Hi. Thanks, Dennis.

Thanks, Manav. Good afternoon.

Hello, welcome everyone, and thank you for joining us on the Arvind Fashions Limited's earnings conference call for the first quarter ended 30th June 2026. I am joined here today by Kulin Lalbhai, Vice Chairman and Non-Executive Director, and Amisha Jain, Managing Director and CEO.

Please note that results, press release, and earnings presentation had been mailed across to you yesterday, and these are also available on our website, www.arvindfashions.com. I hope you had the opportunity to browse through the highlights of the performance.

We will commence the call with Kulin providing his key strategic thoughts on our first quarter's performance. Post that, Amisha will cover the financial performance and business highlights.

At the end of the management discussion, we will have a Q&A session. Before we start, I would like to remind you that some of the statements made or discussed on this call today may be forward-looking in nature and must be viewed in conjunction with the risk and uncertainties that we face.

A detailed statement of these risks is available in this quarter's earnings presentation. The company does not undertake to update these forward -looking statements publicly.

With that said, I would now turn the call over to Kulin to share his views. Thank you, and over to you, Kulin.

Thanks, Girdhar. Very good afternoon to all of you, and thank you for joining us for the Q1 results.

Building on our strong FY26 performance, we have started FY27 with another excellent quarter. Our sustained focus on strengthening the business across brands, channels, and execution continues to deliver strong outcomes.

I am pleased to share that we recorded a 15.5% revenue growth and a 19.6% EBITDA growth during the quarter. The demand environment remains stable despite the West Asia conflict.

The investments we have made over the past few years in strengthening our brand platforms have improved the resilience of our business even in uncertain environments like now. Our continued investments in brands, people, and retail execution enabled us to deliver a 11.6% like-to-like retail growth and 38% growth in our direct-to-consumer online business.

Looking ahead, we remain watchful of geopolitical developments and inflationary pressures. We will continue to manage cost and pricing proactively while staying committed to our long-term growth agenda.

Our priorities remain unchanged: investing in technology and AI to enhance the customer experience, accelerating brand investments, expanding our retail footprint, and continuing to scale our direct-to-consumer business. With that, I now hand it over to Amisha Jain, who will take you through the financial performance in greater detail.

Thanks, Kulin. Good afternoon, everyone, and a warm welcome to Arvind Fashions' investor call for Q1 FY27.

The year has started well with a strong performance. Revenue growth is at 15.5% and our EBITDA margin has expanded by 44 basis points.

All our brands have performed to our expectations. Continuing the trajectory we set in FY26, all our drivers of performance are firing and have helped us deliver a very strong Q1.

Despite inflationary pressures resulting from West Asia conflict, a hike in wages across multiple states, and adverse forex, we continue to do well. Let me call out three key items before I get into the details.

First, our D2C engine continues to grow. Direct channels now account for 62% of our sales, up 380 basis points year-on-year.

Retail grew by 18% and online B2C grew by 38% in Q1. This is a strategic shift.

We are building our business around channels where we own the customer relationship, the brand experience, and the margin structure. Second, profitability improvement is structural.

Full-price sell-through is up and discounting is down, resulting in a gross margin improvement of approximately 90 basis points to 56.7%. Alongside this, we have consciously increased our investment in marketing by approximately 50 basis points year-on-year because we believe demand generation and brand building fuel sustainable long-term growth.

Even as we invest more behind our brands, our focus on cost discipline has ensured that EBITDA margins have expanded, which speaks to the operating leverage in the business. Third, inventory and working capital.

I would like to highlight that our bet on providing additional inventory in US Polo is paying off, and this brand is consistently delivering a very strong performance. In addition to this, there was a change in PVH global sourcing in order to mitigate geopolitical risk.

Having said that, our inventory freshness is at an all-time high, net working capital days are stable, and inventory levels are in line with the changing channel mix towards direct. Now coming to the quarter's performance in detail: Q1 revenue grew 15.5% with net sales value at ₹1,279 crore versus ₹1,107 crore in the same quarter last year.

EBITDA, excluding other income, was ₹160 crore versus ₹136 crore last year, a 19.6% growth over the last year in absolute terms with a 44 basis points margin improvement. PAT came in at about ₹10 crore versus 13 in Q1 last year.

The decline is attributable to lower other income in this quarter as compared to Q1 last year. The underlying operating performance has been strong.

Coming to channel performance: we delivered a robust like-for-like of 11.6% in retail, with an overall retail growing at 18%. Online B2C grew over 38%, taking its share of revenue to 18% from 15 a year ago.

This is fully in line with our intent to pivot away from B2B online and towards direct-to-consumer channels. Wholesale and department stores delivered strong double-digit secondary sales growth as well, and we added 23 EBOs during the quarter.

On brand performance: US Polo Association led the pack, delivering exceptional growth this quarter, and this is on a high base in Q1 in FY26. The brand continues to demonstrate strong momentum across channels and categories.

I would like to call out that our PVH brands, both Tommy Hilfiger and Calvin Klein, are back on growth after absorbing the impact of recent GST changes on premium apparel. Both brands have delivered to our expectations, and we remain confident in the underlying consumer demand.

Flying Machine has also clocked double-digit growth since our acquisition of the residual stake. The brand is now live across multiple e-com platforms, and we are on track to launch the .com and app for the Flying Machine brand in H2 of this fiscal year.

We continue to build our brand proposition around Gen Z consumers, ensuring that we're providing for both men and women more tailored to an on-trend expression with denim at its core. Arrow continues to do well as part of our wholesale business, and our focus this year to strengthen the channels for the brand.

Strategic execution update: I also want to highlight that we have already initiated concrete actions towards our strategic priorities. The consumer work we undertook is complete.

We now have a clear roadmap of the market opportunity and the consumer demand landscape, and this is shaping our portfolio and our where-to-play choices going forward. Our investments in analytics, technology, and AI are starting to bear very early results.

We have mapped out the charter for the balance of the year. These investments will help us deliver deeper consumer analytics and bring meaningful efficiencies into back-end processes.

The organization restructuring is now complete. We have reorganized into a business unit structure for the sharper accountability and speed, while centralizing consumer brand marketing, digital, and data and AI initiatives to build leverage capabilities across the portfolio.

Turning to the macro environment: the continuing West Asia conflict remains a watch item for us. It has the potential to impact supply lines, raw material, fuel prices, and forex rates.

We're taking active steps to mitigate and protect our performance, including very tight control on costs and a possible revision of product prices, if necessary. Looking ahead, with a unifying goal of one team, one mission, driving cohesiveness and collaboration across Arvind Fashions, we are well placed to embark on the next phase of growth.

We are confident of sustaining mid-double-digit revenue growth in the balance of the year with 30 to 40 basis points of EBITDA margin expansion. Thank you so much.

We're now happy to take your questions.

Good afternoon, team, and congrats for a great set of numbers. I have a couple of questions.

My first question is on the D2C part of the business—

Kaustubh, your voice is not clear. If you can be closer to the mic?

Just a second. Is it okay now?

Better.

Hello? Yeah.

Yeah. Congrats for a great set of numbers.

I have a couple of questions. First question is on D2—D2C part of the business.

This quarter again we have seen strong growth in the business, and the—from mix perspective also this business contribution is improving quarter-on-quarter basis. I want to understand what is really driving, this growth on the D2C side, and also if you can help us understand what is the pricing strategy for your D2C, part of the business.

Since you are alluding to the fact that you are selling more of full-price products in the market, on D2C side, how are you pricing your products or whether there is a different portfolio, some more light on, your D2C part of the business?

Kaustubh, thanks for your question. If I understand your question correctly, you are referring to the entire direct-to-consumer business, which is both retail and online.

Is that right?

No, specifically online. Online part of the business.

Okay. Perfect.

Thanks for the question, Kaustubh. As we've always talked about, I think our fundamental strategy is to go direct to consumer both from an offline and an online point of view.

With a key few things that we believe that driving closer to consumer will allow us to actually do a couple of things. One is from a brand portfolio point of view, it allows us to actually understand the consumer demand a lot better.

We're able to react with the trends. We're actually able to drive pricing much closely and ensure that overall the offering at the same time the brand experience is in line, right?

When we start talking about online, the continuous growth that we're clocking—in this quarter we clocked at about 38%—the things that are driving it is a better understanding of the overall consumer demand, understanding the trends, lining up the product line accordingly. We're also ensuring that the overall product mix is catering to the relevant channels, right?

Consumers have a certain profile by channel, and we are ensuring that we're offering the right product on the right channels. That again kind of drives growth.

The last is of course for us, which is ensuring that we're communicating to consumers through the comms that are relevant from a marketing point of view, and that allows us again from a consumer analytics point of view to do a much sharper job as well. With all of this, clocking the growth that we're clocking is relatively, I would say, more structural and the way to go from a future point of view as well.

How are you competing with other brands who are available on the online platform? What would be your pricing strategy to compete with them if you can explain that?

Sure.

I think as we continue to look at the portfolio, there is always been pressure and there's always been other brands on the online platform, and there are a lot of labels that kind of sell over there as well. A couple of things that point to a strong growth for our brand is that one is that our offering from a brand point of view is directly speaking to the consumers that are there, right?

We are, like I mentioned earlier as well, we're able to bring the right product to the platform. You're right, we're also make sure that based on the location of our stores or online, we make sure that our product range is more relevant, and hence there is a slight nuance to the product range that we might carry, the kind of width we carry, and the depth we carry both across online and offline.

We also ensure the pricing is right pricing, which is the ensuring right product-market fit brand by brand, right? It's not ad hoc or it's not a flat priced thought process.

If you look at our history as well, our overall discounting is coming down both from an offline and online point of view, and that will also continue. It's not a pricing-led growth or a discount-led growth either.

Right. If you can help me understand what would be our full-price product sales as a percentage of overall sales for this quarter and what was it?

Because since you have been emphasizing on that factor that your full-price sales have been higher for last couple of quarters, if you can help us understand of the overall revenue mix, what could be the full-price sales mix for us in this quarter, what was it last quarter? That would be really helpful.

I think the only thing I can highlight here is that if you look at our gross margin and the gain of 90 basis points, that is reflective of couple of things, right? One is in direction of premiumization, ensuring the right product mix.

It is also pointing towards lower discounting. If you look at our inventory health also, it's pointing towards much higher freshness.

All in all, this is an indicator of the fact that our end-to-end growth in our GP is coming predominantly from FPSC and reduction of discounts.

Right, thanks. One last question if I can.

Most of our brands are doing extremely well in terms of LTL, like-to-like growth. In fact, Flying Machine for last two quarters now it has got into the double-digit growth trajectory.

This quarter, we have seen overall our like-to-like growth at 11.6%, it has improved if you look into last four-quarter performance. Considering the fact that our top brands are doing extremely well, we have seen good recovery in Flying Machine, should we expect this double-digit growth momentum to sustain or still you expect our like-to-like growth to remain in that broader range of 8% to 10%?

I think as we've also guided earlier, what we believe is that we're confident of our overall 12% to 15% growth this year. As you've seen our performance at an overall level at 15% this year, we are confident of close to a mid-double-digit growth as well.

In that, we believe that our like-to-like and inorganic, which is coming through expansion of stores, etc., we expect it to be a 50-50. Obviously, it will also be a function of the festive calendar and as per the season as well.

I think from a guidance point of view and a direction point of view, I think we should assume that we will be in the zone of 50-50.

Thank you, and all the best for your quarters ahead. I will get back into the queue.

Thank you.

Thank you.

Hi, Amisha. Thanks for the commentary and congratulations on the wonderful set of results.

If you could delve a little deeper into the organization structure changes that you were highlighting, could you share what exactly are you changing and what milestones are you tracking, and what are the end outcome that you expect out of these org structure changes, please? That's only one question.

Sure, thank you so much for asking that. This, as we have discussed last quarter as well, there are a couple of changes that we have done.

One is we've kind of restructured towards a more business unit structure. Earlier, we used to be a brand product organization by brand, but our central revenue function was consolidated for the three brands.

We've actually moved our revenue function into our brands. Our brands are now end-to-end, and our brand leaders are end-to-end owners and drivers of from a overall ownership from our top line and a balance sheet point of view.

That's one part of it. This will obviously lead to better accountability.

At the same time, we also believe that it allows each of these brands to thrive from just the sheer expression from a retail or a department store or multi-brand point of view or an online point of view. That's one part of it, while we continue to be in a structure where sourcing is centralized and obviously our enabling functions are as well, right?

One other change that we have done and as I was highlighting earlier is that we have now moved the brand function, which we are calling as the more centralized data, consumer intelligence, more marketing efficiency-led functions, and also our digital functions, these are centralized at this point, right? This is to ensure that we're able to drive leverage across all our brands, both our Tommy, CK and our US Polo, Flying Machine, and Arrow, and across our other categories as well.

That's the construct we are in where we are in a business unit structure and along with that, we have enabling functions supported by this additional central function as I described, which is to drive analytics, technology, AI, marketing excellence, content, and digital. Does that help answer your question?

Essentially you are saying is that it gives greater emphasis on these functions like data and AI at central level so that you can have more oversight, while at the same time putting more accountability on the leaders to drive sales growth. That's effectively what...

Absolutely. Absolutely.

I would also say that centrally while we are driving this, this allows us for leveraging some of these deep central capabilities across the board as well, right? Having this centrally, it allows us to also drive some of the analytics pieces across some of our enabling functions as well.

It gives us a much greater leverage across the board.

Understood. Where are you in this journey and what is the end outcome that as shareholders we should expect?

Sure.

In terms of restructuring, we have concluded our restructuring, and we are already organized. Our central function is also in shape in terms of the marketing, digital, data, and AI, like I said.

Now what we have done is we've also identified initiatives around data, AI, which are both going to drive efficiency and effectiveness across our value chain. Some of those initiatives are underway as well, and we are starting to see some early results.

Other thing that we've started off is work around consumer analytics. Actually, we've been able to see some early fruits of reduced discounts, for example, could be one part of it where optimization of pricing, etc.

Some of these things we're driving centrally as well. I think what I would only say, since you asked the end result, this is going to be a journey for us, right?

We are now in a new flying formation. We have a few initiatives ahead of us, and we've carved out our initiatives for the full year.

We should continue to see efficiencies. We've also invested towards hiring the right talent in some of these more deep capability areas as well, right?

We continue to do that.

Sure, Amisha. Thanks for this, and all the best.

Thank you.

Hi, team. Good afternoon.

Congratulations on a good set of numbers. There is a sudden jump in SSG during this quarter, what exactly is driving—

Avinash, can you be a little louder?

Can you hear me, sir? Is it any better now?

This is better.

What I'm trying to see is, in the earlier question also, SSG jump has been from 7%-8% to it went to 12%. What is driving this additional growth?

Is it any one particular brand or, in general, the overall portfolio is firing up?

I think if you were to look at our L4L growth, some of it is to do with how the overall demand landscape is right now, and it is consistently what we're seeing across the board. What we are also seeing is that we did couple of things.

Obviously, PVH is back on growth, but also the other part of it is that in US Polo, we did add a little bit of inventory, which is also capturing a lot more demand. I think our L4L growth is both volume and price led.

Apart from that, I will also want to just kind of highlight some of the fundamental stuff that we're doing, Avinash. From a retail point of view, we have been on a journey of driving product innovation and premiumization, right?

That continues. The second is our enhanced focus on sharp retail execution, and that is something we've been speaking about that we will double down and continue to drive brand experience, a better experience, better service levels at our stores, and that's also leading to better conversions, and ensuring that we have the right freshness and inventory at our stores.

These are the couple of things that are helping us drive the growth as well.

Okay. Can this be taken as an indication that you are gaining market share in this market?

Absolutely. I think and we are seeing some of those indicators when we compare ourselves in a more multi-brand environment.

We are gaining share. The other thing that is also happening is with our continued investment in marketing on an ongoing basis, our brands are getting a lift overall as well.

Okay. Understood.

The second question is regarding the inventory only. If I take inventory and receivables both put together, Y-o-Y they were up by somewhere around ₹350 crore.

However, the revenue growth is up by only ₹170 crore. What explains this additional delta in the inventory?

I'm taking both inventory and receivables. I understand the channel mix.

Avinash, the right way to look at is sequential data for this metric, because if you see our sequential data, both our inventory has gone up and our receivable has gone down, which is what we had also indicated in our last call. You will recollect that changing channel mix actually brings inventory in our books, and receivable obviously goes down because of the direct nature of the business.

I think what we explained last time and then again highlighting that you look at this data sequentially, there's a 3 days increase in inventory and a 2 days reduction in receivables. Going ahead, couple of points I want to highlight.

There is a impact of changing channel mix. That Amisha and we spoke about almost a 400 basis point change in channel mix, which is resulting in a 6 days of additional inventory in our books.

Beyond that, Amisha also spoke about some supply chain challenges from the PVH global side, and we had to inward early. These two put together along with the footwear restocking.

You would recollect that last year there was this whole BIS issue and availability of footwear was a challenge, which has now been resolved. All these three put together explains the inventory gap.

Going ahead sequentially, we'd like to just confirm again that they will both balance each other out.

If I look at it, I understand you are currently building upon some kind of safety net given the supply chain challenges, sir. What would this be on a steady-state basis?

Say suppose 2 years down the line or 3 years down the line, if I look at it, how should this inventory be turning out?

Yeah. Avinash, our current inventory turn is around 3.5, and yes, we are working on various things and we believe that with the current channel mix and whatever our aspirations are, we are hoping that in about 18 to 24 months, this should go back to about 3.7, 3.8.

Okay. Understood.

One small question, if I may ask. Have you taken any pricing interventions for the rising RM price and wage hike?

I'll take that. As of now, as we explained in our deck also, long inventory cycle protected us from taking any immediate steps, but obviously, we are very watchful.

Any fresh buys, if things don't normalize soon enough, our commitments for SS '27 are likely to be done over the next 45-60 days. If the prices continue as what they are today, we will be forced to take some kind of a pricing correction.

Okay. Understood.

I'll join the queue. Thank you, sir.

Avinash, just to add to that, I think at this point in time, both from a cost control point of view, we are quite confident about our overall EBITDA expansion. Only in case we feel that there is a certain pressure, will we drive minimal price increase.

At this point in time, we continue to watch.

Okay. My question is basically coming from is there any pricing benefit that you've got because of the lower inventory, which led to this 90 bps of margin expansion in this quarter?

Could you say that again, please? I didn't catch the last part.

Is there— No,

this quarter, there is a 90 bps of gross margin expansion, right? Apart from lower discounting, did you also benefit from the inventory stock filling that you have done in the last quarter?

That's what I'm trying to figure out. No,

it's not like we've had to reprice or anything because of the COGS pressure, if that's what you're asking. Like I have said earlier as well, our movement of GP is predominantly driven by gain in COGS, lower discounting, and overall channel mix shift towards direct to consumer.

A move to direct to consumer allows us to control our product proposition, our pricing, and allows us to optimize on our discounts as well, leading to much better sellouts also. I think all in all, GP expansion and also our like-for-like is coming from the same place.

That answers my question. Wish you all the best.

Thank you.

Thank you.

Hi, team. Congratulations on a good set of numbers.

Amisha, basically my first question is towards the demand side. Any take on how has been the urban consumer demand sentiment?

You also mentioned about some consumer survey in your opening remarks. Can you highlight what are the broad trends in the industry and what are the actionables for Arvind Fashions from that survey, if you can just briefly touch upon that?

Sure, that's a great question. Thank you so much.

I think at a very broad level, I will say that our consumer demand overall holds stable for our portfolio, and you can see that in our numbers, right? We've grown at a portfolio level at about 15.5%.

When I step back to the work that we did over the period of two quarters and to build out what the consumer demand landscape looks like, where the opportunities are, the one thing that I will point is that the larger direction that it points to is that the offtake of the casual lifestyle category is really fast. What we're seeing is that our brands are very well positioned in that space.

When you look at our brands with Flying Machine sitting, as we are repivoting it to a more Gen Z denim-oriented unisex brand, which is catering to both men and women, it caters to a consumer segment which is growing really fast and, again, in the casual lifestyle space. US Polo is actually really well positioned as a large tentpole brand, which is now sort of catering to on one end at a very deep level a casual lifestyle with its polos and shirts that actually caters more towards the casual work as well, at the same time towards the socializing moment also.

There I think US Polo actually serves really well across the portfolio. On top of that, from a pricing point of view and premiumization point of view, sits Tommy Hilfiger.

There, again, our portfolio of casual lifestyle products, which is both the polos, shirts, and bottom wear, it continues to do really well. Then on top of that is the CK portfolio.

Calvin Klein is again catering to a much younger audience, which is more from a high-net-worth point of view. This is consumers sitting above a household income of ₹50 lakhs and above.

Now when I look at all of this, right, what our consumer work is pointing to that our brands are actually uniquely positioned and sitting in very, very sharp segments with a pretty deep penetration and an ability to actually keep taking on market share, right? This is allowing us to actually drive much faster growth both in online and offline, and this is fueling what you're seeing overall from a growth momentum point of view.

That's this part of the portfolio. Our other categories like footwear, etc., given the kind of potential US Polo as a brand has and the halo it has, US Polo footwear actually caters to the on-trend sneaker culture also, and that we are continuing to see do really well in this all-day comfort category of footwear products also.

Lastly, coming to workwear, we are actually working and pivoting Arrow towards more catering to the modern professional of today. As that brand, with its strength of product innovation that it has continued to have for many decades now, we believe that Arrow is actually well poised to take on the workwear category, which is more evolving towards what a modern professional seeks, right?

I would say that all in all, our portfolio is actually sitting at the center of where the future demand lies, and we are expecting that this will continue to clock sort of the mid-double-digit growth for us.

Got it. My second question will be around something which you mentioned last time that for US Polo specifically, we have been opening higher size stores, we want to showcase our product portfolio in a better way.

Just wanted to check how has been the consumer response there. Are we seeing a better throughput?

How has been the consumer's feedback for those higher size stores?

I think US Polo, the journey of US Polo will continue to be what we spoke about last time as well, that we will continue to increase the store square feet and upsize our stores. As we go through renovation and as we go through upsizing, we do believe that the potential for US Polo only is going to keep increasing, because like you rightly pointed out, last time we did talk about the fact that for us now we're in a place where we believe we need more space to be able to do justice to the brand in terms of bringing the brand to life and in its entirety, right?

With all the other expansion, the kind of denim portfolio that it carries, the shirts and the polos, also what we have in US Polo Sport, right? Beyond that, we have categories like innerwear, etc., as well also.

As we look at this, we do want to keep expanding and keep driving upsizing. Now the stores that we have opened, which are larger in size, continue to clock PSFPDs in the same zone as they used to clock earlier, which means with every increase in square footage, we are able to actually scale revenue much faster.

Our entire endeavor is to now make sure that we are able to upsize these stores. Hope that answers your question.

That's encouraging. One last question if I may squeeze in.

Over last 2 years, what we've been seeing is that all the brands are starting EOSS a bit early. Any take on the competitive intensity?

Because demand has been pretty much rough, we have been doing good. Since last 2 years, I am seeing that the EOSS has been starting a bit early.

Any take on the competition?

I can't comment on why they are, driving EOSS early. We're also seeing some mid-market, sort of mid mid-season discounting, etc., as well.

What I will also highlight is the fact that overall growth for our brands, has been actually pretty strong in terms of the secondary sales even if we were to look at department stores and MBOs as well, right? The like-for-like numbers for our retail are in front of you.

When I look at it for us, I can only comment on the fact that for us, for EOSS is only relevant in the few weeks that we believe are required from a liquidation point of view. We obviously don't partake into these, based on what some of the competition moves are.

At the end of the day, these are decisions that brands take based on what their liquidation requirements are. Overall for us, we have continued to clock very solid growth both in our department stores and MBOs, and that's actually an indicator of the fact that we're not only gaining market share, but also, doing much better than the other parts of the portfolio that these platforms have.

Okay. Thanks for that detailed answer.

Thanks for the opportunity, and all the best for the future quarters. Thank you.

great set of numbers, and thank you for the opportunity. I just want a bit of understanding with regards to both our brands, Flying Machine and Arrow.

Flying Machine, you guys have managed to turn it around pretty well last two, three quarters. On the ground, what is really driving?

Is it we have managed to do a lot of product-level changes or are we going aggressive on the store side? That's my first question.

Secondly, on Arrow, what will be the outlook for next 2-3 years? Thank you.

Yeah. No, thanks for asking that.

I'll I'll go, talk about both the brands one by one. As you pointed out, Flying Machine has been on a journey where we've kind of looked at the brand.

I was speaking about the consumer demand landscape sometime back, and what we've identified is a very unique positioning for Flying Machine. We also have understood the fact that the equity, the brand equity and the strength of this equity is actually quite solid.

As we've kind of gone through over the last quarters, we've also we've gone in and sharply repositioned the brand as a denim-oriented brand, which is focusing on the youth consumer, bringing more on-trend products to the market, and at the same time catering to both men and women, right? That that is the direction of for this brand.

In terms of product range, we have brought in a more revised line, and that new product range, which is catering to this consumer, catering towards this pivot that I was just spoke of, again going back to its core and its core equity of denim, is showing really solid green shoots. You can also see that, we went in and took our stake back of Flying Machine as well.

Ever since, we've been able to also scale it on digital platforms. Upcoming H2 will also see the launch of the .com as well.

The point I'm trying to make is that, sharp positioning of the brand, right-sized product portfolio pivoted towards the positioning of the brand, at the same time launching it across platforms which are relevant to that consumer, and for us for this consumer, our digital platform is critical. As we do that, we will start actually investing behind Flying Machine in terms of from a brand marketing point of view, again content that is relevant from this consumer profile point of view, right?

All in all, we believe that this will continue to hit home. We are quite bullish about the brand and definitely seeing positive double-digit traction over there.

That's on Flying Machine. Sorry?

On a store network, how is it looking like now? On how many EBOs would it have now, Flying Machine?

Look in terms of the size of total portfolio, obviously our largest portfolio of stores is US Polo and the next is Arrow, and Flying Machine is in that journey smaller than the two. There is a significant headroom of growth for Flying Machine.

The position we have taken is that we will be opening Flying Machine stores where it is relevant and start with expanding and probably putting the right-sized boxes with the right retail identity where the consumer profile is there. We have this concept of center of culture, and for Flying Machine, we want to make sure that we are opening stores in the heart.

I'll give you an example, a classic example would be a more youth-oriented, university-oriented profile to kind of get the brand more grounded and going. There is a direction on retail that we will take.

Flying Machine does have a certain fleet, and we will be kind of going through and sifting through this fleet as well and ensuring that we're growing this fleet, re-looking at the identity, etc., right? There is a journey to be had on Flying Machine.

Right. Thank you for that.

What would be the outlook for Arrow as I asked, both in growth and margin level, yeah? Yeah.

Arrow for us is a very, very unique brand in our portfolio. Like I said earlier, we have a portfolio of very strong casual wear brands, which sit across price points, across consumer profiles, right?

The one brand that caters to the consumer, which is to the modern professional of today in our portfolio is Arrow. This brand is going through that pivot.

If you look at Arrow from a wholesale business point of view, it continues to deliver. Now our focus is to continue to drive and strengthen it from a direct channel point of view.

What you will see is more focus on right store formats, driving renovations, ensuring that we have the right product proposition and merchandising mix at retail. Once we are kind of satisfied with that, you will see us start pushing towards marketing at that point in time, right?

At this point in time, we are continuing to drive Arrow towards efficiency. That will be the key driver, which will also another focus is to make sure that we start pushing it from a profitability point of view as well.

Right. I had just one more question.

What would be the right way to look at the business as a whole at PAT level, because I understand post-Ind AS accounting tends to compress a lot of our profits by front-loading our lease rental costs, etc., right? When can we see a bit more expansion on our bottom line, especially since we have been doing very good on EBITDA level, yeah?

It's about 4% to 5% depending on which quarter you're looking. The difference between pre and post will be between 4%

to 5%. Oh.

Q1 tends to be a bit compressed, right,

compared to— Q1 for traditionally, Q1 is a bit compressed for this business, this kind of business.

Okay. Thank you, sir.

That answers my question.

Hello, am I audible?

Yes. Hi, Rutu.

Hi, sir. Congratulations on good set of numbers.

I actually wanted to understand about the store addition. The net store addition that was I think around four to five stores in this quarter.

Which kind of stores are we focusing on and what are the regions? Are we planning in Tier 2 or Tier 3 cities?

What is the strategy behind there?

Sure. I think overall as we've quoted earlier as well, we continue to drive store additions and from an annual point of view, we're looking at 1.5 lakh net square feet addition this year.

From a sheer management of the portfolio point of view, the way we look at store additions, at the same time, we look at about a 5-odd percent closing based on which are the catchments, things are not working, or is the demand shifting, etc., right? That's a journey of general retail.

Now in terms of where we are opening our stores, all our brands are actually at a very different point in their journey. US Polo has the largest network, and it is actually deeply penetrated over about 150 cities.

We will continue to drive US Polo more from an expansion in the same catchments, but at the same time upsizing the stores. We are also continuing to see all demand catchments that come up, which are relevant, and we expand the brand accordingly.

The way we will look at Flying Machine, as I had mentioned in the earlier question, is that we want to make sure that it is at the center of culture with the right consumer profile. This is a portfolio that we will again keep driving from a Tier 1 point of view, but at the same time ensuring that within those cities as well, we are continuing to drive into catchments which are relevant to the consumer, right?

Now same way, I think for Arrow, Arrow is again present in more than about 80, 90 cities. Again, this brand has a potential to grow further.

We're also re-looking at the box size and upsizing as well. Tommy and CK both are on a premium end of the brand, and we look at only the top end of the malls, which is the Grade A malls is where we look for these brands to go.

Now as you can see, the point I'm trying to make is that Tier 2, Tier 3 obviously we will cater to the cities to your question with the right store profile and ensuring that our relevant brands are over there. Having said that, Rutu, I want to also highlight the fact that there are parts of the market which have demand for our brands, and we end up accessing that demand through our direct-to-consumer channels, which are both our marketplace and the new .coms that we are going to launch, right?

With this, it allows us to give consumers the access to our brands, right? That's why we have a very holistic channel strategy.

Our MBOs also continue to drive that demand in places where we believe that we don't want to expand with our store networks. Does that help answer your question?

Just a follow-up on this. The store closures that we have gross addition is 23 and the net addition that means approx—

Can you hear me now?

Yes.

Yeah. I was asking that the store that we closed in this quarter, is it mainly because of the low-performing store or did we upgrade the store and that's why it's the closing and addition of store that way?

Yeah. It is generally going to be a mix of both.

As the country evolves, the one thing we've seen, and this is a standard retail journey, right, that there are demand catchments that start and then they thrive, and then there are some parts which start showing maybe an average or subpar potential. We do believe it is important to prune that more from a health of the fleet point of view.

We always keep monitoring how the demand shifts, right? Hence, you will always see a 5%-ish closure.

Now it's a matter of timing for this quarter. Like I said, I think for us the full fiscal year, we are looking to expand by about 1.5 lakh net square feet.

Understood. Thank you so much and all the best for the future quarters.

Hi, Amisha. Congratulations on a great set of numbers.

Ma'am, I wanted to understand you have sort of talked about your brand positioning being at points where the consumer demand is very robust. As an industry, we are also seeing that segments like fast fashion and youth fashion are sort of gaining very strong momentum across the country.

Wanted to check what is your thought process on these emerging spaces and whether you would also at some point in time play in these segments?

I think for us when you look at our brands and what define our brands is the legacy of these brands, the strength and the core positioning of the brands. I would like to parse out this thought process of fast fashion a little bit, because as a brand, the couple of things that we look to drive is what is relevant to the consumers and making sure that that is available to the consumer at the right time.

Hence, the two things we will ensure we drive is being on trend. At the same time, the one effort that is ongoing for us is to make sure that we're getting closer to market.

That is a journey for us both from our overall brand portfolio point of view. We want to make sure that we are running our lines more closer to market to ensure that we're able to capture the demand correctly, right?

If the silhouettes are shifting, if the patterns are shifting, if there is a slight shift, for example, linen is in real huge demand, and we made sure that that is available to our consumers across our brands with the right product and a really great quality product, right? Some of these things we captured demand more from a closer to market point of view, and that is how we will continue to cater to the market.

The reason I'm not going to call this fast fashion is because fast fashion also alludes to having extremely high fashion side of the portfolio, which actually stays for a very short period of time, which is less about a brand and a brand positioning, but more capturing a certain silhouette. I would want us to kind of have this part very clear.

From a brand point of view, we want to make sure that we are honing in and centralizing from a product innovation point of view, ensuring that we are capturing the DNA of the brand, at the same time the demand that is available in the market. As we do that, from a supply chain point of view, we are looking at building closer-to-market lines, and that is to make sure that we are more closer to the consumer demand.

Hopefully, that answers your question.

Yes, it does, Amisha. Small follow-up on this.

Are we largely closer to where we want to sort of be in terms of being closer to the market, or it will take some time for investments in terms of supply chain to get closer to that?

No, I think this will be a journey for us, right? The industry used to run on a very long lead cycle in terms of inventory,

and

this is going to be a journey. The two journeys that we have taken on to get closer to demand, one is to drive our D2C business.

If you look at it, our shift towards D2C is to ensure that we are much closer to understanding the demand, sensing the demand and movement from a trend point of view. That's one thing we're doing.

The second thing in line that we're doing is getting more closer to market drops, and each of our brands are actually at a very different place in terms of this journey. This will be an ongoing journey, and this should over a period of time bring inventory efficiencies as well for us.

Understood. Another bookkeeping thing I wanted to understand though you have explained it, but does channel mix also has a contribution of better gross margin for you?

Because if that's leading to higher D2C, it must be benefiting you from gross margin perspective as well, right? Is that also a contributor to your gain?

Yes, a changing channel mix towards retail and online B2C yields a higher gross margin.

Okay. Lastly, sir, obviously at EBITDA level, your growth is very strong.

Wanted to understand what led to this fall in other income, and how do you see this sort of fanning out in the coming two, three quarters? In fact,

Devanshu, last year first quarter, there were quite a number of COCO stores which were closed,

and

there was a gain in the unwinding of the Ind AS 116 transaction accounting. Going ahead, we believe that whatever closures will be a balanced mix of stores, and we don't seem to be seeing any adverse spikes in other income.

It is largely going to be stable around ₹7-₹8 crore, what we reported this time.

Fair enough, sir. Thank you for taking my questions.

Hi. Thank you for the opportunity.

Firstly, Amisha and team, I would like to congratulate the team for the great work they have done for Arrow and Flying Machine. As we have visited the stores and the kind of assortments, the visibility, and everything, it was at an great level.

Really great great work by the team there, congratulations on that one. My first question is on the freshness part.

The management has been highlighting this, I think, for the last two, three quarters that the freshness has been at the peak level. Just wanted to understand what at the back end has basically resulted in this kind of freshness?

What changes has been made specifically on the supply chain side?

I think largely freshness is also indicating to the fact that we are hitting our season sell-throughs the way we want them to, right? The fact that our inventory freshness is at an all-time high is indicating that our ability to sell out the product that we are bringing in, stuff that we are bringing in from an agility and supply chain point of view closer to time is helping.

At the same time, we are able to liquidate inventory and we are able to liquidate our old-season inventory in time as well. This is an ongoing journey, and I think we will be on this journey for some time.

Understood. I think sir has briefly touched upon this other income part, but my question is more on the minority interest.

The kind of PAT suppression which has been seen can be attributed to the increase in minority interest also. Suggesting that the profit growth has been disproportionately concentrated towards the PVH JV and not that much to our own 100% owned brands.

How should we see this going ahead, and can we expect any significant improvement there on that front? You see, I think if you are looking at minority interest as compared to last year quarter one, last year quarter one, there used to be a Flying Machine minority interest also, which is not there this time.

What you see now is a purely PVH brands share of the minority interest.

Secondly, Q1 usually, as I spoke earlier on the call also, is a is a not so is a is is an average quarter for us. As we see progress into the year because of the festive season, the Diwali, the the winter, our Q3 and Q4 results are pretty pretty good in terms of, how the business performs.

Going ahead to answer your question, you will see that there will be an improvement in the minority interest. Of course the performance of PVH, which will lead to a higher minority interest.

Okay. Just an extension to that on the P&L itself, the higher expenses, the staff and the other expenses, I think the management has already highlighted that that is mostly because of the wage hike and the other operational decision that has happened.

Just wanted to understand how much of this cost increase would be front-loaded investment on our newer stores, and how much of it would be the structural inflation as such?

I think if you were to look at it overall, we have also mentioned earlier that we continue to invest in marketing, and our EBITDA is post 50 bps investment in marketing, right? That is one part of it.

Overall, our costs have largely been in line with our channel expansion. The one thing that I did speak of earlier as well is that as we are trying to put through some of these areas of future growth, we have invested behind people and resources towards our growth drivers.

That's also one more of the investment. All in all, if you'll see our overall EBITDA performance, GP to EBITDA, is pretty much showing that our costs have been maintained, and it's only the higher investment in marketing of about 50 basis points.

I also want to highlight that we've expanded margins by about 200 basis points over the last two years with a sharp focus on cost and other efficiencies as well, right? The way I look at it is as we expand and scale with double-digit growth, we will continue to see operating leverage overall in the business.

Okay. On the inventory bit, we have seen increase in the inventory days, and that is mostly because of the early sourcing which the company has done.

My question is that what if the consumer demand in say the second half of the fiscal tends to soften, which I think there is a concern which you have also highlighted, can we run a risk of impacting the FCF there? If that is the case, then what could be the possible measures we could take to mitigate this risk?

At this point in time, as you look at our performance both from an online, offline point of view and also our secondary sales across the board, our demand has been holding. Our brands are actually hitting out of the park compared to competitive brands also in multi-brand environments, right?

At this point in time, we don't see a slowdown or a major shift the way you're describing in terms of demand, right? Now as I've also mentioned earlier that we are watching this space, and if we see inflationary pressures both from a COGS and a cost point of view, we will make sure that we A, drive much tighter cost controls, and that's already something that we are looking at, and if required, and only if required, we might look at a pricing action.

At this point in time, like I said, it's just a watch item for us.

Understood. One last question, ma'am.

On this AI bit, is it possible to highlight a few of the tangible impacts which we can see from the AI implementation on maybe on the operational efficiencies or maybe the SG&A side if you can just highlight over the medium term?

At this point in time, we are investing and we are starting to see early results. Like I had said, I think one initial read is in terms of the way our analytics is driving from a discounting point of view.

Now this is going to be an ongoing journey for us both from actually both online and offline, and our investments in analytics, technology, and AI are going to continue, right? Like I mentioned in my opening remarks also, very early days, early results.

As we go, we have sort of our charters planned out, some of the things that we want to drive. As things go, we will see how we can kind of share some of that.

Understood. Great.

Thank you, ma'am. Thank you, sir, and all the best for the coming quarters.

Thank you so much.

Thanks, Manav. Thank you everybody for joining us on the call today.

If you have any more questions, please feel to reach out to me, and happy to take them offline. Thank you so much.

Have a good day.