Ladies and gentlemen, good day and welcome to Go Fashion (India) Limited Q4 and FY 2026 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. These statements are not guarantee 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 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gautam Saraogi, CEO of Go Fashion (India) Limited. Thank you, and over to you, Mr. Saraogi.
Thank you, Michelle. 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 Investor Relations Advisors. 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 websites. FY 2026 has been a year that has tested our resilience, challenged us in numerous ways, and ultimately reinforced our conviction in the long-term opportunity that lies ahead for Go Colors. The bottom wear industry has undergone a transformation. Go Colors has consistently evolved alongside these changes. When Go Colors began its journey in 2009, it started off with leggings, churidars were the cornerstones of the offering. This is no longer the case.
Today, our portfolio mix has changed dramatically. Approximately 70% of our revenues now come from the value-added bottom wear portfolio, which are the non-leggings range. This includes trousers, palazzos, joggers, treggings, jeggings, athleisure wear, fusion styles, and many more. This shift is not incidental. It is a result of a deliberate design investment, consumer insight, and the courage to expand in our defined category. We continue to strengthen and diversify our product portfolio to stay aligned with emerging market trends and consumer preferences. Over FY 2027, we plan to add 10- 12 new refreshing products, a bottom wear product for our customers, not just line extensions, but genuinely new format that opens up new purchase occasions and customer cohorts. Our aspiration is clear. To be the definitive one-stop destination for women's bottom wear in India. Now coming to our store network strategy.
Our store net expansion strategy has undergone a significant evolution this year, and I want to walk you through the thinking behind in some detail because it is central to how we unlock the next phase of growth. On the store network, we have added 43,000 sq ft of retail space over the last year, a growth of 11%, primarily driven by our aspect on shift to larger EBOs. As the bottom wear category broadened, with more and more products coming in and more SKUs coming, our smaller stores have actually increasingly become inadequate from a consumer experience standpoint. A customer walking into a small store today cannot see the entire full breadth of what Go Colors offers. This store, the store is limiting the conversion between the brand and the consumer.
In line with our new strategy, we now firmly focus on increasing consumer experience through larger EBO stores of 700 sq ft and above. These stores allow us to display our entire full range of inventory and create dedicated sections for different product categories and deliver a meaningful, better in-store experience. We have reviewed our portfolio of stores comprehensively. In FY 2026, we have shut down 50+ stores in our overlapping catchment areas and over the next three months in quarter 1, we plan to shut another 50 such small stores. These are deliberate consolidations, two or more small nearby stores being merged into a single larger for a better-equipped store with a larger and more display of inventory.
Our store expansion strategy will continue to remain calibrated and selective with a clear focus on entering high-potential locations, predominantly Tier 2 and Tier 3 cities, where penetration of our organized bottom wear market is low. Over the next five years, we significantly aim to expand our footprint with the potential to nearly double our scale in terms of square feet. The new business strategy will lead to revenue maximization and cost optimization. Now coming to brand building and customer engagement. FY 2026 has seen us invest meaningfully in brand visibility and customer engagement, particularly among the younger consumer cohorts, which represent our future growth opportunity. To drive improved store performance, we have undertaken through initiatives centered on product freshness and customer engagement.
We are accelerating the launch of new designs and expanding our product range to cater to a wider customer base. In January 2026, we had collaborated with a leading influencer to launch a new collection specifically aimed at enhancing brand visibility and relevance among younger audience. This was a deliberate effort to see Go Colors brand in a cultural and digital context that resonates with the Millennials and the Gen Z consumers. Looking ahead in June 2026, we will have a brand ambassador for our products. This is a significant step for Go Colors, one that we believe will meaningfully amplify our brand salience, support stronger top-of-the-mind awareness, and generate improved traction at the store level. A brand ambassador will help us create more consistent and more emotional storytelling around Go Colors' identity, particularly as we expand into new markets and formats.
Coming to our new business initiatives. First is our Daily Wear concept. This initiative designed to capture everyday casual wear and utility driven segment of men's and women's wear market is demonstrating healthy unit economics in the early stages. We believe that this concept complement our core portfolio as well. By the end of FY 2027, we plan to expand the Daily Wear concept to over 25-30 stores, which as on 31st March 2026 is 10 stores. It will give a strong read on scalability, consumer adoption across different markets. On our international foray, Go Colors opened its first international store in the Middle East during FY 2026, making a significant milestone in our brand journey. This early response has been encouraging, and we are studying the unit economics and consumer responses carefully.
Our approach will remain measured and data-driven as we scale this channel. Coming to the LFS business. The LFS business has been volatile in FY 2026. As noticed earlier, Q3 was significantly impacted by a key LFS partner pausing fresh inventory intake for approximately 45 days. This was an operational disruption, not reflection of any consumer demand for Go Colors products, but it negatively affected our revenue and channel efficiency for the quarter. We have since resumed supply to this partner and have put in place a strong engagement protocols to ensure that we do not face this recurrence again. More broadly, the LFS channel has faced structural challenges around footfall recovery and secondary sales velocity over the past several quarters.
Our focus going to FY 2027 is on improving product assortment and placement with partner stores, ensuring consistent secondary sell-through, and deepening our engagement with all LFS partners to maximize our visibility and consumer access at each touch point. We expect the LFS channel to stabilize and show meaningful recovery in FY 2027. Looking ahead to FY 2027, our priorities are very clearly defined. First and foremost, we are committed to turning SSG positive and ending FY 2027 with a positive full-year same-store sales growth. This is not just a financial metric, it is a proxy for brand health, consumer traction, and store productivity. Every initiative we are taking, larger stores, fresher products, brand ambassador, influencer partnerships, the Daily Wear concept, improved store aesthetics is ultimately aimed to driving the SSG positive outcome.
We have a clear internal roadmap for moving from negative SSG of FY 2026 to a positive number by the end of FY 2027. Second, we will successfully migrate to a new store format strategy, continuing to close smaller stores in overlapping catchments and replacing them with larger 700+ sq ft stores. We will simultaneously invest in improving the look and feel of our existing stores, bring in more premium and aspirational products that matches the evolving expectation of the consumers. We want every customer to walk into a Go Colors store to feel that they are engaging with a brand that truly understands them.
Third, we will refresh our product portfolio with new additions, targeting new purchase occasions and consumer sentiments, and ensuring Go Colors remains the most innovative and comprehensive women's bottom wear brand in the country. Fourth, which will be our Daily Wear concept of opened 25-30 stores, to be 25-30 stores by the end of FY 2027, building on the healthy unit economics we've already seen in the 10 stores what we've opened before 31st March. Fifth, we will continue to focus on the LFS channel recovery, working closely with our partners on assortment, placement, sell-through to ensure that the channel contributes meaningfully to our overall growth. Through all this, we remain committed to maintaining a healthy working capital position and generating sufficient internal cash flows for further expansion, keeping our balance sheet strong as we invest in the future.
Before I close this, I want to speak in the longer opportunity, longer term opportunity because I feel it's easy to lose sight of in a difficult year like what happened we just experienced now. The company continues to maintain a strong competitive position in one of the most recognized women's bottom-wear brands in India with a clear emphasis on quality, comfort, and fit. Our category expertise, long-standing relationships, and brand recall position us exceptionally well within the women's bottom-wear segment which itself remains significantly under-penetrated by organized players. Given the still low penetration of organized retail in the country, the bottom-wear market offers a meaningful and long-term opportunity for the brand with our depth of presence and heritage. With this, I would like to hand over the call to our CFO, Mr. R.
Mohan, for the update on Q4 and the full year's results and financials. Thank you.
Thank you, Gautam, and good evening, everyone. First I'll give you the financial highlights for Q4 FY 2026. Our revenues for the quarter stood at INR 196 crores. Gross profit stood at INR 123 crores with a GP margin at 62.9%. Our EBITDA for the quarter stood at INR 50 crores. EBITDA margin stood at 25.3%. Profit after tax for the quarter stood at INR 8 crores. Coming to FY 2026 performance, revenues stood at INR 838 crores. Gross profit stood at INR 529 crores with a GP margin of 63.2%. EBITDA is at INR 237 crores and EBITDA margin is at 28.3%. PAT is at INR 59 crores. ROCE and ROE excluding Ind AS impact as on FY 2026 is at 11.5% and 8.9%, respectively.
Cash and cash equivalent stood at INR 181 crores as on 31st March 2020.
With this, we'll now open the floor for question and answers.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask questions should please press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only 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 Sameer Gupta from India Infoline. Please go ahead.
Hi, hi team, and thanks for taking my question. Gautam, firstly, if you were to exclude the stores that have been closed during the year or during the quarter, and there is a sizable number of closure, this is what we see, could you help us with what kind of SSS growth the rest of the stores have clocked in the system?
Yeah.
Yeah, go ahead, Gautam.
Thanks, Sameer. In fact, I was just having a look at this data also. In Q4, if I exclude those stores and if I see how many stores have delivered positive SSG, out of our total network of stores, there have been about 275 stores which have delivered positive SSG in Q4 with an average SSG of about 10%-11%. There are many stores which are actually doing well and many of the larger stores which are more than 300 sq ft, and about 275 stores have been actually positive. I think, it's a mixed bag of stores. I think if you exclude the closed stores, I'll have to just see the reported SSG before closed stores or after closed stores.
My hunch is that it is excluding the closed stores of the year. This is SSG based on nine stores through the year. The closed stores have actually not been considered.
Okay. Basically, even if you exclude the closed stores, it's still a 3.5% decline in.
Minus, which is the reported number is after excluding closed stores.
The stores which are closed is not the problem in terms of SSG. We would still need something else to fix the problem, right?
No, because there are still many smaller stores in the network, and we have still 100+ stores which are smaller stores in the network, which have to be eventually migrated into larger stores. See, I'll tell you the main problem of the negative SSG is because we've been going from store to store meeting customers. Many of the smaller stores don't have that kind of shelf space and size to accommodate all the newer products what we are launching. Because of that, product discovery in the smaller stores become a problem. That is been one of the reasons why our overall EBO SSG has been negative.
Got it.
As we transition in FY 2027, we see this recovery happening.
Got it. Got it. Fair. These 275 stores, is there any analysis on, you know, their store size or their vintage age, something like that?
These 275 stores are across vintage. It's not that all of these stores are new stores. They're across vintage. Out of these 275 stores, approximately close to 200+ stores , 210 stores are stores which are more than 300 sq ft or more than 400 sq ft. Even our data is suggesting very clearly that positive SSG is more common in these stores.
When you say 100+ smaller stores, what would be their average store size?
No, these are all store size below 300 sq ft. The 100+ stores.
Okay. Okay, got it. By any chance, would you be able to share the net store addition that you expect for FY 2027?
Right now it's very difficult to give a guidance on the number of stores we are going to be adding on a net basis because we are going to be looking to close many small stores and open larger stores. It's difficult to give a net number as far as store additions are concerned. On a square feet basis, I can tell you how much square feet we'll be deploying. We would be adding at least more than 10% more square feet in the coming year.
This is net?
Net, correct.
Okay. 100+ smaller stores you are saying?
In FY 2026 we delivered about 11%, so I'm hopeful that even in FY 2027 we'll be at least minimum giving 10%-11% of square feet increase.
Okay. These 100+ smaller stores you're mentioning is after the cleanup in 4Q. There are still 100+ more smaller stores.
Yeah, that will happen over a slightly longer period of time. What we have done is we are consolidating some of the smaller stores in Q1 as well, which I just mentioned in my speech. Right.
Mm.
Those already have larger stores nearby, so the business is likely to move to the larger stores.
Okay.
Having said that, there'll be still a tail of small size stores that will happen over a period of time. As and when we are opening larger stores in those markets, we'll be shutting those very small stores.
Got it. Got it. Fair.
It's very difficult to give a timeframe for when we and how we'll be closing those stores.
Fair, fair. No worries. Secondly, Gautam.
Sorry, Sameer. This one. One more thing, what we have done is when we are signing 700+ sq ft stores, right? We don't want to be in a situation where after three years we feel 700 sq ft is also less. From a 700+ sq ft store size, we are able to say that in the long-term future as well, we will not have a situation where the store has started turning out to be small for us. We are calculatively signing stores which will last from a longer-term perspective.
Fair, fair. Great. Secondly, I'm sorry taking some more time.
No, no. Please go ahead, Sameer.
See positive SSS growth expectation or ambition for FY 2027 versus 3% decline. Now you have stated the broad plans. What I notice is that the key strengths that we associated with Go Colors, which was lower store sizes, less fashion quotient, ability to stack up products rather than, you know, having it on racks, which resulted in higher throughput and superior store economics. Now, when we are moving to larger stores and having a higher fashion quotient, more influencer marketing, I believe the risks also increase if SSS growth doesn't come through.
No, no.
-risk of inventory write-offs, higher operating leverage. yeah.
First I'll clarify on that. That's a good point. I'll tell you, from a unit economics and return on capital employed perspective and payback period perspective, a 700 sq ft store and a 300 sq ft store does not behave differently. Even when we're having positive SSG in our unit economics, we had larger stores also and smaller stores also, and both have similar unit economics. It's not that we've never had 700+ sq ft stores in our ecosystem and network of stores, right? Stores 2,000 sq ft, where it's a single box 1,000 sq ft, follow the same unit economics. From a payback period and return on capital employed, it's not going to change much.
As far as stacking and display is concerned, it is not that we are entering into the fashion category. The bottom wear category is always going to be a core and basic category. The only problem what I am facing today is that my smaller stores cannot accommodate the new size. Once I start opening a larger store, there is a display space to stack them and hang them. From that perspective, the inventory risk does not increase because I am not entering the fashion space. It is just because my line of products have increased, which are again very basic and core in nature, I just need shelf space to display.
My fundamentals of our business, of our EBITDA giving certain throughput, giving certain EBITDA without inventory risk, it will continue the same way even in our 700 sq ft store because we've had 700 sq ft store in the past in our current ecosystem as well.
Got it. Fair. This answers the question. Lastly, if I may squeeze in, inventory increase, is it just a function of changing mix or is there something else?
It's a combination of two reasons, Sameer. One is because we've had a revenue softness, inventory days is showing higher. Second, because our pilot also has gone live with 10 stores, there's slightly increased inventory over our bottom-wear inventory because of the pilot of Daily Wear concept. We've started seeing the sales, but the sales have not picked up velocity for the inventory to be efficient towards the sale for the Daily Wear concept. The slight elevation of inventory is largely on the basis of softness in bottom-wear sales and the Daily Wear concept products which have entered this year in our inventory, where the sales have just started picking up now.
This inventory level what we have currently at four months, in FY 2027, it will stabilize again back to three months, what was our previous number.
Both the factors are going to be there, right? I mean,
Sorry?
SSG you're targeting, I mean, the same-store sales growth, if at all, will be low single digits. Daily Wear as a pilot will still continue.
As far as inventory is concerned, our inventory sourcing is dynamic, Sameer. Now, since there has been softness in sale, our inventory will autocorrect in bottom wear. There will not be a situation where my inventory levels are continuing to rise dramatically. This year, yes, we will grow, we will have positive SSG, but even the inventory levels as far as Daily Wear is concerned and bottom wear is concerned, it will autocorrect.
Got it. Fair. This is all from me. Thanks for taking all these questions and all the best for the future. I'll come back in the Q&A follow-up. Yeah.
Thank you, Sameer.
Thank you. The next question is from the line of Deep Shah from Equirus Securities. Please go ahead.
Hi, sir. Thanks for the opportunity. Basically two questions from my side. The last couple of quarters, if we see, we have been taking initiatives in terms of improving customer experience, we have been closing down smaller stores, we have been launching new products. However, when I see number, nothing has been flowing to that side. First of all, if you can comment upon how has been the demand trends, what's happening in the industry, if you can throw some color over here.
I will look to the second question.
Sure. Thank you, Deep. Deep, see very clearly it's very reflected in our numbers. We are also going through an internal transition. When we are going through an internal transition, we have identified where the pain points are. Now we know what actions have to be taken. When we are taking those actions, the results always takes a little bit of time. I know it's not reflected in our quarterly number what efforts we are putting in, but I'm very hopeful that in the coming quarters all our repair actions what we are taking it will finally show good results for us. I think if we wait a little more, be patient little more, we will start seeing the green shoots.
Okay.
As far as demand scenario is concerned, I think overall demand is not as weak maybe as how it was maybe six months or a year back. Quarter 4, when I speak to my peers, many retail companies, apparel companies have given positive commentary around demand and demand scenario. I think from a demand perspective, probably it's not as weak as it was earlier, and we have seen improvement in demand in the industry.
Okay. Got it, sir. Sir, secondly, on the margin side, we have somewhere in the PPT mentioned that there was INR 5 crores of impact due to the Reliance credit note.
Yeah.
If I adjust that to my gross margins, we have seen some 114 basis points of gross margin expansion on a YOY basis.
Correct.
Can you comment upon the nature of this expansion? Secondly, see, considering over last two months, cotton prices have seen a very sharp rally. Any outlook for the gross margin on FY 2027 gross margins?
Yeah, I think, see, I think we'll maintain similar gross margins. I think we'll maintain between that 62.5% and 63.5% gross margins, what we've been delivering. See, the one good thing in our P&L, right? Even in a very tough year, we have not moved and pivoted to discounting. We have kept our no discounting policy intact. Our gross margins have been rock solid intact. Even in the coming year, we see similar gross margins to what we've been delivering. I don't see an expansion, we'll be similar gross margins.
Okay. Done, sir. Thank you so much.
Thank you. Thank you so much, Deep.
Thank you. The next question is from the line of Avinash Karumanchi from Motilal Oswal. Please go ahead.
Hi, sir. Good evening. My question is regarding the ASP. If you look at like, there's a steady increase in the ASP and also the number of products that are priced below INR 1,000, their share has gone down from 80%- 70% in the last four quarters. Is that one of the steps that you're looking to drive the ASP growth which will help you going forward?
See, from an ASP perspective, Avinash, look, we are careful on premiumization. Yes, we want to, you know, introduce products of a higher ASP, but we don't, we don't want to become so premium that we start becoming a very expensive product, right? Expensive product line. Currently, our ASP is around that INR 800. I think in the short term it will be between INR 800-INR 900. We are very cognizant of that. We don't want to premiumize so much that our ASP starts crossing INR 1,000 or beyond INR 1,000. We always want to keep our ASP. We want to try keeping our bottom-wear ASP sub INR 1,000.
This reduction in the percentage share of products below INR 1,000, is it because you voluntarily moving some low-value products or?
I don't think that percentage should be given too much importance. I think we should always see a blended average of our ASP. 70% of the products are less than INR 1,000, but we are also introducing products which are more than INR 1,300 as well. The way as management we are looking at is that what is our blended ASP which comes into our business. The blended ASP right now is between INR 800 and INR 811. I think that's a very decent, healthy ASP, and we would like to maintain our ASP. From a long-term perspective, we would like to maintain it under INR 1,000.
Okay. Okay. Got it. The other question is regarding the LFS, sir. When we said last time that this 45 days of issue that happened with one of the partners, that was supposed to be ending in third quarter, right? Even this quarter we are seeing a decline here in case of LFS.
See, what has happened, you know, what has happened, Avinash, we've had a 15%-16% decline in LFS revenue in Q4. If I adjust that INR 5 crores which I mentioned in my investor presentation, because when we do a reversal or we get a credit note, it adds on to the LFS revenue, right? Because of Ind AS 115 standards. If I adjust the INR 5 crores, the 15% decline will come down to 7%. Now, from a trajectory perspective, where we were at -30% in quarter three, the -30% has become -7%. The recovery has already started seeing in Q4 from an LFS perspective. - 15% is an incorrect number to look at.
If we adjust the INR 5 crores of shortfall of credit note and we look at it from that perspective, then the fall is only - 7% or - 8%.
Okay. Okay. Okay.
From - 30 in Q3, it's come to - 7 in Q4. In Q1 you'll see further improvement where it'll. I'm hopeful that it'll start, there will be no degrowth and there'll be growth as well.
Understood. Understood, sure. You said in the earlier point that out of the 800 stores, somewhere around 275 stores are delivering a positive SSG.
Correct.
Out of rest, 500 stores, 100 stores would be smaller stores which.
Correct.
Over the near future you'll be closing down.
Correct.
What's the commonality between the other 400 stores which are still seeing a negative SSG?
See, the other 300 stores, more than 300 stores are seeing negative SSG, and we are studying. See, it's, even those stores, some of those stores have actually de-grown and there are many stores which have grown. We are looking at the reasoning of all the other stores. We have studied all the buckets of sizes. We have seen that the majority degrowth has happened in the very small stores. Of course, I can't say that all larger stores have grown, but the, whichever stores have been positive, a major chunk of them have been the larger stores. When we are studying that data, we've been able to come to the conclusion that the larger stores work better than the smaller stores.
Okay. Okay. That's it. One last question regarding this 10% area expansion that you will be doing. These pilot stores, they are of a larger size, right? 2,000 sq ft-2,500 sq ft kind of stores.
Correct. Correct.
How many of that are you building into this 10% area growth?
I think, including that, I think, see, the number of stores, as far as we are adding, we are going to be adding another 10 stores, 15 stores in FY 2027, right? We are already currently at 10 stores. The 10 stores, 15 stores will add maybe 2% or 3% on the overall square feet.
Okay. Okay. Got it.
Maybe from a bottom line perspective, we were adding 10%, including the Daily Wear concept pilot, maybe it'll become 12%.
Understood. Thank you, sir.
Thank you, Avinash.
Thank you. The next question is from the line of Shyam Sundar from Franklin Templeton. Please go ahead.
Yeah. Hi, Gautam. Good evening.
Yeah. Hi, Shyam.
Yeah. Hi. Gautam, this SSG coming back to low single digit next year, the key insight you are mentioning is, once we do away with some of the smaller stores and with larger stores, our customers should have a better discovery potential and therefore that should lead to better SSG. Is that the key insight there? Did I get it right?
That is one of the, that is one of the main reasons.
Okay. Okay. Are there any other reason that gives you confidence?
No, no. See, see, what we are doing now, Shyam, we are doing 2, 3 things. One is obviously the larger stores, which is one of the key main reasons why our business also has been slowed down because of the display of styles. We're also launching many new products in the coming year, which are, in today's time, the consumer is demanding, which like we are launching all-day pants, we are launching cloud pants. We are launching a few new products in the pants category, which is likely to do very well in the coming years. Some new product additions, better store experience, larger store with a brand ambassador coming on board and our marketing also gets strengthened. I think the overall, all these 2, 3 levers will have a very positive impact on the sales and performance of the business.
Understood. Okay. Understood. Got it. Okay. Gautam, the next question, if you look at our clean EBITDA margin, as in the pre-Ind AS EBITDA margin based on our disclosure.
Correct.
If you look at over a 12-quarter period, that margin has steadily dropped, from.
Correct
... 60% odd to 6.8% this quarter.
Correct.
What is your diagnosis here and how do we intend to arrest this margin decline? Is there some tough margins that we can defend given our store, the quantum of stores and the cost base that we have now built into the system?
Okay. Shyam, the best way to look at the margins will be from a full year basis because the quarter four EBITDA is also impacted because of the LFS credit note. The best way to look at it is from a full year basis. From a full year basis, you'll see our EBITDA for the full year, pre and post EBITDA is 11.5%, and last year was 16.8%. There is a INR 40 crore fall in EBITDA. Last year, our full year EBITDA was INR 143 crores. This year it's INR 193 crores. There is a fall of about INR 40 crores.
The stores what we have shut and shutting, these stores' revenue is more likely to move to the larger store which is nearby for a period of time. The cost which was incurring for these stores was more than INR 25 crore. A good chunk of cost comes down when we are shutting these small stores. Eventually, once the business also moves to the larger stores, the EBITDA margins will start improving and start going up. I'm not really very concerned about the EBITDA margins because it's, it's a function of rent and salary which will get corrected once the smaller stores start shutting in Q1. The margin recovery is more likely to happen from Q2.
From Q2 reports, Q2 financials, you'll be able to see a significant increase in our EBITDA margins, which is currently at about 11.5% for the full year. Vis-a-vis we were close to 16.8% in the previous year.
Correct. In FY 2023, I think that was a peak at close to 90% odd.
Correct. We were at about 18%.
But, but we-
We were at about 18, yeah, 18.5%. This EBITDA, which is right now is at its lowest, it cannot go below than that. From Q2 onwards, Q1 we are going to be, like I just mentioned in my speech, in Q1 also we are going to be shutting about 50 small stores. From July onwards, from Q2 onwards, once those small stores are out of the ecosystem, that entire INR 25 crore plus cost reduces in the P&L, and the revenue is also eventually moved to the larger stores. We'll get a full benefit of that flowing to the EBITDA.
Understood. Okay. Okay. Thanks. Thanks, Gautam. Thank you very much.
Yeah.
Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Hi, Gautam. Thanks for the opportunity.
Hi, Devanshu.
sir, we are most likely optimizing our network by 10%-15%, right?
Correct. Correct.
Q4 combined.
Correct.
SSG expectation is turnaround only by end of FY 2027, right?
Correct
Revenue for FY 2027, can we assume it should be like a 10% kind of a dip, 10%-15% kind of a dip? Is this the right way to look at it?
No. We will not de-grow in FY 2027, Devanshu. The idea is to grow.
Mm-hmm
We, you know, a lot of things, a lot of efforts have been happening in correcting the small stores, doing good marketing. We've signed a brand ambassador also. I think all these things are going to bring a positive result for us in FY 2027. There will definitely not be a de-growth. I'm expecting that we will grow. Difficult to give a growth guidance, but we will definitely grow in FY 2027.
Gautam, what I understand, your SSG target that you're giving is a tad conservative, right? Why I'm saying so, suppose you have given two examples, right? Rajasthan and Maharashtra. If you are combining these two stores into one store, right? Your SSG should jump up, right, in that particular cluster. Why are you saying that your SSG will only become positive by year-end?
See.
If we are closing-
No. See, I'll tell you what happens, Devanshu. When we are closing the store, it takes time for the revenue to move. We are also not able to estimate key within which time frame will that revenue move. Right now, from ideology, from a guidance perspective, we feel that, okay, we should turn positive by the middle of next financial year or maybe end the entire year on a positive SSG. For us to define the time frame of how long it will take for that revenue to move from the smaller to the larger store is very difficult.
Okay. Okay.
Yeah.
Gautam, going back to the example, you're saying that two stores combined were having about 500 sq ft- 600 sq ft, which is now.
Mm-hmm
getting converted into one large store of 900 sq ft-1,000 sq ft.
Correct.
So-
Correct
combined, how should we see the revenue and margin profile of that cluster, right?
Yeah, the unit economics don't change, Devanshu. In fact, Sameer had asked the same question.
Yeah.
The unit economics don't change. I'll tell you the reason why. Even if I take my current network of stores, we have stores of all sizes.
Okay.
I have seen, the larger store sizes also give the same unit economics. From a unit economics perspective, if the business is likely to move to the nearby larger store, the unit economics will be the same. In fact, the question is when we are opening another large store in a fresh market of 700 sq ft, it will carry the same unit economics as a 300 sq ft one. See, the existing store which is there and the business is going to move to the larger store, the existing larger store, there will be improvement in revenue.
Yeah
brand-new 700 sq ft store when I open, the unit economics...
Mm-hmm
... is going to be very similar to my 300 sq ft.
No, I get it. The example that you have provided is actually a 900 sq ft- 1,000 sq ft store, right?
Basically, ideally the idea is suppose. See, I got your question. Suppose the 200 sq ft-300 sq ft stores were doing.
Yeah
INR 4 lakh each.
Right.
I've opened a new larger store nearby.
Yeah.
That INR 8 lakhs of business with some incremental business should move to the larger store.
Yeah. Okay. Still, you're saying only INR 4 lakh. Your annual revenue per store is INR 55-
No, no, no. I'm giving you an exam-- No, no. No, no.
Yeah.
I'm just giving you a hypothetical example. See, if two stores are there, they're doing, say, INR 5 lakh each.
Mm-hmm. Okay.
We are opening one large store nearby in that cluster. It's a brand-new store of, say, of 700 sq ft-800 sq ft.
Okay.
Both those stores' revenue should move to the larger store.
Mm-hmm.
In addition to that, because it's a larger store with better experience, it should do a much higher number than what those two stores were combined with also.
Okay. The unit metrics of larger store should actually be better than the
It must be actually much better than two smaller stores because. I'll tell you why. Your employees also, what you're going to be keeping in the 700 sq ft store is going to be less compared to the total employees what you would keep in two small stores.
Fair enough.
From a unit economics perspective, it, the viability and it'll be on par with the 300 sq ft, if not better.
Fair enough. Have you seen this precedent in some of the areas already, or this is just an expectation?
No, no. We have. See, I'll tell you many places where we've opened larger stores, we have seen deep cannibalization in the very small stores nearby. It's very evident that the customer has a better shopping experience in a larger store. See, you practically see, no, when you're walking into a 250 sq ft store, Devanshu.
Mm-hmm.
The new styles, it becomes very difficult to display the new styles. Ideally, as a company, we should have pivoted to larger stores and seen this pivot a lot earlier. Today, that's why we are not repeating the same mistake. By doing 700+ sq ft store, we will not be in this position again after three years or four years.
Okay.
I'm taking a 700+ sq ft store to also keep in mind and accommodate the newer bottom-wear products what I launch in the future.
Understood. Understood, Gautam. Gautam, I also wanted to understand. My understanding suggests that, the core consumer which we had was 25 to 35 years.
Correct
... age women, right?
Correct.
Our intent was to bring in that 20 to 25 years age young women also, right?
Correct.
Now with the product launches that we are doing, right, what are we trying to do with these products? Are we sort of trying to attract the 20 plus age group?
See, what we are trying to do, Devanshu, we want to launch products which are relevant for all age groups.
Okay.
When we launched the Prajakta Koli associated collection.
Yeah
that collection was well purchased across a 20-year-old girl and a 45-year-old woman also. I think Our product strategy is very clear that it should appeal to all age groups. Whatever new products we are developing, it will be not only for the Gen Z, but even for the millennials as well, if not older.
See, we don't want to.
Yeah, go ahead. Sorry. Go ahead.
If we see your numbers, Gautam, right? If we see this quarter's performance also, actually your ASP has increased by about 9% odd.
Mm-hmm.
Volume per store has dipped by about 11%, 12 odd %, right? That is the broad estimate I have come up to. Your volumes are actually dipping, right? That means your core consumer is actually not finding what the relevant products are there.
See, I understand. See, I understand that we are in a volume-led business, right? I mean, see, look, there's no doubt about it that we are in a volume-led business. I'll give you another aspect. When a consumer is shopping apparel, say bottom-wear, the average they buy off a particular average transaction value. See, today our average transaction value, say, is around INR 1,700, INR 1,800. I'm just giving an example.
Okay.
As the ASP increases, the consumer will end up buying off a particular transaction value. Sometimes I'm not saying that we should not be looking at volume. Volume is a very, very important metric in our business.
Mm-hmm.
As ASP increases, it will not also completely mean that the volume growth is keeping up in pace and the consumer bill percentage will keep increasing. Are you understanding? Suppose earlier if a lady used to buy, say, two bottoms of INR 500 each.
Mm-hmm.
Today when she's coming in, she's probably buying INR 1,300 for each bottom.
Right.
She's actually, from an average transaction value perspective, she's actually spent more than what she was spending earlier. See, what I mean to say is, we should keep an eye on volume because ours is a volume-led business. If, because there's a volume degrowth does not mean that there's a fundamental misalignment in the business. Does not necessarily-
So you're-
-mean like that.
-you're saying that your bill counts have actually not dipped to the extent your units per transaction-
Yeah, yeah. My bill counts have actually not fallen. Yeah, exactly. It's not to the volume degrowth what you're calculating. Absolutely.
Okay. You're not losing consumers, it's only that they're purchasing less from you.
Yeah, purchasing less because your ASP also is increasing. Today, see, when you're offering a INR 1,400 product, sometimes the customer says, "Okay, I'll take a INR 1,400 product and maybe not two INR 500." I'm just giving you an example. But look, it still does not mean that we should not look at volume.
Mm-hmm.
At the end of the day, apparel, the entire apparel category volume data is a very important data to track. In this case, I don't think we should give too much emphasis on it. It does not really mean that there's a misalignment in the business. It's not that we are losing customers.
Got it, sir. Thanks for taking my question.
Yeah.
Thank you. The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go ahead.
Hey. Hi. Hi, Gautam. Thanks for the opportunity.
Yeah.
Gautam, I just wanted to understand, this, conceptually, this whole point that if we move to larger store, then SSGs will improve. I'm understanding it will be combination of our existing offerings and on that there'll be a layer of new offering that we'll give. Now, the productivity-wise, the old inventory, which in any case we are seeing that it is not driving SSG. Its efficiency both in inventory terms and per square footage terms should not lead to SSG.
Mm-hmm.
Or higher SSG. The balance is actually whatever the incremental inventory will bring, that is supposed to drive.
No, Tejas. Tejas, I'll explain to you. See, when I move from a 300 sq ft to a 700 sq ft, my inventory is necessarily not increasing at the store. See, I'll tell you what happens. If I want to launch new products, I can very well keep it in the 300 sq ft, kept it in a folded way, one behind the other. Accommodation is not the problem. The problem is the display. When I'm moving from 300 sq ft- 700 sq ft, I'm going to keep the same number of units what I was keeping in a 300 sq ft. It is just that they are displayed a lot more. The product discovery happens very easily when the consumer is walking around the store vis-à-vis the new product lying in a shelf behind another stack.
Got it.
My inventory does not increase. I understand your question. Your value is a valid point, but my inventory does not increase when I'm moving from a 300 sq ft to a 700 sq ft.
Got it. One should assume that at least inventory turn does not get compromised.
Mm-hmm.
Square footage efficiency, how should we think about it?
Square footage efficiency. See, in our business, no, though we are reporting square footage now, for us you should see whether the absolute average per EBO is increasing and what is the SPSF. Sale per square feet, of course, is a very important metric for any brand to track. Because we are a sub-1,000 sq ft brand, the right way of looking at our kind of model would be, okay, how is the average store of a Go Colors store output and throughput in a year, and what is the same-store sales growth? I think these are the two metrics to track for us.
Perfect. The last one, what process led us to narrow down that this is the problem statement? Sorry I logged in late, but, have we kind of seen early success stories that this is actually the solution which can be now scaled and then can be directly scaled?
Yeah. I'll tell you. We've been visiting many stores. In retail you have to be on the shop floor visiting many stores, and we visited many of our stores. Because in the last few quarters and years, we have launched so many products. When we visited our store, we saw the display, when we spoke to the sales executive, we spoke to many customers. We just got a very good sense of what was happening. Second example what we had that when we opened a slightly larger store, there were many stores which did really well, and the new products also did very well. When we connected the dots, we understood where the problem is. That's how we arrived at this conclusion that this is a big factor.
See, the entire bottom-wear market is moving more and more towards value-added products, right? As you keep introducing more value-added products and the shelf space is not enough to display, growth will get hampered, no?
Perfect. Was this not the option or not considered as an option to, let's say, buy a next door store and expand the store? I'm just.
You know, I have done that in many cases, but sometimes it's not available, Tejas. I mean, look, it's. Sometimes we are lucky to get it, sometimes it is very difficult. We're keeping an eye on situations like that. If we are able to either get space behind the store or on the side of the store.
No, I was just thinking from consumer journey and muscle memory perspective that there is some muscle memory has been built on your geo-location, and then suddenly if the store is not there.
It transitions, it transitions very fast because you're not. We are also at the end of the day opening stores in prime location. It's not that the customer will miss it. If you are opening in locations which are weak, then I completely buy your point. I think in retail any which ways, even if you're not having the square feet transition what we are having, brands keep moving from location to location. The importance for discovery is that it should be a prime location.
Got it. Got it. Thanks and all the best.
Thank you, Tejas.
Thank you. The next question is from the line of Dhananjay Jain from JM Financial. Please go ahead.
Hi, sir. Thanks for taking my question. I just wanted to understand how has been throughput of these larger stores compared to others, the smaller size stores, and how has been customer experience you are hearing? That's all.
No, I mean, look, once these larger stores have opened, we've also visited, we've also seen that the customer is reacting to it very differently. We've introduced a methodology where there is more self shopping. Typically in our smaller store, what used to happen was when a customer used to enter, she used to get assisted by a sales girl. It's very difficult to shop in a small Go Colors store by yourself because browsing is very difficult. The sales girl has to take out the folded garments and then show the product to the consumer. In the 700+ sq ft, there is an element of self browsing. When there's an element of self browsing, the self-discovery takes place. From what we have spoken to consumers, the feedback has been very positive. We've also visited the stores.
We've also seen that it's made a very big difference.
Sir, the participant has left the queue. We'll move on to the next question, which is from the line of Aanchal Jalan from Lotus Wealth. Please go ahead.
Hello. Thank you for taking my question.
Yeah. Hi.
Sir, the company has built around a niche in women's bottom wear, right? Competitors like Nykaa that are multi-brand platforms are growing very strong with wider offerings and customer reach.
Right.
How does the management plan to defend and grow their market share in the coming years? What is your take on this? Can you please give some roadmap around it?
See, I think the main objective of the company in the midterm and long term is to keep going deeper in bottom wear because I still feel. I know we had a tough year, but I still feel the bottom wear category is huge and there is a very, very big growth map for us left for in bottom wear. Having said that, to your question about other categories, we did a pilot with top wear and little bit of men's wear as an all-day wear category pilot we did. We've opened 10 stores, and we've seen that the unit economics are very, very, positive and encouraging. As the bottom wear business keeps growing, if the pilot also does well and on the merit of the pilot, we'll decide the future course of that growth as well.
I think as a company, we are trying out different things, like you mentioned the Nykaa example.
Okay, sir. Basically the company is ready to cater to other projects also, right? If there's good opportunity.
No, no, which we are doing right now through doing this pilot.
Yes.
It's not because we are any less bullish on bottom wear. We still feel that there's a lot of growth left here in this niche itself.
Okay, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Rusmik Oza from 9 Rays EquiResearch. Please go ahead.
Yeah. Am I audible?
Yeah, yeah. Please go ahead.
Yes, please.
Yeah. Thanks for the question. Sir, a small observation on numbers. FY 2025, 2026 and last two quarters also our gross margins has been steady at 63%.
Right.
The EBITDA margin in FY 2025, which was 32%, has come down to 28% in FY 2026, and especially in the last two quarters, it's averaging 25%.
Right.
Similarly, if I observe your net margin, which was 11% in FY 2025, goes down to 7% in FY 2026.
Right.
Especially it's just been 4% in the last two quarters. I just want to understand, based on whatever you've spoken in your last, you know, in this call, changing the strategy and, you know, the store format and so and so, by when you feel you could go back to that 7%-11% net margin range going forward? That's my first question.
See, definitely we will see margin recovery from quarter 2. I'm quite. In quarter 1, margins will continue to be a little weak because we are closing above 50 sq ft odd small stores in quarter 1. Quarter 2 onwards, we should see a good recovery in margins. Difficult to give a guidance on how much percentage we will end up with, but there will be a good decent recovery from quarter 2.
Okay. Okay. Okay. In absolute figure also, if I'm seeing, two quarters back, previous four quarters, you had at least a average net profit of around INR 20 crores per quarter, which is now the run rate has come down to INR 7 crores, INR 8 crores in the last two quarters.
Right.
You know, barring Q1, if you're expecting Q2 onwards recovery, do you.
Right.
Do you envisage it to going back to around that INR 15 crores-INR 20 crores in the second half of FY 2027?
Difficult to give a such a such a narrowed guidance. Very difficult to give a guidance. From where we are today, our margins are right now currently quite weak, right? From what we have delivered. From here, it's going to significantly improve. From a guidance perspective, it'll be hard to guide on how much it will become.
Okay.
I can tell you this, that it'll be from quarter 2 and not from quarter 1.
Okay. Okay, thanks. Thanks for the answer. Yeah, appreciate.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. Thank you and over to you, sir.
I would like to thank everyone for taking part in this call. I hope we've answered all your questions. We are undertaking a comprehensive transformation in our store format strategy, our product portfolio, our brand investment, and our new business initiatives. This transformation will take time to fully manifest into our financial numbers, but the early signs are encouraging. If you need more information, please feel free to connect to Mr. Devendra Verma from SGA, our Investor Relations Advisors. Thank you.
Thank you, members of the management. Ladies and gentlemen, on behalf of Go Fashion (India) Limited, that concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you.