Vedant Fashions Limited — Q1 FY26 earnings call

Call held 31 Jul 2025

Management summary

Vedant Fashions delivered a strong rebound in Q1 FY26, driven by a more favorable wedding calendar compared to the previous year. While revenue and SSG showed robust growth, margins faced slight pressure due to the normalization of marketing expenses which were negligible in the base quarter. The company is shifting its strategy toward retail quality and consolidation of non-performing stores rather than aggressive square footage expansion.

Highlights

  • Revenue from operations reached ₹281 crores, a 17.2% YoY growth.

  • Customer sales grew by 23% YoY to ₹405.7 crores (₹4,057 million).

  • Same-Store Growth (SSG) reported at a strong 17.6% YoY.

  • Gross Margin remained industry-leading at 66.9%.

  • EBITDA Margin stood at 43.2%, impacted by normalized marketing spends.

  • Profit After Tax (PAT) grew 12.4% YoY to ₹70 crores with a 25% margin.

  • Global retail area network reached 1.78 million square feet as of June 2025.

  • Management targeting 8-10% gross store additions for the full year.

Concerns

  • Weak Consumer Sentiment

Key financials

  1. Revenue ₹281 Cr +17.2%YoY
  2. Customer Sales ₹405.7 Cr +23%YoY
  3. SSG 17.6%
  4. EBITDA Margin 43.2%
  5. PAT ₹70 Cr +12.4%YoY
  6. Gross Margin 66.9%

What they filed

Q4 FY26: revenue up 8.7%, net profit up 12.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ1 FY25Q2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26
Revenue240 268 511 367 281 +17%263 −2%492 −4%399 +9%
EBITDA113 122 242 166 121 +7%111 −9%218 −10%179 +8%
Net profit62 67 158 101 70 +13%56 −16%135 −15%114 +13%
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.

Segment breakdown

  • Mohey
    Beating Company Average qualitative SSG Performance
  • Twamev
    Doing very well qualitative SSG Performance

Guidance & targets

Other

  • ASP Growth Target Other · FY26 · High confidence 3.6% - 3.7%
    So, all in all, 3.6% - 3.7% is something which we sort of target as ASP growth, which is one lever.

    — Vedant Modi, Chief Revenue Officer

  • Gross Store Additions Other · FY26 · Medium confidence 8% to 10%
    So, again, I do not want to give a particular guidance as such, but ballpark from a gross number, it should be between 8% to 10% of where we stand at the end of the last financial year.

    — Vedant Modi, Chief Revenue Officer

Market Share

  • Category ASP Jump Market Share · Every Quarter · Medium confidence 80-90 bps
    Alongside the category improvement because the share of Mohey and Twamev is increasing in the Company, there is again a 80 basis points to 90 basis points jump in ASP at a Company level, every single quarter because of this.

    — Vedant Modi, Chief Revenue Officer

Margin

  • Gross Margin Floor Margin · Annual · High confidence >65%
    But our recommendation would be to look at annual level and as a management, we are very comfortable with a gross margin of anything above 65%.

    — Rahul Murarka, Chief Financial Officer

Risks & concerns

  • Weak Consumer Sentiment

    high

    Management noted that consumer sentiment remains weak across the mid-premium industry with no positive shift seen yet.

    Management acknowledged

  • Retail Inflation in Lease Rentals

    medium

    High inflation in metro market rentals is slowing expansion in certain pockets where yields don't make sense.

    Management acknowledged

  • Negative Operating Leverage

    medium

    Fixed lease costs are hurting margins because revenue growth has lagged store additions over the last two years.

    Both acknowledged

Q&A highlights

3 direct
Marketing Spend Normalization Direct
The reason why it looks higher than the same spends in the 1st Quarter of last year, is because... last year we had taken a strategic call of spending close to no money on marketing in the first two quarters.

Explains why EBITDA margins appeared lower YoY despite strong revenue growth; it's a return to normal seasonality.

Asked by Tejas, Avendus Spark

Margin Pressure and Lease Costs Direct
We have been opening stores in last couple of years, but the revenue has not grown to the extent it should have. So that is the reason there is a negative operating leverage which is there on account of the lease cost.

Management admits that aggressive expansion without commensurate revenue growth has created a temporary drag on margins.

Asked by Archana Menon, Morgan Stanley

Franchisee ROI and Inventory Turns Direct
When I talk about Mohey... in the larger stores, Mohey actually has tremendous value in terms of the growth it gives to that particular store... it will be at a very similar ROI level.

Addresses concerns that newer, higher-ASP brands like Mohey and Twamev might dilute franchisee returns due to higher inventory requirements.

Asked by Jignesh Kamani, Nippon Mutual Fund

2 min read 5 chapters

Detailed narrative

Wedding Calendar Rebound Drives Growth

The first quarter of FY26 saw a significant rebound in the wedding calendar compared to the same period last year, which had negligible wedding dates. This shift resulted in customer sales growing by 23% to ₹405.7 crores and a robust Same-Store Growth (SSG) of 17.6%. Management noted that the groom business improved faster than non-groom segments due to the better wedding date alignment.

Margin Dynamics and Marketing Normalization

EBITDA margins were reported at 43.2%, which appeared lower than the previous year's Q1. Management clarified that this was primarily due to marketing costs normalizing at 5.6% of revenue, compared to an abnormally low 2.3% in Q1 FY25 when the company strategically cut spending. Gross margins remained stable at 66.9%, and management expressed comfort in maintaining levels above 65% annually.

Strategic Retail Consolidation and Quality Focus

The company is pivoting from aggressive square footage expansion to improving retail quality. While gross store additions are targeted at 8-10%, net square footage growth may be lower as the company consolidates older, non-performing stores. A specific example cited was the Rajouri Garden market, where a 15,000 sq. ft. flagship is being replaced by a more efficient 7,000-8,000 sq. ft. store to improve throughput and quality of business.

Brand Diversification: Mohey, Twamev, and Diwas

Mohey has transitioned from a bridal-only brand to a broader wedding wear brand, resulting in SSG that consistently beats the company average. Twamev is targeting the 'bridge to luxury' category, with plans to open flagship stores in the top 30-40 Indian markets. Diwas, the newest brand, is focused on the festive wear market and will face its first major test in the upcoming festive season through digital and marketplace channels.

Operational Excellence through Technology and Training

Vedant Fashions is investing heavily in modern technology, specifically the 'VFL Parivaar' app, which provides daily 2-3 minute training sessions for fashion advisors. This replaces the traditional model of infrequent annual training. Additionally, the company is leveraging AI intelligence and 'endless aisle' technologies to improve conversion rates and omni-channel integration.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Consumer Services earnings calls