Go Fashion (India) Limited — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Go Fashion reported stable revenues in Q1 FY26 amidst temporary headwinds in its LFS channel, softer footfalls, and supply chain disruptions from Bangladesh. Despite a 2% SSSG decline, gross margins improved to 63%. The company remains committed to its expansion strategy, targeting 120 net new stores for the year, with a focus on virgin markets and piloting new product categories to drive future growth. Management expressed optimism for demand recovery in upcoming quarters, driven by the festive season.

Highlights

  • Revenue stood at INR223 crores, broadly stable year-on-year.

  • Gross margins improved to 63%, driven by easing raw material costs and a favorable product mix.

  • EBITDA was INR69 crores, with an EBITDA margin of 30.8%.

  • Profit After Tax (PAT) was INR22 crores, achieving a PAT margin of 10%.

  • Same-store sales growth (SSSG) declined by 2%, primarily due to softer footfalls.

  • The company added 27 new stores in Q1 FY26, bringing the total to 803, and aims for 120 net additions for the full year.

  • New categories, including women's topwear and select menswear, are being piloted in 10-15 existing stores.

  • Cash and cash equivalents, including mutual funds and fixed deposits, stood at INR247 crores.

Concerns

  • Softer footfalls and SSSG decline

Key financials

  1. Revenue ₹223 Cr 0%YoY
  2. Gross Profit Margin 63%
  3. EBITDA ₹69 Cr
  4. EBITDA Margin 30.8%
  5. PAT ₹22 Cr
  6. SSSG -2% -2%YoY

What they filed

Q1 FY27: revenue up 0.0%, net profit down 27.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue209 215 205 223 224 +7%195 −9%196 −4%223 +0%
EBITDA64 70 62 69 67 +5%52 −26%50 −19%61 −12%
Net profit21 24 20 22 22 +5%7 −71%8 −60%16 −27%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Store Additions

  • Net Store Additions Store Additions · Full Year FY26 · High confidence 120
    We remain on track to achieving a target of 120 net additions for the full year.

    — Gautam Saraogi

  • Store Additions Store Additions · FY26 onwards · High confidence 120 to 130 stores plus net additions
    FY '26 onwards, we aspire to open 120 to 130 stores plus net additions going forward, given the lower store closure rates this year.

    — Gautam Saraogi

  • Proportion of New Stores in Virgin Markets Store Additions · This year (FY26) · High confidence at least 60% to 70%
    Well, our endeavor is to do at least 60% to 70% of our store openings in new virgin markets.

    — Gautam Saraogi

  • LFS Store Additions Store Additions · Q2 and Q3 · Medium confidence more stable
    In Q2 and Q3, I don't foresee too many LFS additions because we've just added a good number of stores. So we are pretty decently penetrated with our existing partners. So I think over Q2 and Q3, the LFS additions would be more stable.

    — Gautam Saraogi

SSSG

  • SSSG SSSG · Way forward · Medium confidence low single-digit
    Way forward, our first step would be to achieve low single-digit SSSG and improve store level productivity and throughput.

    — Gautam Saraogi

  • SSSG SSSG · next few quarters · Medium confidence mid-single-digit type
    See, I think, look, as senior management, we are trying all levers to ensure that we reach a mid-single-digit type of SSSG over the next few quarters.

    — Gautam Saraogi

New Categories

  • Pilot Stores for New Categories New Categories · next few months · High confidence 10 to 15 stores
    So I think the first phase anyway, we have planned to open 10 stores to 15 stores of pilot stores.

    — Gautam Saraogi

Margin

  • Gross Margin Margin · Annualized basis · High confidence 62% to 63% or 62% to 63.5%
    See, I think it will be in that range of 62% to 63%, Gaurav. I think 63% is what we have delivered in Q1. And I think we will be -- we will be in that range between 62% to 63% or 62% to 63.5%, we will be in that range.

    — Gautam Saraogi

Risks & concerns

  • Softer footfalls and SSSG decline

    high

    SSSG declined by 2% in Q1 FY26 due to softer footfalls, influenced by Eid timing and a general slowdown in retail, impacting even older stores.

    Management acknowledged

  • Temporary headwinds in LFS channel

    medium

    The LFS channel saw a 13% decline in Q1 FY26 due to soft footfalls and issues with key partner stores, though recovery is expected.

    Management acknowledged

  • Supply chain disruptions from Bangladesh route blockade

    medium

    Delayed shipments of key SKUs from Bangladesh due to road transport restrictions impacted Q1 sales, with mitigation efforts underway to move production to India.

    Management acknowledged

  • Inventory risk in new categories

    medium

    Management is proceeding cautiously with new category pilots due to the significant inventory risk inherent in the apparel retail business.

    Management acknowledged

Areas of evasion (2)

  • Exact quantification of the impact of Bangladesh supply chain issues
  • Precise market share data (pending a new study)

Q&A highlights

2 direct
SSSG slowdown and internal actions to recover Direct
See, I think, look, as senior management, we are trying all levers to ensure that we reach a mid-single-digit type of SSSG over the next few quarters. We are turning every stone.

This question addresses the core organic growth challenge and management's strategy to tackle it, which is crucial for long-term investor confidence.

Asked by Rahul Agarwal

LFS channel decline and volatility Direct
So I think the volatility is also to do with the new store additions what we have done because it gets booked in revenues. And obviously, there are footfall issues as well. And yes, in some of our LFS partners, we have also seen a lot of consolidation at their level as well in terms of number of stores.

This highlights the underlying reasons for the underperformance of a significant revenue channel and provides context for its future outlook.

Asked by Sameer Gupta

Impact of Bangladesh supply chain disruption on Q1 growth Partial
Very hard to quantify, Avinash. It's little difficult to quantify, but I'm guessing-there would be a little impact. I wouldn't say that our revenue growth has got hampered only because of Bangladesh. I wouldn't say that, but I'm sure it would have had a small impact.

This reveals a specific external factor that negatively impacted Q1 performance, even if management found it difficult to precisely quantify the financial effect.

Asked by Avinash Karumanchi

3 min read 7 chapters

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.

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