Detailed Narrative
Q1 FY26 Financial Performance Overview
Go Fashion reported Q1 FY26 revenues of INR223 crores, remaining broadly stable year-on-year. Gross margins improved to 63%, driven by easing raw material costs and a favorable product mix, resulting in a gross profit of INR140 crores. EBITDA stood at INR69 crores with a margin of 30.8%, while Profit After Tax (PAT) was INR22 crores, achieving a 10% PAT margin. The company maintained a healthy balance sheet with INR247 crores in cash and equivalents as of June 30, 2025.
Same-Store Sales Growth (SSSG) and Footfall Dynamics
The company experienced a 2% decline in Same-Store Sales Growth (SSSG) during Q1 FY26, primarily attributed to softer footfalls. Management noted that April and May saw subdued footfalls due to the early timing of Eid and some geopolitical reasons, though a recovery was observed from June onwards. Older stores (FY15/FY16) also recorded a negative SSSG of minus 4% to minus 5%. Management is actively pursuing various strategies to achieve a mid-single-digit SSSG in the coming quarters.
LFS Channel Challenges and Outlook
The LFS (Large Format Store) channel witnessed a 13% decline in Q1 FY26, despite healthy outlet additions. This volatility was attributed to new store additions, footfall issues, and consolidation among key LFS partners. While the channel has shown significant fluctuations in previous quarters (29% growth, then 3% growth), management is optimistic about its recovery and stabilization in the coming quarters, expecting LFS additions to be more stable in Q2 and Q3.
Store Expansion and New Market Focus
Go Fashion added 27 new stores in Q1 FY26, bringing the total store count to 803. The company remains on track to achieve its full-year target of 120 net store additions, with an aspiration to open 120-130 stores annually going forward⏳. A significant portion, at least 60% to 70%, of new store openings are planned for virgin Tier 2 and Tier 3 markets, aiming for horizontal growth and reaching new customer bases.
New Category Expansion (Topwear & Menswear Pilot)
The company is in the process of rolling out new categories, including women's topwear and select menswear, across 10 to 15 pilot stores. The initial launch is set for the first week of August, primarily utilizing existing stores with extra space, with only about one new signing among the first 10-15 pilot stores. Management emphasized a cautious approach due to the inherent inventory risks in the apparel business, aiming to gain experience before wider expansion.
Supply Chain Disruptions and Mitigation
Q1 FY26 sales were impacted by temporary supply chain disruptions, particularly from Bangladesh, which led to a blockade of road routes. This resulted in delayed shipments of selected SKUs, with goods arriving late in June. In response, Go Fashion is moving some production to India for winter '26 and ensuring shipment timelines are met to prevent future delays, thereby reducing its exposure to the Bangladesh route.
Gross Margin and Inventory Management
Gross margins improved to 63% in Q1 FY26, driven by easing raw material costs and a favorable product mix. The company aims to maintain gross margins within the 62% to 63.5% range on an annualized basis. Inventory days stood at 98 days, which management intends to further optimize. The inventory for the new category pilot is also included in this figure, with bottom wear inventory being optimized over time.