Good evening and a warm welcome to everyone present on the call. I have along with me Mr.

R. Mohan, our Chief Financial Officer, and SGA, our investor relation advisors.

I hope you have all received our investor deck by now. For those who have not, you can view it on the stock exchange and the company website.

Q3 has been a challenging quarter for the apparel industry, mainly due to lower footfalls. During Q3 FY '26, revenue stood at ₹194 crores, with gross margins of 64.3%.

EBITDA stood at ₹52 crores, and PAT stood at ₹7 crores. However, the company has demonstrated resilience in its core operational fundamentals, such as full price sales ratio, items per transaction, and customer conversion rates, which have remained stable, reflecting continued consumer relevance and disciplined execution.

The overall retail environment remained subdued with discretionary consumption witnessing moderation across categories. Factors such as uneven festive demand, selective consumer spending, and lower footfalls resulted in a slower same-store sales growth during the quarter.

The softness was largely industry-wide in nature. The company continued to prioritize full price sales ratio by maintaining full price sales ratio more than 95%.

This disciplined approach helped us maintain healthy gross margins at a stable 64.3% in Q3 FY '26, which further highlights the strength of our brand. Q3 FY '26 was deeply impacted by a slowdown in our LFS channel.

One of our key LFS partners had a pause of fresh inventory intake across brands, which affected our LFS sale by 30%. We continue to engage closely with our LFS partners and expect this channel to normalize as we continue to supply inventory to them.

We continue to engage with our LFS partners to ensure that these kind of interim issues what we have faced, we don't face again. To improve same-store sales growth, the company has undertaken focused initiatives around customer engagement and new product launches.

In parallel, we had recently collaborated with a leading influencer to showcase our bottom wear collection and enhancing the brand visibility and relevance among younger audience. Such initiatives are expected to support stronger customer traction and improve store-level performance over the coming quarters.

Over the time, we haven't strengthened our position in the non-leggings category, and it has further strengthened. Today, our non-leggings bottom wear category gives us a 65% contribution in our sales, which, in earlier times, used to be less than 50%.

Moving over to the operational metrics of Q3 FY '26, our store expansion strategy continues to remain calibrated and selective, with a clear focus on entering high-potential markets. As of 9 months of FY '26, the company has added 49 stores, and we expect to close FY '26 with a net additions of 60 to 70 stores.

Our approach to network expansions remains very disciplined, with emphasis on store-level profitability and strengthening brand salience. We continue to keep a close watch on inventory levels, with inventory levels being at 114 days as of December 31st, 2025.

On the inventory front, we have seen an increase in our inventory for our new concept, daily wear concept, which had increased our inventory marginally from the earlier times. For the full year FY '26, we anticipate inventory levels to stabilize in the range of 100 days, ensuring operational efficiency and healthy working capital management.

Our strong focus on inventory and working capital efficiency will help us achieve the target of converting more than 50% of our EBITDA into pre-Ind AS operating cash flows. On our new initiatives, including our international store in Dubai, and our daily wear concept are demonstrating healthy unit economics in early stages, and we remain excited about their performance in the coming quarters.

As of now, we have opened 6 stores for our daily wear concept, and we look to make it about 10 stores by March 2026. In line of our commitment to shareholders, we've announced a buyback this quarter of 14,13,000 shares at a price of ₹460 per share, with a total size of ₹65 crores.

Way forward, smaller format stores, the small-sized stores, has been witnessing a sharp decline in performance because the today's consumer is looking to shop in a larger store experience. In line with that, we had consolidated some of our smaller stores last year, and we will look to continue some of our remaining smaller stores in the quarters to come.

The company is taking a cautious approach on new store expansion, with a clear focus on strengthening same-store sales growth. Our priority is to improve performance across the existing store network through better execution, enhanced customer experience, and operational efficiencies.

Our immediate objective is to move from negative same-store sales growth to flattish and then eventually taking it to low single-digit, supported by improvements in store-level productivity and throughput. This will not only be driven by external factors, but even by sharper execution at a store level, introducing new products, and better engagement with our new audience.

Second, our footprint expansion will be driven by careful selection of high-quality locations through picking and choosing the right location with strong unit economics. Lastly, recognizing retail is fundamentally a balance sheet business, we remain sharply focused on cash conversion, higher inventory turnover, and disciplined capital allocation, ensuring business remains profitable and is a very ROCE-centric business.

With this, I would like to hand over the call to Mr. R.

Mohan for an update for Q3 and 9 months FY '26 results and financials. Thank you.

Thank you, Gautam, and good evening, everyone. First, I will give the Q3 financial numbers.

Our revenue for the quarter stood at ₹195 crores. Gross profit stood at ₹125 crores, with GP margins of 64.3%.

Our EBITDA for the quarter stood at ₹52 crores. EBITDA margins is at 26.7%.

PAT for the quarter stood at ₹7 crores. PAT margin is at 3.7%.

Coming to the 9 months FY '26 performance, revenue is at ₹642 crores. Gross profit stood at ₹406 crores, GP margin at 63.2%.

EBITDA is at ₹187 crores, with EBITDA margin at 29.2%. PAT stood at ₹51 crores, with a PAT margin of 8%.

ROCE and ROE, excluding Ind AS impact, as on 9 months FY '26 stood at 13.1% and 10.3%, respectively. Cash and cash equivalents stood at ₹256 crores as on 31st December, 2025.

With this, now we will open the floor for the question-and-answers.

Yes, hi, Gautam. Thanks for taking my questions.

Firstly, sir, wanted to understand how should we read your SSSG performance? We were flat for a fairly long period of time, but now reporting in the negative trajectory for last 3 quarters.

Though you mentioned that from a retail parameter perspective, footfall is the only challenge, but my concern was that even footfall we are attributing it to weak consumption, but is there a certain level of deterioration of brand strength so that it is not attracting the relevant amount of footfalls? Your color on this will be very helpful.

Thanks, Devanshu. No, I think see, Devanshu, from a brand perspective, I don't see that.

Yes, we want to, as a brand, increase our younger audience as a customer base, but from a brand strength and relevance perspective, I think we are very much there. See, even from a product mix perspective, if you see, today 65% of our sales are coming from the other value-added products, and that's how the bottom wear market is heading in direction.

I think from a brand relevance and product relevance perspective, I don't think is an issue. I think the overall footfalls in Q3 has been very weak.

See, we've done many channel checks also, and we have seen similar kind of trajectory in other places as well. The footfalls issue has had to do a lot with our SSSG.

Another thing which I mentioned in my speech, our SSSG in our very small stores. See, today what has happened because the bottom wear market has become a wider market with so many products, the very small stores from an experience perspective becomes a little bit of an issue.

We have seen softer and larger de-growth in SSSG in those very small stores. I think the larger attribute to our negative SSSG is obviously the overall macro scenario and footfalls and these small stores which have de-grown a lot more than normal because of the size.

Fair enough, Gautam. This footfall issue, is it also related to consumer sort of preferring to shop more online or via quick commerce channels where our presence is very limited, right?

Are you also thinking on ramping up our presence in these channels? Because footfalls, etc., may remain weak, right?

If the consumer preference is shifting towards other channels or maybe through formats where they are getting the entire wardrobe rather than preferring to go for a standalone bottom wear store. How are we sort of focusing on capturing such consumption occasions?

See, in fact, rightly you said, Devanshu. I think, look, online and quick commerce has always done well, and for us, because we are having a very small contribution, so that's a channel for us to build.

Our online channel has seen decent traction. Our quick commerce also we've been live on Blinkit and Zepto, and we've seen very good traction there.

I think as that channel picks up speed for the apparel category, our share also in the e-com space will organically grow. From an e-com and quick commerce perspective, we are there present with our styles and inventory across all channels.

I think it's just a matter of time. Once it picks up speed, it will also start reflecting in our revenue numbers.

Fair enough. Lastly, Gautam, few clarifications on the LFS side.

Our revenue mix has improved towards EBO, right? It is 80% EBO this time around versus 74% last year.

The gross margin for this channel is about in my understanding, 35%, 40% better versus the LFS channel, right? If you see from a company-wide perspective, this should have reflected in 250, 300 bps better gross margin on a YoY basis.

This is flat, right, in this quarter? Is this largely due to deterioration in gross margin profile of LFS channel as well?

What explains that? Yeah.

See, we are also studying that, Devanshu, and I will come back to you on that. At the outset, when we are looking at it right now, last year we had started EOSS a little late at the EBO level.

This time we have started a little earlier where usually we start. Last year our EOSS start date itself was late.

Because the quarter 3 had a week, 10 days of more EOSS week, that could have had an impact on the EBO gross margins, which is not reflecting in the upside of the overall company gross margins because of low LFS. We're anyway studying this.

We'll come back to you with more clarity about it, but at the outset, it looks because of the start of early EOSS, which is by a week, 10 days.

Okay. From a model perspective, is your LFS SOR-based, or as in the partners can return the inventory in case they are closing the store, or how is it?

Usually it is like this, Devanshu. It is based on SOR.

What we do as per Ind AS standards is because it's on SOR, we show it as debtors in our books. We show it as sales when we dispatch the goods.

It is debtors in our books. Because it is SOR, as per Ind AS 115, we have put a provision for sales return based on historical trends.

Whatever is the last 3 years of historical trends of returns, we provide it on a quarterly basis. The provision of sales return is inbuilt for any stock which is coming back through the year.

No, that's fair. What happens in terms of store closures, right?

We have had

For example, yes, your question is right. Suppose today an LFS decides to shut 20 stores, those 20 stores' stock will come return and it'll be booked as a sales return.

What happens, such increase in return will reflect in the next year's provisioning because you tend to usually take a 3-year average for a provision of sales return perspective. To your question, if an LFS shuts 30, 40 stores or whatever stores, the stock coming back will be shown as a sales return.

Fair enough. Thanks for taking my questions.

Gautam, sorry.

Thank you, Devanshu.

Hi. Thank you for taking my question.

My first question is again with regards to the LFS channel only. This quarter we have seen 137-odd LFS getting shut QoQ.

One, was there anything specific this quarter that we saw such large closures? How do we look for expansion in LFS going ahead?

Yeah. See, Gaurav, this stores are largely one of our key LFS partners, they had changed the format of that store, and they had rebranded and changed the format of the store.

When that happened, all the external brands had to move out of those particular stores, including us. The reason we have exited the stores because that key partner had decided to change the format and rebrand it.

Now moving forward, LFS expansion from a store addition perspective, whenever we do get an opportunity for adding new stores, we will selectively choose which location makes sense and then we will select. Like in Pantaloons we have been expanding and adding stores over the last few quarters.

Even in Reliance we are getting new stores. Selectively on the basis of what is being proposed to us, we will select those locations and move forward.

As far as quarter 3 is concerned, our quarter 3 revenues were deeply impacted because for one of our key LFS partners, we were not able to dispatch stock for about close to 45 days. They were not taking inventory across brands for a period of 45 days, and because of that, we were not able to dispatch stock.

That is why we've lost 45 days of dispatches, which has resulted in 30% drop in sales. That's why our Q3 overall numbers have got deeply impacted because of this dispatch issue, which happened in November and a little bit of December as well.

Gautam, can we expect sales come back in Q4 in some sense because of the No. You

see, not really because, see, what happened, that 1.5 months which we have lost, your See, what happens, how do we replenish stock at an LFS store, right? We keep a base stock.

We decide a maximum stock level. Now based on the maximum stock level and the closing stock at an LFS store, you're basically only sending the difference.

At the at So in January or February, it's not that you're going to be sending additional stock. You're going to be sending stock only to the extent of the maximum stock level.

The 45 days what we have missed out, that increase in number will not see in January and February.

If that 45 days we have missed out, they would have again sold during

that I understand. See, you see, Gautam, ours is a replenishment business.

The sales will happen, you keep replenishing that store, right? Your maximum base stock is only to a certain level.

If you have not replenished 45 days, you have, to a large extent, lost out on a lot of secondary sales. Now we will not be able to recover those secondary sales in the coming months.

Technically, you're sending only that much stock which is there in the base stock. Okay.

Gautam, just completing on that LFS opening part, how many LFS now we can model in to open at least for Q4 and the rest of the couple of years going ahead? See,

it's difficult to say. It's difficult to give a guidance on how many LFS stores we will be opening next year.

It all depends on how our partners expand, and in that proposal of expansion, what we think would be relevant. It's going to be very subjective to what is being proposed to us.

See, sometimes a partner can decide to add 70 stores, 80 stores, but certain key markets, you wouldn't want to be part of that market. It's very subjective to what is being proposed to us.

I think that we will be able to only know next year as we are proposed with the list of stores.

Gautam, coming back to the EBOs, are you seeing any recovery in the momentum of any sorts in the month passed by in January to indicate that from a negative 4.5% SSSG that you witnessed in Q3, probably you will go flattish or of that sorts, or it continues to remain weak as it was in Q3?

See, Gautam, I think, see, we are seeing two trends, Gautam. I think what is happening is our mid-sized stores, stores which are slightly higher than 500 square feet, 600 square feet See, because our product range has increased, right?

65% of our sales are coming from the non-leggings category, the value-added categories. Today, the consumer wants display and experience of shopping when you're seeing so many products.

We are seeing two trends, right? The smaller stores, the very small stores are obviously seeing a decline because they are not able to display all the new products.

The slightly larger stores, which are the 600, 700 square feet stores, they're seeing good increase. Some of the stores are actually showing very good positive SSSG as well.

I think over a period of time, as our small stores phased out of the system and the newer stores what we cautiously add becomes of a relevant size, you will also see improvement in SSSG from that perspective. Largely, the improvement of SSSG is going to be obviously relating footfalls.

I think both these things hand in hand will play a very important role in the recovery of the SSSG from being negative to a mid-single-digit positive.

Gautam, in this scenario, as correctly said, then there could be possible drag on the margins because your cost will keep on escalating at a certain pace. Would it be fair to assume that at least over the next three, four quarters, you might see a decline in the EBITDA margin just because of the negative leverage?

See, I'll tell you what we're planning to do as a company, right? Right now, we are being very careful with expansion.

Right now, we have prioritized and thinking how do we get the SSSG back to positive? Today, we are at -5%.

Our aim is to get to mid-single-digit to 5%, right? From -5%, we have to take it to +5%.

All our efforts right now as a company is to see how we can fix this and get this into positive. Of course, the overall footfalls is going to make a very big contribution to this, but we're also going to be putting in smaller efforts at new products, at putting better-looking stores to fuel that.

Our first priority over the next 1 year is to definitely put entire focus on improving SSSG and maintaining margins. On the expansion front, we're going to be very selective in our expansion in the coming quarters so that because of expansion, there should not be a EBITDA hit in the P&L.

Because what happens, Gautam, when we are opening new stores, immature stores which are not matured, they are a load on the P&L because you're paying the full rent and salaries without the store being matured. We are taking one step back and saying, look, hey, we will be very careful in our expansion, not go overboard with the expansion so that margins don't get compromised during this recovery period.

Sure. Then can we expect this store opening to even come down next year in the EBO format versus 60, 70 that you are expecting this year?

See, honestly, Gautam, we are not guiding like earlier times, right? Earlier times, we used to be very clear with our guidance on how many store openings.

This time, we have seen that our margins because of negative SSSG, margins have taken a hit. As a management, we have taken a conscious call to slow down the store expansion and do it selectively.

See, that does not mean that we will not expand. See, wherever we are getting a very good opportunity and where we should feel that we should be there, we will also expand.

We are not setting ourselves a target. We during this recovery period of taking SSSG from -5% to +5%, we don't want to compromise on the health of the P&L.

Got it, Gautam. Thank you, and that's all from my side.

Gautam, just continuing from the previous question, is it fair to assume next year's store opening could be around sub-50 stores or even lower than that? Because this year, with 60, 70 stores, also your margins have been hit.

Next year also, the recovery is a question mark. Definitely, the store opening would be below 50?

Ankit, I know where you're coming from, and honestly, it's very difficult for me to give a guidance right now. It all depends when does the SSSG pick up speed, right?

Suppose if things go well and next year by I'm just giving you a hypothetical example. By next year middle or maybe the second quarter, we come back to positive SSSG, then maybe we we also start increasing our footprint as well.

It all depends on the recovery of the SSSG. It's very difficult to give a number for next year whether it will be below 50 or above 50.

It's very difficult to predict. As management, we feel that we will not go to an extreme of not opening also.

Like for example, if you get a good mall which is coming up in in a Mumbai or a Bangalore or any other city where it's a prospective mall, a very prospective high street, we will definitely go and open there. We will not go overboard and try to open everywhere also at the same time.

We'll keep a good blend.

Given that it takes 3 months to 6 months to open a store and today with you at -5%, 6% like-for-like growth, next 6 months' store opening will be muted, at least that we can assume?

Yes, it'll be muted. It's difficult to give a number, but I can tell you it'll be muted for sure because we're going to be very cautious in our approach.

Sure. Second is on the

Also, sorry, Ankit. Just extending to it.

See, we'll also be doing a lot of relocations, Ankit. What will happen sometimes like I explained to you, right, see, sometimes very small stores which are not doing well.

Today, the consumer wants a slightly better experience. In the same market, we might shut the older store and open a new store.

There might be some relocations, which will have a positive impact on the revenue number as well.

Gautam, we would appreciate if you can share the area of the stores today. At a 800, 900 store network, we don't know what is the area, given that bulk of the store closure of smaller stores are behind us.

Now you're opening 600 sq ft, 800 sq ft. Yeah.

What I'll do now, Ankit, probably after this earnings call, once we have calibrated the entire data, we will share that data with everyone how many stores are there which are the smaller stores, everyone has clarity on that.

How many more store closures are remaining for the smaller stores? Can you just share the decline you are seeing in the smaller stores?

We will share First we are calibrating the data. Once we have calibrated the data, we'll be happy to share.

Okay. No, because on the previous question, you said that the smaller stores are significantly negative SSSG or declining.

At least some data you would have to pass that comment, right?

No, I'll tell you. Like for example, where our company average level is -5%, the smaller stores, we have seen a slightly higher de-growth of more than 9%, 10% SSSG.

Sometimes numbers are not fully reflected. Even when we are visiting stores and when we are interacting with our consumers, the consumer feels that, okay, in a slightly larger store of a 600 500, 600 square feet, the newer bottom, the newer style are better on display.

It becomes easier to shop. In a very compact store of 200 square feet, it becomes very difficult to display all the items to the consumer.

From an experience perspective also, it hampers. No,

I agree because your core moat was a smaller store, high throughput, high-margin business. Now that is getting disrupted because your average store size is becoming 600 at least incremental store size.

No, no, see, Ankit, the unit economics of a 600 square feet store and a 300 square feet store is not different. Even a 600 square feet store from a unit economic perspective comes under the same category as well.

It's not that my EBO unit economics will go down because I'm opening a 500, 600 square feet store. See, if today I would have gone and opened, say, 2,000, 3,000 square feet store, that's a completely different unit economics.

Stores which are sub-1,000 square feet have similar unit economics for a 200 square feet also and for a 550, 600 also.

Gautam, at least last 3 years since we started opening bigger stores, sales per square feet has declined, if you see. Now that could be due to market environment, or it could be due to loss of market share, or it could be due to loss of footfalls.

It could be either of it. At least on the face of it, we have seen a decline in sales per square feet.

Your question is right, Ankit. The sales per square feet would be more because of the footfalls and the overall macro scenario.

It is not because we have gone into a larger store and the unit economics are not as good as a smaller store. It's not because of that.

Sure. My second question is on LFS.

You made a comment that one of our large retailers is switching the stores which had third-party brands to private label brand. Now do we have visibility that next year that won't happen from the retailer, or it's going to continue, and we have been said that few hundred more stores could be closed in the medium term?

See,

we are also trying to get that clarity, Ankit. Honestly, if you ask me the truth, I don't know.

Can it happen next year? Maybe yes.

We are also speaking to our partner and trying to get that clarity so that we are also prepared on if there are going to be such format changes at their end, we will know about it. The minute I have some clarity on that, maybe in the next earnings call or maybe in between that, I'll definitely guide everyone on that.

Sure. On the inventory part, right, our gross margins have expanded.

With the change in format and other things, how are the commodity prices placed today? With the GST pricing being more favorable at least for higher price points above ₹1,000 products, going forward, do you feel the need to reduce the discounting which you're giving to the consumer, or the new labels have come up, how will that pricing change, and how are the commodity prices?

See,

honestly, Ankit, you're talking about the GST reduction, right, those products you're talking about, right? We were giving the benefit to the consumer.

We have not changed our MRP for such products. We are continuing to give the benefit to the consumer.

There might be a time where we feel instead of taking a price hike for those products, we'll just remove the discount what we were giving for the GST benefit. In short, we've not taken the price hike, but we'll get the benefit of that eventually.

When we are going to start doing it, we are deciding it internally once. To answer your question, we are not changing the MRP of those products where the GST was reduced.

Wherever the GST was reduced, we were passing on to the consumer. Eventually, instead of taking a price hike of those products which were due, we would just remove that benefit without taking a price hike.

In the other products, sub-₹1,000, where the discount was not available, 5% remains 5%, there, are you considering taking a price increase?

No, not right now. See, Ankit, we are in a volume-led business, right?

Our entire company's focus is to drive volumes. I have reviewed the products under ₹1,000.

We have made very small correction in certain products where we have increased the pricing because it was underpriced to begin with. Those are very, very few products.

Largely, we have not touched anything under ₹1,000 because we feel we are well priced.

Last question is on the A&P spend. Do you think at this point of time, you need to be aggressive in A&P?

Because previously, you always said when demand is not there, you don't want to spend. Because as it is, demand is not there, consumers are not going to walk in.

Has that mind shifted that you have to go aggressive at this point of time?

No, I don't think we have to spend more, honestly. I think that logic of 2% of revenue still holds good.

This time, it shows a little more because our revenue this year has stayed flat, but we had marketing budgets allocated for a growth revenue, right? That's why as a percentage of revenue, slightly shows higher.

From how much we want to spend, I don't think that number will increase. We are just transitioning our digital marketing to a very different methodology where we are reaching out to the younger audience and the millennial audience by different, different type of personalized marketing.

See, our marketing team, to begin with, was a very old school orthodox type of marketing. It now changed.

Over a period of time, we started pivoting towards more and more digital. I think the way of marketing is going to evolve.

From a spend perspective, I don't see our spend increasing. We used to spend 2%, 2.5% or 2 2% to 2.2%.

We are going to be around that number. As a quantum of spend, it's not going to increase.

Sure. Can I ask another question, since I've taken a lot of time?

Just on the top wear, given that bottom wear is under pressure, which is the core bread and butter, do you think it's prudent now for you to continue to expand top wear aggressively or concentrate more on bottom wear?

No, no, see, I'll tell you. The top wear project what we have done, the everyday concept, that's just a pilot.

See, the pilot needs its time, right? Now we've opened 6 stores.

That will take its own journey. That decision-making in that pilot is independent of bottom wear.

We are not going to speed up that in any way to show growth. That pilot will go in its own speed.

It's going to take some time, and it's for the future. As far as bottom wear is concerned, see, we are very, very bullish on the category.

Yes, this has been a very tough time for the category and the brand where we are seeing headwinds, and it's not reflecting in numbers. Our conviction in bottom wear is very much there.

Even our recent Technopak study also emphasizes that how large that category is. Even from a short-term, mid-term, and long-term perspective, our entire energy and strategy for bottom wear is very much intact.

Sure, Gautam. Thank you, and all

the best. Over the next couple of years, Ankit, if you have to show growth and the numbers have to come, it has to come from bottom wear.

We cannot expect the pilot to take care of the gap of growth. The pilot is there, and it'll take the pilot in its own sweet time.

We cannot rush the pilot. Otherwise, we won't do justice to that project as well.

Bottom wear is our main business, and we'll fix it, and we'll bring it to growth. We are very bullish.

Noted. Thank you, Gautam.

Yeah.

Hi. Thank you for taking my question.

I just wanted to understand that how much of this SSSG decline can be attributed to the entire store size issue that we faced, because you said that the smaller stores saw a relatively negative SSSG, or rather, the larger stores saw better SSSG performance versus the footfall in general being weaker?

See, Vaishnavi, it's very difficult to quantify it. I would say largely this SSSG is negative because of the slowness in footfall and the overall weak environment.

It's very difficult to quantify, but I would put it more towards the overall macro scenario.

What I'm trying to refer to is is that let's say, in H2, right, where we, I think, almost shut almost 40 to 50 H2 FY '25, we shut, I think, almost 40 to 50 of the smaller store formats. We gave us We We said that the store closures are almost done.

Again, now in this quarter, we're coming up and we're saying that we're still seeing the performance of the store smaller stores not being up to the mark, which is why we're shutting them again. I'm just trying to understand where are we coming in this entire small store, large store, medium store, and how should we look at this in terms of our performance as well?

See, the stores what we shut last year, yes, we did shut those stores, and we've seen that when we shut those smaller stores, the revenue moved to the nearby larger stores. We saw that.

It didn't have a very big impact on SSSG because 40 stores as a base on such a large number of stores will not move the SSSG needle so much. Now as far as how many stores we are going to be shutting, we are calibrating the data of the smaller stores because we can't just shut those stores just like that.

We'll have to also see when are the lease renewals coming up. As we get more clarity on that, we'll definitely guide the market on how many such stores in the smaller bucket is there and how many of the smaller stores will be shutting in the short term, we will also guide that once we have calibrated the entire data.

As from your end, you'll also have clarity on what's happening.

All right. One more thing is we can also get some more inputs in terms of how does the unit economics, etc., move for the slightly larger stores, like what the earlier participant was also suggesting, because when

Very similar, Vaishnavi, and I'll tell you why. I'll tell you why a 500, 600 is very similar to a 200, 300, and I'll tell you why.

When we sign a store, we sign on a rent-to-revenue ratio. If the rent-to-revenue ratio is in our budget, whether it's a 600 square feet store or whether it's a 200 square feet store, your EBITDA prior to staff expenses will be the same.

Now coming to staff expenses because that is the real difference between a 600 square feet store and a 200 square feet store. In a 600 and in a 200, the number of people you employ for managing the store are the same.

Your operating expenses also pretty much the same. A 600 square feet store from a unit economic delivers the same unit economics what a 200 will deliver.

The difference always what happens is when you go past 1,000 square feet. Suppose you open a 1,500 square feet, the unit economics dramatically changes because the electricity cost dramatically goes up.

The number of people you're going to be keeping in the store dramatically goes up. Then you'll have to keep separate housekeeping staff.

The entire mathematics on employee cost dramatically changes when it crosses to 1,200 square feet, 1,300 square feet. Sub-1,000 square feet, you're keeping the same number of people what you're keeping in a 200, 300 square feet.

The difference is really those other operating expenses in which the staff cost is the highest.

Okay. Understood.

Also, one last question. In terms of the newer stores that we're opening, which are slightly larger in the size, are they again in the nearby vicinity of the smaller stores, or are we targeting different clusters or in the same cluster?

No. See, one more thing is, definitely, during these times where SSSG is soft, we are ensuring that we are not giving any room for cannibalization.

Now when we are opening stores, we are very careful that we are trying to open in different clusters where even the smallest remote chance of cannibalization should not happen. That is why we are extremely selective and cautious in our approach of store opening.

Okay. All right.

Thank you.

Thank you for the opportunity. I just wanted to understand your revenue mix also this quarter.

You have given bifurcation wherein from non-leggings, sales is around 65%.

Correct.

As a category, that category is not seeing that kind of difficult time, in our opinion. I wanted to understand which category is seeing slowdown, or all categories are seeing decline at the same time, or how fashion is changing?

I understand. Prerna, I'll tell you, the product mix change has very little to do with a negative SSSG, and I'll tell you why.

Pre-COVID, when we had SSSG of more than 15% or we were double-digit SSSG, even that time, the product mix was evolving and changing. Product mix is something which evolves even when your SSSG is positive or negative, so that has nothing to do with that.

The real reflection of SSSG being negative is more to do with the footfalls. The main reason is that.

It is not because this product has gone down and this product has slightly improved that it is reflecting in negative SSSG. The main reason of SSSG decline is because of the decline in footfalls.

Suppose if we are having -5% SSSG today, our footfalls are down by -5%. What directly correlates with negative SSSG is the footfalls and not the product mix.

Because what we've seen in the past, even in the good times when we had double-digit SSSG during pre-COVID, our legging-churidar contribution was falling at that point of time, and our other product sales was improving. That was something which we had envisioned that was anyways going to happen, that legging as a category is going to continue to decline even in the future.

Okay. Understood.

Then just trying to understand because other apparel players has not been declining every quarter the way you have been declining. Footfall in this quarter, especially given that the season has been decent and the footfalls have not been a complaint by many other categories in discretionary segment as well.

Why would footfalls be a problem for you for more than three quarters now?

See, difficult to answer this question, Prerna, but in quarter 3, of course, our numbers are weak, right? The first thing what we do is we do some channel checks.

We have seen a decline everywhere, but the women's category, we've seen a bigger decline. This I'm saying about in general overall women's apparel.

Irrespective of top wear, irrespective of bottom wear, irrespective of whether it's ethnic, western, or fusion, whatever little bit channel checks as a company we've done, we've seen slowness everywhere.

Also, is there any strategy change with respect to ownership of stores, because all your stores are on your books, and any franchisee options that you are evaluating so that can be better?

No. See, the COCO model works very well for us, Prerna, and it gives us better control.

From a hygiene perspective also, we've realized that COCO stores deliver a much better customer experience because we have SOPs in place. For us, we are largely going to go to the COCO route.

Franchisee route, we are not against, but we will do franchisee very selectively in markets where we are not having operational control, very similar to what I have narrated earlier. From a ROCE perspective, see, as the business improves, once growth comes back onto the table, the margins improve, automatically, the ROCE will start showing a better figure than what it is currently.

From a strategy of COCO versus FOFO, I feel we are going to continue with the COCO because that's a model that works for us. Because sometimes we feel from a COCO perspective, the store experience, the store look and feel, everything is well maintained in a COCO model.

Understood. Thank you, and all the best.

Thank you.

Yeah. Thank you for the opportunity.

The first question is basically on the market share data. As per the latest Technopak report, can you call out what's your market share?

Yeah. The report says that we are having the same 8% market share in FY '24 what we had earlier.

It shows that the branded market for bottom wear is a ₹10,000-crore branded bottom wear market as on 2024, in which we have a 8% market share.

Okay. Can you just call out the initiatives taken to drive footfalls as far as customer engagement goes?

See, I think driving footfalls to a very large extent is determined on the consumer sentiment. That's not very much in our hands.

What best we can do from our end is to ensure that our product mix is good, our stores are well located, and our digital marketing is strong. These type of levers are in our control, but the overall consumer sentiment which is there in the market is something which we'll have to wait and watch how that improves.

These initiatives of just ensuring that we have the right product mix and we're doing right digital marketing is what we can do at our end to ensure that we deliver best SSSGs.

When you say customer engagement, what you're essentially referring to is the digital marketing?

See, a lot of personalized digital marketing works very well. Today, a lot of our digital marketing has moved to personalized customer where today a consumer who is shopping in a Go Colors who is buying certain categories, we promote the other category through WhatsApp, through Instagram.

Our entire digital marketing has become more personalized around the product with our existing customers and new customers. Our digital marketing is more transitioning into product-led communication than just brand communication.

Like for example, if you're a customer of Go Colors, you've been buying x number of products, but you don't know that this product is available at a Go Colors. Through our data, we will know that x person is buying this.

What we've seen in recent past, when we are personalizing advertising communication for that person, that person is able to see, okay, this product is also available. You're able to get that customer back to the store.

Our digital is moving more personalized product-led, which works for us very well. We do it direct, and we also do it through influencer.

Understood. You've made these product changes, right, on these product launches

you, Resham.

Madam, please let her continue.

Madam, please let her continue. No problem.

Please go ahead, Resham.

Yeah. With all these new product launches which we can see out there in the stores, right, would you say you've spoken that, okay, brand dilution is not an issue, other issues are not there, but do you see that somewhere the value proposition for the customer has become a little bit weaker?

Because if I see, as we have westernized our portfolio, right, western wear is somewhere where there is a lot of competition. If I just compare the merchandise for the new product launches that we have done with, let's say, an offline store like a Westside or even if we go lower on the value side, Zudio, etc., I think Westside probably would have similar merchandise, but at a much lower price point, right?

Then we're not seeing footfalls not because of other reasons, but just because the value proposition has weakened with

us, and maybe I understood your question, Resham. In fact, I'll tell you this was something which we covered in the Technopak.

In fact, we added this in our presentation recently. We've put a triangle chart in that updated slide on market size and our share.

In that, what the study says is that more than 500 500 to 1,000 and 1,000 and above contributes to more than 2/3 or maybe more than 70% of the bottom wear market. The less than 500 category is a very small category compared to the mid-premium and the premium category.

See, the bottom wear category, when you take the value-added products like trousers, palazzos, it's very difficult to price it sub-500. The sub-500, to what I have studied, is a very leggings-oriented market.

No.

Sorry to interrupt. I'm not referring to the sub-500 market.

Okay? Now let me be very specific.

For example, the wider bottom denims, right, which have been launched, right? Now for example, our MRP is, let's say, a 1,300.

If a similar merchandise in, let's say, a Westside, it's priced at 1,000, right? Then clearly, this is just one example that I'm giving you, right?

Then clearly, the value proposition for the customer, it becomes far superior with our competitors.

Oh, you're saying from our competitive pricing, you're saying.

Yes. I'm talking about, let's say, offline competition, right?

If we move to online, it's a much wider world out there, right, with plethora of options there, right? Then with that, let me put it this discretely, that if, let's say, you were to drop your prices, okay, on some of your specific merchandise, right, by x percent, do you think that is going to boost footfalls, or do you think that is not the case?

Okay. I understand your question, Resha, and I'll clarify this.

See, what we try doing is when we launch a product, we try benchmarking it at what prices will a like-to-like product or a similar product be selling in the market. Maybe there's one product which you're mentioning maybe we have over-priced it by ₹200.

Maybe that's a one-product phenomenon. I'm not going into the specifics of that product.

In general, when we are releasing products, we benchmark to see that we are not very expensive compared to competition. We should be either on par or maybe lesser, and that's how our pricing strategy is.

We don't want to put ourselves in a situation where we've launched a product at a premium, realize that it is very expensive to competitors like other competitors what you mentioned, and then we drop the prices. To begin with, we are ensuring that we are not pricing ourselves so much higher than what is available in the market.

I'll give you another example what happened in our new concept what we opened, the new daily wear concept. Certain products of menswear what we launched in the Linking Road store and the other five stores as well, we had priced it a little higher.

When we realized that we had priced it a little higher than what is available in the market, we immediately changed the pricing. Because that's a new category and segment for us, we are also learning.

In bottom wear, because we have done it over so many years, when we are releasing a product, we keep studying what our pricing is and versus what is there available in the outside. Maybe an exact product is not available, but at least a like-to-like or similar product, what price it is selling.

We try keeping that price parity to begin with. Sometimes we make mistakes like that one product maybe you mentioned we did go wrong.

I don't want to be specific about that product, but in general, it's a conscious effort that we get our pricing right from day one.

Right. You don't believe that if we bring our prices down, we are going to be seeing more footfalls, right?

Not at all. To begin with, we are pricing our product very sharply.

It's in line with if that product is available outside, it's in line with that.

Right.

I'll give you a basic example, right? Let's take our legging product.

You'll have leggings of different price ranges. For a product of our spec, and I'm taking leggings because, right, that contributes to 35% of the business, I'm taking that product as an example.

If you take a product of similar spec, you will see brands selling between ₹549 and ₹649. We are somewhere in between.

We are at ₹599. We are very mindful of that, how we price ourselves.

We want to always ensure that, okay, we are giving good comfort and quality, but the pricing should be sharp.

Right. I do acknowledge the fresh merchandise, and the new product launches, they are very much visible in your stores in Mumbai at least, right?

I do acknowledge that, right? I have one more question, if I can squeeze in.

Sure. Please go ahead, Resha.

Thank you. That's the last one.

A lot was spoken about the store sizes, right? Typically, we've been in that 300 to 600 square feet kind of store size.

Now the new stores that whatever calibrated, muted store count that we would be opening, they're all at 1,000 plus? Also a related question, that when you say small stores, do we have definitions of small, medium, large stores internally?

See, the new stores what we're opening for the bottom wear stores, I'm not talking about the pilot. For the new stores what we are opening for the bottom wear will be below 1,000 largely.

It'll be in the range between 500 and 1,000. It'll be mostly in that range, but we are unlikely to cross 1,000 unless it's a very good rental deal we're getting.

We are largely going to be in that bracket of less than 1,000. When I talk about a small store, yes, any store which is effectively lower than a 300 or 350 square feet store comes down being a small store.

It also depends on the depth and the width of the store. Without being too technical, anything below 350 and 300 is regarded as a small store, where today we are not able to display those products in a very small store.

Sure. We'll look forward to more granular data on the store sizes in your next presentation.

Thank you so much, and all the best.

Thank you. Thank you.

Hi. Good evening, everyone.

Thanks for taking my question. Gautam, firstly on the LFS channel, now even if we exclude the anomaly of this quarter, the growth or the performance in this channel has always been volatile.

Some quarters, it is up more than 20%, 30%. Some quarters, it is a decline.

If this is a replenishment model, which you alluded to an earlier participant's question, technically growth should be smoother like the way we witness in our EBOs because that will be the capturing the end-level consumer. Just a follow-up on this again, the LFS key partner that you're talking about changes format, not buys for 45 days, and they don't really inform us beforehand so that you can plan better?

I'll answer your second question, see, yes, we were obviously not informed. Once festive got over, POs were on hold.

We couldn't send stock. It was something which came up very, we didn't know about it.

We obviously couldn't foresee it. As far as format changes also concerned, I think, look, format changes is very common not for this one LFS partner, it happens anywhere.

Brands are always informed only at a particular point of time. They will never be well informed in advance, but that's how retail works.

On the PO part, definitely we should have been informed that this was coming, but we weren't. Luckily, we were able to solve those things post-December 15th, and as of now, things are running smoothly.

We are also trying to work with that LFS partner to ensure that such operational issues don't happen in the future. On the volatility part, Sameer, see, I think, look, there are two things, right?

Where can we have volatility in LFS? One, a, if there is a fall in secondary sales because of footfalls, or b, we have not replenished that store properly.

I think the volatility in Q3 what we have seen was a point that we were not able to get the purchase order and we were not able to replenish. I think the volatility depends on which aspect, whether it is secondary related or whether it is primary related.

This quarter, we have seen that it was more around the perspective of that we were not able to dispatch, and that's why we saw a fall in revenue in LFS. In previous quarters, there are some quarters where the secondary sales itself were low, and we could only replenish based on what is sold.

I think that was a very different reason altogether. This issue what has happened in Q3 is more of a very direct operational issue rather than a, I would say, a consumer sentiment or market issue.

Got it. The previous quarters are more reflective of the consumer and consumer demand

and That's what I'm saying. It's not an apples-to-apples comparison, but yeah, at the outset, it looks like, okay, LFS has de-grown.

I think the underlying reasons in what was maybe in the earlier quarters and what is today is different.

Fair point. Second question, again, it's a follow-up on an earlier participant's question.

Brand relevance and strength, now it's been 11 quarters of flattish same-store sales, and you're confident that brand strength is still very, very relevant and strong, and you alluded to the brand market share is intact at 8%. The last 3 years then only two of these things can happen.

One is that people have stopped buying branded bottom wear or they are basically shifting to unorganized. Is there a third thing that I'm missing?

See, I'll tell you from a brand relevance perspective, no, Sameer, see, we are very closely in touch with the consumers who are walking into a Go Colors and buying, right? We are very clear whether we are meeting the needs of the consumer who's buying.

The consumer who's coming in is definitely buying, and we are very, very relevant. Yes, in the last few years, when the overall footfalls are below, our new customer acquisitions have been slightly on the lower side, where the actual quantum of new customer acquisitions have increased, but because the base has increased, the percentage has fallen slightly.

What we are also trying to do as an audience is just to push up how we can push newer audience acquisition, especially the younger age group. That is what we're focusing on.

Got it. Wish you all the best for the future.

Thanks.

Thank you, Sameer.

Yeah. Thanks for the opportunity.

Again, my questions are around the competition and the gross margin part. Gautam, there was an interesting comment made by one of the largest consumer PE funds yesterday on television that there's a silent shift happening in the consumer categories from organized listed traditional players to, say, unlisted agile smaller players basically, and this is happening even in the apparel category where he cited an example of few unlisted players like Snitch, Souled Store, Bombay Shirt Company, Rare Rabbit.

These four brands combined have added ₹2,000 crore of revenue in last year basically, while some of the listed players are still struggling. My first question is how are we measuring this shift basically, because I think there's something missing, right?

Because as earlier participants also highlighted, last 11, 12 quarters SSSG has been muted. There's definitely some sales is happening, but that is being taken away by some of these unlisted players.

That is my first question. Second, a corollary to it, whether high gross margin is an issue for us basically?

Being a listed player, gross margins are very much visible and in public domain and have been on an inclining trend for last 5 years now, and we are seeing the similar trend happening in other listed apparel retailer who has a very high gross margin basically, and they are kind of struggling with the sales growth. Those are the two questions from my side.

See, I think you're definitely right. See, if you compare pre-COVID and post-COVID, right, the number of brands in the retail industry, whether unlisted, whether listed, whether digital, whether offline, has significantly increased.

Right now, and I'm speaking this from a generic perspective. I'm not talking about bottom wear, women's wear, men's wear.

There is a lot more supply of different, different brands across different categories of apparel, and the number of players today are far higher than what it was pre-COVID. That definitely makes an impact on this individual categories.

As far as gross margins is concerned, see, we are in a high gross margin categories because of the kind of category we are in. We are in a very full price sales category.

Because we are able to achieve and keep the 95% of the sales ratio going, that is very clear indicative in our gross margins. The gross margins what we are having is a very clear indication of full price sales ratio and lesser of discounting.

Now the question is whether we should reduce the selling price and push for volume. Even if we had to reduce the selling price, how much would we reduce?

If we would have reduced probably by ₹100 or ₹200, that does not really change the customer's decision to buy that product. Then you'll end up taking a gross margin hit.

From a product pricing perspective, like I also mentioned to Resha, we are keeping the price of the product very sharply priced. It reflects in high gross margins because of lower or, I would say, negligible discounting.

Okay. There's no way to kind of do a pilot project where we can kind of cut pricing around certain products and see if that increases the footfall, because as I said, there is a similar problem with one of the another listed player in apparel segment?

See, from a price reduction perspective, I'm very clear, see, look, we don't have to really rework on our pricing. Our pricing is very sharp, and maybe in a few products, maybe we're over-priced by ₹100 or ₹200, and maybe those are exceptions.

Largely, I would say, more than 90% of our products are very, very sharply priced. I don't really think that we need to take a price cut to boost volumes.

I don't think that is required.

Sure. That's all from my side, and best luck for coming quarters.

Thank you so much.

Thank you, Akhil. Thank you so much.

Good evening. You mentioned that it's a little difficult to guide on store openings, which is fine.

I'm still unable to figure out why unable to guide on store closures in the sense that if there are stores which are double-digit SSSG de-growth for say a couple of quarters or three quarters, aren't they a no-brainer call to shut them down? If so, how many such stores are there which are on the double-digit SSSG de-growth category,

if you could throw some light? See, I think, no, no, we are happy to guide.

We are just calibrating the data, and the minute the data is ready on the smaller stores or maybe negative stores, we will definitely pass on the data to everyone. It is not that we don't want to disclose the data.

We're just calibrating the data and seeing different cuts of it, and we are also seeing what is the lease period of it before we take a call. Once we have full clarity on that data, we will definitely communicate it.

Secondly, on the gross margin side, with the mix towards the value-added compared to the traditional, of course, given the previous callers' questions as well, we have seen the best of gross margins, right? We can't expect any expansion or anything of that sort from here on?

No, see, currently, at a company, we are between us around 62% to 64% of gross margins we are delivering right now. See, from a gross margin delivery perspective, we are very happy, and I don't see any expansion there, right?

What will really create an uptick in the EBITDA margins is that our sales improve, our SSSGs improve, and our operating cost as a percentage of revenue falls. I think that is where the work has to be done.

From a GM perspective, we are very happy with what kind of gross margins we're currently delivering.

Okay. In terms of your capex per store on the large format stores, suppose if you are present in a very nice area where you already have a couple of say small format stores, which for some reason or for negative SSSG you decide to close that, to find an equivalent larger store in a similar area, wouldn't that be a challenge in the sense that the rent per square feet, etc., would be slightly higher than the smaller format store?

Is that right understanding? No,

no, and see, in such locations, right, for us, rent-to-revenue ratio is what we look at rather than rent per square feet. Even if we are taking a slightly larger store, we make a projected revenue for that particular and see what will be our delivered EBITDA on a steady-state basis.

The relocating a store from a smaller store to a mid-sized store will not really result in the drop in EBITDA margins. That we are very careful.

That's one thing which I also had explained earlier in the call that a 600, 700 square feet store if I'm opening, from a unit economics, it will not really change much from a smaller store perspective.

Are we changing anything on the agreement side in terms of the lock-in period, etc., compared to what it was earlier?

No, no, our agreements are very standardized. We do a lease from anywhere from 9 years to 11 9 years to 12 years, and our lock-in periods are very standardized what the industry follows.

I think those are going to be very similar to what we used to do earlier.

Thank you so much. Wish you all the best.

Thank you.

No, no, madam. If there are more questions, please proceed.

From my side, it's not a problem. If there are more questions, happy to answer.

Please, you can let the call continue if there are more questions, no problem.

Hi. Thank you for taking my questions.

First, I wanted to understand from the online channel perspective, is our product structurally not suited for that channel from a unit economics perspective, and is that why it's been such a small share over the years?

Manjeet, I think we have checked that. See, I think our category is a very offline category because of the color, the touch and feel, the fitting.

I think women, in general, prefer and trying the product out in a physical store. Like I remember even during the first wave or second wave of COVID, when our offline stores were shut, but our e-com was up, it's not that we saw a sudden boost in our e-com sales.

In fact, when the store started again post the lockdown, we saw a sudden surge in the store sales as well. Why I'm giving you such an old example is because we've seen this product category is a very touch-and-feel category.

What we've also seen, right, and I'll be honest with you, we did this customer feedback where we asked the consumer why are you not shopping at a Go Colors. That few customers said your store is very close by, it's faster for the consumer to go to the store, try it, rather than wait for the online order to get delivered.

Sometimes what happens is when you have a very large network of stores, the consumer can very easily say, look, hey, I'll go to the store nearby and get it, it's much faster than me ordering it online.

Okay. Got that.

My second question was, as the mix has shifted from about, let's say, 60% on churidar, leggings about 5 years back to much lower level now, I would presume the fashion element of our portfolio has gone up, right? Typically, when I think about it, a higher fashion element brings more supply chain complexity and a higher risk of dead stock in the apparel retail business.

Am I thinking anything in the right direction, or am I missing something over there?

No, no, your question is very, very valid. Yes, when you move from churidar to legging to other value-added bottom wear products, it will not be as core as leggings and churidars, what you're saying is right.

Having said that, even then the category is still largely core. It is not as fast as fast fashion, where every season you're procuring and then you might end up with dead inventory.

If a legging, churidar stays in season for 3 years, 4 years, maybe other value-added products will be for more than a year and closer to 2 years. I think the time period of its relevance reduces, but it's not fast fashion.

It's not as risky as fashion where you can end up with unsold inventory. That's not really the case.

Yes, your question is right. The fashion quotient slightly increases when we're talking about non-leggings and churidars, for sure.

That goes without a saying.

Okay. My last question was on the inventory days, which we have seen over the years, and I think I've read your comments on it over the last few years since you're listed.

I see some apparel brands who can work with a significantly lower inventory day number, right? What is different in our category, because that's one thing which sort of keeps our return on capital quite suppressed overall despite having reasonably good margins, right?

Even in the best of the years, you had done probably 20%. That's where the question is.

I think, look, we've studied our sourcing model and our product portfolio, we feel on a steady-state basis, 85 to 90 days of inventory is what is apt from a product perspective because we have so many size and colors. It'll be very difficult to operate below 85 or 90 days.

Yes, there is room of efficiency, we will keep improving, but that is that number. Currently, we're at about 114 days, and the reason why inventory has slightly gone up is because of muted sales, your inventory days has increased because of muted sales, which I think in the coming quarters it will stabilize.

See, we've been very sharp with inventory. This is a very temporary increase in the inventory days what we're seeing in this quarter.

It'll stabilize in the coming quarters to come. From an efficiency perspective, I think we can bring it down to about 85, 90 days, which we have done it in the past, and I think we'll be able to bring it down to that levels.

Now whether going below 85, 90 days for our kind of category and our kind of SKUs, little tough to go below 85 days.

Got it. Lastly, related to working capital, is there any leeway on payable days, or is that we get a better pricing and that's where the payable days stay in the longer run?

We get a better pricing, that's why we keep our payable days low, and that reflects in the gross margin.

Okay. Thank you for taking my questions.

Thank you.

I'd like to thank everyone for being part of the call. We hope that we've answered all your questions.

If you need more information or any other questions, please feel free to contact Mr. Deven Dhruva from SGA, our investor relation advisors.

Thank you so much.