Thomas Scott

Thomas Scott reported a robust financial performance for Q4 and FY26, marking its 10th consecutive quarter of revenue growth. Q4 FY26 revenue from operations grew 63% year-on-year to ₹78 crores, with EBITDA increasing by 67% to ₹11 crores, achieving a 14.14% margin. For the full fiscal year 2026, revenue reached ₹255 crores, a 58% year-on-year increase, and EBITDA grew 72% to ₹33 crores, expanding margins by 105 basis points to 13.1%. Profit after tax for FY26 stood at ₹19 crores, up 51% year-on-year, with a PAT margin of 7.57%, and the company's ROCE was 22.31%.

The company has successfully transitioned into a digital-first, data-driven fashion retailer, leveraging its 'test-and-scale' model for rapid product launches and inventory management. Proprietary platforms like thread.al and catalog.al are actively used for demand forecasting and catalog management, enabling quick identification of fashion trends and optimized pricing. This technology-enabled approach, combined with manufacturing agility and a multi-brand platform, has been validated by the strong growth, with management stating they are 'only just gotten started' and accelerating deployment of these platforms.

Thomas Scott expanded its product portfolio with early launches in womenswear, which received encouraging traction, and a maiden foray into footwear, both showing healthy consumer acceptance. These new categories are strategically focused on premium brands, aiming for margin and ROCE accretion. The overall portfolio is undergoing premiumization, leading to better price realizations year-on-year and a shift towards higher-priced products, contributing to gross margin expansion.

The company's debt-to-equity ratio is currently between 0.3 and 0.4, largely influenced by a ₹22 crores insurance claim receivable from a major fire incident that impacted inventory. This receivable is currently classified under other current assets, with equivalent bank funding. Management expects the debt-to-equity ratio to reduce to approximately 0.2 upon the recovery of this insurance claim within the next few quarters. While short-term borrowings fluctuate, the company's current limits are deemed sufficient to manage working capital requirements, which have seen improvements in terms of debtors' days.

Thomas Scott operates with a blend of in-house manufacturing and partnerships, with its own factories running at maximum capacity. The company is making continuous investments in expanding its Sholapur manufacturing facility at its own pace. For new categories like footwear, the strategy is to partner with manufacturers to maintain a 'zero net capital investment' approach, ensuring healthy margins and ROCE without significant capital outlay. The company's supply chain planning involves procuring raw materials several quarters in advance to mitigate price volatility, particularly for winterwear.

The company's customer return percentage is around 20%, which is lower than category averages and is continuously improving due to marketplace-led and internal initiatives. The sales mix for the Thomas Scott brand is predominantly online (93%), which includes both wholesale sales to marketplace distribution partners (like Myntra and Amazon) and direct retail. Offline stores contribute about 7% of the brand's revenue, with a strategy for organic growth where store profitability funds future expansions.