things should revive. If things do revive, FY2027 will be a great year for us. Maybe closer to the start of FY2027, I'll be able to give a better guidance on how many store openings I'll be doing in FY2027. Maybe in the call, what we do in April - May for the next Q4 earnings, I'll be able to give a better guidance on what we have planned for FY2027.
From a margins perspective, given the revival in demand, what you are foreseeing, any margin guidance for the second half you would want to call out?
On a from an EBITDA perspective, it's difficult to give guidance. But I think from a gross margin perspective, things will look very steady at between 62%-63% of gross margin.
Okay. Thank you, Gautam, and all the best.
Thank you, Ankit.
Thank you. Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to the management for closing comments.
I'd like to thank everyone for being part of this call. We hope we've answered your questions. If you need any more information, please feel free to reach out to Mr. Divendruva from SGA, our investor relations advisors. Thank you [crosstalk}.
On behalf of Go Fashion India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.