ARVIND FASHIONS LTD (NSE: ARVINDFASN) Q3 2026 Earnings Call dated Jan. 29, 2026
Corporate Participants:
Girdhar Chitlangia — Chief Financial Officer
Kulin Lalbhai — Non-Executive Director
Amisha Jain — Managing Director and Chief Executive Officer
Analysts:
Unidentified Participant
Avinash K — Analyst
Priyank — Analyst
Taisha Shah — Analyst
Prakash Kapadia — Analyst
Palash Kawali — Analyst
Neeraj — Analyst
Ashutosh — Analyst
Andre Purushottam — Analyst
Pooja — Analyst
Shreyas J — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q3NFY 26 results earning conference call of Irwin Fashion Limited. As a reminder, all participant line will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchdown phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Girdha Chitlangya. Thank you. And over to you sir.
Girdhar Chitlangia — Chief Financial Officer
Thanks Dinesh hello welcome everyone and thank you for joining us on The Arvind Fashions Limited earnings conference call for the third quarter ended 31st December 2025. I am joined here today by Kulin Lalbhai, Vice Chairman and non Executive Director and Amisha Jain, Managing Director and CEO. Please note that results, press release and earning presentation have been mailed across to you yesterday and these are also available on our website arvindfashions.com I hope you had the opportunity to browse through the highlights of the performance. We will commence the call with Colleen providing his key strategic thoughts on our third quarter performance.
Post that I will hand over the call to Amisha to take us through the financial performance and the business highlights. After the end of the call after the end of the management discussion we will have a Q and A session. Before we start I would like to remind you that some of the statement made or discussed on this call today may be forward looking in nature and must be viewed in conjunction with risks and uncertainties we face. A detailed statement of these risks is available in this quarter’s earning presentation. The company does not undertake to update these forward looking statements publicly.
With that said I would now turn the call over to Colleen to share his views. Thank you and over to you Kulin.
Kulin Lalbhai — Non-Executive Director
Thanks Gizzar. A very good afternoon to you all. Thank you for joining us for the Q3 results. I’m very happy to share that this quarter we have seen the highest year on year growth in several years. We have grown at consistent double digit growth rates over the past few quarters which demonstrates that our growth drivers have fallen in place. The demand environment was stable and we achieved a 4.5% growth led by healthy LTL growth of 8.2% in the retail channel and around 50% growth in the direct online channel leading to an overall 18% growth in EBITDA with a 40 basis points margin expansion.
Our PAT adjusted for the onetime wage code related charge has also grown by 65% which shows strong operating leverage coming through moving forward with a strong addition in square footage, a healthy LTL growth and robust growth in our direct online and adjacencies, we hope to maintain this growth momentum. We continue to stay focused on our mantra of profitable growth resulting in further improvement in return on Capital Employed. Arvind’s reacquisition of a 31.25% stake in AYDPL reinforces Flying Machine strategic importance within the AFL portfolio with the brand positioned as a key growth driver in the denim led youth fashion market.
I would like to now hand it over to Amisha Jain to take us through the specifics and more details about our financial performance.
Amisha Jain — Managing Director and Chief Executive Officer
Thank you Colleen Good afternoon everyone. Wishing you all and your families a very very happy New Year and a warm welcome to the investor call for the quarter ended December 31st, 2025 Q3 of FY26 marked another strong quarter for us with revenue growth of 14.5% driven by consistent execution across our direct to consumer channels. We delivered a robust 8.2% like for like growth, nearly 50% growth in online B2C and a sustained double digit secondary growth in our wholesale channels. In the quarter gone by NSB stood at 1,377 crores as against 1,203 crores in the previous year.
Same quarter and our EBITDA was 195 crores versus 165 crores. We continue to grow our direct channels. These together now account for nearly 63% of sales, a 260 basis points higher share over last year. Retail growth is very healthy at double digit with very good like for like at 8.2%. Our expansion gathered pace and we’ve added over 41,000 square feet of retail space in this quarter. We are in line to open 1.5 lakh square feet in FY26. Our strategy is to pivot our online sales towards online B2C and that is also yielding really good Results.
Our online B2C grew by nearly 50% taking its share to 17% with significant improvement in channel margin coming to wholesale. The wholesale channels also grew double digit with some billing of Q2 which was which was impacted by GST transition earlier that got moved into this quarter. Both MBO and department stores secondary sales have also witnessed a very strong double digit growth. Now moving on to brands during this quarter we acquired Flipkart stake in Flying Machine. We believe Flying Machine offers a tremendous growth opportunity and going ahead it will operate with a very sharply positioned role.
A Gen Z focused unisex fashion brand anchored in on trend expression with denim at its core. Flying Machine will launch its dedicated D2C platform in fiscal 27, creating a direct to channel more directly communicating to the consumers, building relevance, community and cultural momentum with our Gen Z consumers at a brand level. Further, US Polo continued its momentum and grew exceptionally at over 25% led by impactful execution across all consumer touchpoints. Growth in other brands was nearly to high. Single digit PVH brands growth was impacted due to geopolitical supply chain disruptions and transition to a new GST regime where GST rates have increased from 12% to 18%.
Talking about other categories, those also grew really well and almost all of these growing in excess of 20%. These were predominantly led by footwear which is now back to a very high growth. We believe that the disruption caused by implementation of BIS norms is now behind us. Overall adjacent categories grew at 23%. Among the other metrics that showed improvement are inventory freshness and gross margin. Inventory freshness is at an all time high and gross margin is improved by 50 basis points. We continued our focus on advertising spends among the balance sheet metrics. Overall working capital remained stable.
Inventory buildup was to mitigate any geopolitical disruption. This has also helped us improve freshness and on time Season Launch coming to the PNL the growth in EBITDA at AFL in Q2 is 18.2% of 40 basis points led by gross margin improvement. Since there was early onset of festive season and wedding season, we entered EOSS a week earlier than usual. Overall discount was higher but better channel mix, cost efficiencies and selects have led to improvement in margin in this journey of profitable growth. The PAT which is excluding code on wages impact in Q3 is at 44 crores versus a growth of 65% over last year.
The growth in PBT is nearly 20% again excluding code on wages. As we enter last quarter of the year, we are reasonably confident of maintaining our growth rate. We will continue our store expansion and we hope to achieve a net square feet addition of 1.5 lakh square feet for this year. Our consistent execution on product in store experience will help us deliver a healthy double digit growth in retail and direct to consumer channels. We also expect that the government initiatives will aid higher consumer disposable incomes leading to a demand improvement across categories in the medium term.
The outcome will of course depend on how the market environment shapes up. Thank you.
operator
Team. Can we begin with the question and answer? Yes, thank you ladies and gentlemen. We’ll begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchdown telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. Our first question comes from the line of Avinash K. From Motilal OSWAL Financial Service Ltd. Please go ahead.
Avinash K — Analyst
Hi sir. Congratulations on a very good set of members. So if I heard right, you said like US Polo, growth is 25% for a brand which is almost at 2000 crores, what drove such a huge growth in this quarter?
Amisha Jain — Managing Director and Chief Executive Officer
Thank you. Thanks for your question. I think that’s a great question and I think we’re quite excited to see the way some of the growth drivers around US Polo are shaping up. I think kind of if you were to talk about how some of the initiatives that were put in place. One large thing that we’ve been talking about is its product. I think the one thing that we’re seeing is that US Polo product elevation is extremely visible in the market. The consumer is taking that really well. We’ve been driving premiumization and that is another trend that has worked extremely well for US Polo.
So all in all, I think from a product assortment point of view, our strategy is on point and I think we’ve been going extremely well. The second thing is we did double down on how our distribution looks like in US Polo and our retail expansion has been targeted towards that. So shutting down of non performing stores but predominantly expanding retail has also led to significant growth. The third piece is that the other categories have been doing really well and we’ve doubled down on that, especially with U.S. polo. And if you look at it from that perspective, inner wear, footwear, kids and womenswear have clocked upwards of 25% growth as well.
So I think from all in all, I think our growth drivers in US Polo have been significant. We’ve also seen coming back to direct to consumer growth driver for us, we’ve also seen an 80% plus growth in online as well. So overall when you look at it both all channels firing retail doing extremely well and online channel doing really well, that has led to the growth of U.S. polo.
Avinash K — Analyst
Okay, okay, understood. My only concern is that this isn’t the case of channel filling or inventory stuffing which led to growth in the near term.
Amisha Jain — Managing Director and Chief Executive Officer
We are like for like in US Polo. Overall from a retail point of view the retail growth is at 23% and a like for like in US Polo is at 11%. The other important thing to note is it’s a mainline business in retail and our direct to consumer business that has actually grown. And when you look at our wholesale numbers, also our wholesale, while it is at double digit, if you were to remove the outflow from of Q2 are actually between Q2 and Q3, we are actually in line with the standard growth of wholesale as well.
So it’s really the consumer offtake that is driving us. Polo.
Avinash K — Analyst
Okay. That’s a very good number actually. Congrats.
Amisha Jain — Managing Director and Chief Executive Officer
Thank you.
Avinash K — Analyst
Yeah. Second thing is a little bit of bookkeeping question. If you look at like employee cost, they have grown up by 23% this quarter. So is it a one off or how should we read it?
Amisha Jain — Managing Director and Chief Executive Officer
Sure. So I think there are two parts to it. Employee benefit expenses have gone up slightly in this quarter. More, you know, sort of putting in some money towards the employee welfare expenses, which is a one off. And also some of it is the ESOP charge. But I’ll also highlight one thing. As we spoke last time also I talked about some of the growth drivers and one critical growth driver that we had highlighted was our investment towards data, AI and consumer centricity. And so we’ve also had, you know, we’ve kind of ramped up hiring there and that’s what you’re seeing as well in the consumer intelligence piece and also invested towards some of the strategic pieces while we’ve done this.
What you will see coming next year is that you know, these numbers should come in line with the growth of, of the business as well.
Avinash K — Analyst
Okay. So most of it is like study structural basis. You’ll see a similar kind of 80 course run rate going forward.
Kulin Lalbhai — Non-Executive Director
Yeah, there will be small cost. Hi Gar here. There could be small, you know, one time which will drop off some of the staff welfare kind of a thing. But yeah, otherwise it will be pretty consistent like this.
Avinash K — Analyst
No. Okay. Okay, that’s it. From my side. I’ll join the queue. Thank you, sir. Thank you, ma’. Am.
Amisha Jain — Managing Director and Chief Executive Officer
Thank you.
operator
Thank you so much. Our next question come from the line of course to power score from ICST Direct. Please go ahead.
Unidentified Participant
Yeah. Good afternoon, ma’. Am. Congrats for a good set of numbers. My question is on flying machine now since we have consolidated it and we have brought the brand under our pd. So now we will definitely look to look to redefine the strategy for the brand. Suppose how much time will it take brand to really get back to its original growth rate or maybe when we can see brand really start performing and adding materially to the growth and profitability of the company.
Amisha Jain — Managing Director and Chief Executive Officer
Sure. Great. Thanks for the question. I just want to kind of step back and talk about Flying Machine holistically. If you were to kind of look at from a market point of view. We believe that there is a tremendous opportunity in front of us in Flying Machine. As you can see from a denim point of view, there’s a large gap between the number one player in the market and rest of the brands. We have a belief that Flying Machine, with its equity that it holds and the positioning that it has had, we believe that it can be one of the largest denim players both in men’s and women’s segment.
And tying to that also, one big thing, that one big push you will see is us addressing the Gen Z consumers in the market from a portfolio point of view. Flying Machine is actually really, really well positioned to kind of take on that space. And that’s why we’re bullish about it now. Given that we will also see that our channel strategy will align that way so we will have a bigger, bolder digital strategy. You will see us launch theflyingmachine.com in the coming fiscal year and some of those initiatives will start lining up as we start working closer towards the market in terms of how we are targeting the consumer, serving the consumer and addressing the consumer from a product portfolio point of view.
Now having said that, what you will see in this quarter, the way we’ve performed, we’ve seen a 17% like for like in Flying Machine in the stores as well. And our B2C on flying machine has grown by about 40%. Department store has grown by about 35%. So to the question that you’re asking, we’re already seeing green shoots. We’re already seeing that the brand is sort of on its path and we will need another couple of seasons, maybe two to three seasons where you start seeing the brand sort of coming into more of its mainstream growth as well.
But I would also emphasize that it’s already on that path now obviously given the movement, given that we’ve now bought the stake, etc. What you will see us do is line it up better in terms of how it we will cater to the Gen Z consumer through other marketplaces. So it’s. It opens up a few more avenues for us as well. And you know we are quite bullish about it. We will see momentum in this brand continue over the next few seasons.
Unidentified Participant
My related question to it is since you are making it more a Gen Z Focus kind of a brand, what how will be the pricing differentiate you know, differentiation will be with some of the brands which are already there in the market. So you know, some of the premium brands which are already there in the market and their focus might be something else, but you are focusing more from the Gen Z kind of a brand concept. So will there be any material price difference which will be available in the market?
Amisha Jain — Managing Director and Chief Executive Officer
See, I think when you look at Flying Machine, it is actually very well positioned to be this strong youth denim brand. And when you look at the product market fit, I think it’s got actually a phenomenal product market fit as well. Our products are priced exceptionally well for the value that we’re offering. And so from that perspective, I feel that from a consumer point of view, it’s actually very well poised to serve that segment of the consumer.
Unidentified Participant
Okay, thanks. Thanks for the understanding and all the best for your quarters ahead.
Amisha Jain — Managing Director and Chief Executive Officer
Thank you.
operator
Thank you. Next question comes from the line of Priyank from Vellum Capital. Please go ahead.
Priyank — Analyst
Hello, I hope I’m audible. Yes, my question team, my question is on the, on the when I have to look at non controlling interest which has dropped quarter on quarter and also on a long term run rate. What explains this? Is it pvh?
Amisha Jain — Managing Director and Chief Executive Officer
Some.
Priyank — Analyst
I mean the growth issues at the PVH and what, what, what would that be? If you can elaborate on that.
Girdhar Chitlangia — Chief Financial Officer
So hi Priyank Girder here. You see in the last quarter there was a code of wages impact on the PVS business which subdued its profitability by some bit. There was a FM model change also where we moved to a different model with a couple of our partners. So because of which we had to reverse some of the sales and take a negative position on the P and L. So those are the two which explain the large part of the drop. However, having said that, I think when the GST was rolled out there were some headwinds on the PVS business early in October and sometime till November post which businesses stabilized.
I think there was a price increase and consumers found it a little difficult to absorb and buy. But since middle of November till December and now we are seeing quite healthy growth and those numbers are coming back. So largely it is attributed to some slowdown in PVH in the early part of the quarter. A labor code impact and a fm. Yeah, the largely the PV impact early in the quarter was because of the GST where prices had to be increased.
Priyank — Analyst
I couldn’t get the first point move to the different business partners. And could you explain me that what was the change in the business model?
Girdhar Chitlangia — Chief Financial Officer
Yeah, for the flying machine we had to move to an SoR model with couple of our partners. So whatever was the inventory, we had to take it back and you know, we started recording sales on a secondary basis. So the residual inventory at that transition time had to be recorded as a reversal of sales in our books. Which. Increased the loss and hence the minority interest went down.
Amisha Jain — Managing Director and Chief Executive Officer
I think, I think the pvh, the only point is that given the gst transition from 12% to 18%, we did pass on and increase prices there. So I think there was an interim blip that we saw in terms of that sticker shock. But what we’ve seen now is that the sales are stabilizing over there.
Priyank — Analyst
Got it. So ma’, am, when I have to just reconcile the like to like numbers, the US Polo would have grown at 11 FM at 17. PVS might have seen slight decline. So if the numbers are so high, so what? So the balancing number comes only for Arrow, which also would have been negative. How does this reconcile on a total 8% like to light growth that we have reported?
Amisha Jain — Managing Director and Chief Executive Officer
Yeah, so see, all our brands have grown. I mean we’ve grown overall at 15%. Our brands, you know, sans US Polar have grown at about single digits. And you know, like for, like for example you were talking about, has grown at. For FM has grown at about 11%. PVH has also grown. The thing with Arrow has been that there have been two. Two things. One is we did see a little bit of a supply disruption because of the movement of goods from Bangladesh and some of the key inventories were a little delayed into the market, which got streamlined a little bit post November and now we’re kind of on track.
Right. So there was this minor, you know, sort of that movement led to us participating into the wedding piece a little later, which impacted Arrow a little bit. While Arrow has grown, it has grown in early single digits overall. What we see now is that all our brands are actually on a pretty solid positive growth.
Priyank — Analyst
Sorry, I’m just reconciling the numbers again. You said US Polo light to light growth would have been early double digits and FM also 11%, is that right?
Amisha Jain — Managing Director and Chief Executive Officer
Sorry, say that again please.
Priyank — Analyst
I’m saying, just getting a clarification on the numbers that you spoke out. US Polo would have been 11% and even FM flying machine would have been 11% on the light to light growth.
Girdhar Chitlangia — Chief Financial Officer
Yeah, but share of Priyank share of FM is very low. You know, while the number is double digit, the share is very low. And hence, you know, on an overall basis the weighted average will still be 8%.
Priyank — Analyst
Got it. And one last thing, on a overall strategic part, when I have to look at 9 months performance despite the solid performance on the top line, what we are yet witnessing is not all the gross. I mean yet on the EBITDA level, the uplifting has been done only via gross margin gains. I mean the gross margin mix of course with the retail going up is also going up, but it’s not completely populating down into the EBITDA margin, which means that we are yet on an investment journey for our brand. When do we see the gains coming from the operating leverage and not only via gross margins, which will give us a confidence that the brands which we are expected to turn around are actually performing well.
Amisha Jain — Managing Director and Chief Executive Officer
So I think if I were to step back, as you may have noted that we’ve expanded our margins by 140bps over the last two years with a focus on cost and other efficiencies. And so with confidence on growth around double digit, we believe that operating leverage is possible in the business and we expect EBITDA to grow more than 15%. And I think that’s something that you’ve seen consistently as well. We have seen operating leverage year over year on fixed costs, excluding the one time cost as well. So I think with all of that in place, we have also said that, you know, we want to make sure that we will continue to invest towards advertising as well and we do to spur growth also.
So I think we are in line with, with that kind of an investment and given our growth trajectory, we are confident that we will be able to see more than 15% in terms of EBITDA growth.
Priyank — Analyst
All right, thank you.
operator
Thank you, sir. Our next question comes from the line of Taisha Shah from Avidis Spark Institution Equities. Please go ahead.
Taisha Shah — Analyst
Hi, thanks for the opportunity and congrats on good set of numbers. Just wanted to start with, could you help us understand the strategic rationale behind increasing the online B2C contribution and which of the three objectives it is primarily aimed at? Is it growth profitability or working capital efficiency?
Amisha Jain — Managing Director and Chief Executive Officer
Yes, I think at a broad level we’ve called out that direct to consumer is a key growth driver for us and us kind of getting more and more closer to the consumer. It does a few things for us as a consumer organization, as a brand organization. As we stay closer to the market, our learning and understanding of the consumers increases and how we kind of pull that back into a feedback loop. Not just from the way of how we are communicating to the consumer, but also from a perspective of how we are serving the consumer.
The learnings around product and our entire value chain. So there’s one large element of saying that as a brand we want to be closer to the consumer and want to make sure that we are center of culture, adapting to whatever the consumer is shifting towards and we are able to do that faster. And hence we’ve always maintained that we would like to take this number of us from a direct to consumer point of view. We do want to take it to about a 75%. We are at 63%. If you were to look at it from our share of business point of view.
Right. Overall it also a second point is I think it allows us to actually also maintain pricing and keep that in check. It allows us to continue to control the discounting, allows us to kind of again bring some of those gross margin and EBITDA numbers in check. Right. So I think that’s the last second piece of it in terms of how it will enable us to improve overall structural economics of the business as well.
operator
Got it.
Taisha Shah — Analyst
Second, just wanted to know what are the you spoke about the distribution interventions that we would have made in US Polo to deliver this kind of robust growth. So first, if you can elaborate a bit on distribution intervention that we would have made recently. And second, what is the white space or total universe which is available the way you see it today, which gives you visibility of 2 to 3 years growth in this particular brand?
Amisha Jain — Managing Director and Chief Executive Officer
So the first part of your question was on distribution for US Polo, right?
Taisha Shah — Analyst
Yes, yes.
Amisha Jain — Managing Director and Chief Executive Officer
I think I’ll kind of go back to again saying that our growth driver as a growth driver, I think there are a couple of things that we had called out. One is retail expansion. Second is kind of doubling down our focus on making sure that we drive retail efficiencies and hence like, for like growth. The third being digitization in general and obviously driving adjacent categories. Now when you apply this to US Polo, it’s firing on all of these fronts. In terms of retail stores, we’ve been at a pretty solid expansion trajectory and by the end of this year overall at a portfolio level, we will add net 1.5 lakh net square feet.
Addition is what we will end up doing. US Polar obviously is driving a good chunk of this. At the end of the year, US Polo will be at about 400 plus stores and we would have added close to 60 stores in US Polo. Having said that, US Polo is clocking very well in terms of the retail like for like also. Plus on top of that, when we look at the online play in US Polo, I think what we’re doing is ensuring that the right product is reaching the consumer through this online channel as well. And there we are also seeing that the growth in online of US polo as a brand is actually pretty strong.
So all in all, if I were to look at it, our direct to consumer channel strategy is actually playing out really well for the brand.
Taisha Shah — Analyst
Perfect. And last one if I may. What’s your read on the health of inventory and working capital as it’s today? Because at least on paper it looks like it has grown faster than nine month revenue growth.
Girdhar Chitlangia — Chief Financial Officer
Yeah, I will answer. I will take that. You see health of inventory, we are, we are perhaps at the best ever health of inventory. Our, you know, inventory which is more than two years is lowest ever I think the last three, four years. Yes, I agree that the inventory levels seem a little higher but please understand that we are nearing an election in Bangladesh in February and to de risk some of those issues. And you know almost 15% of our product comes from Bangladesh. So to derisk that we actually took a conscious call to invert some of the inventory in late December which is showing up.
We believe that this is transitionary over the as situation stabilizes we will come back to normal inventory terms of between 3.8 to 4 somewhere there actually.
Taisha Shah — Analyst
Thanks and all the best for coming quarters.
Amisha Jain — Managing Director and Chief Executive Officer
Thank you.
operator
Thank you so much. Our next question comes from the line of Prakash Kapadia from Kapadia Financial Services. Please go ahead.
Prakash Kapadia — Analyst
Yeah, thanks for the opportunity. Couple of questions from my end. You know you’ve been guiding and achieving, you know, the meet teams growth over the last few quarters and you’ve been talking about, you know, some of the tailwinds over the last few few months. So given some of these tailwinds, shouldn’t you know, growth aspirations now be slightly higher than what we’ve been targeting and achieving of that broadly 11 to 14% sales growth range. And also it will be helpful if you could comment on adjacent categories. How crucial is that to our growth strategy? What is the contribution of adjacent categories to our.
And lastly, what would top 10 cities be contributing to our overall sales? Those are my questions. Thank you.
Amisha Jain — Managing Director and Chief Executive Officer
So I think. Thanks for the question. I think when you look at growth over the last three quarters and as you pointed out I think we’ve shown significant momentum and that’s also on the back of again the strategic growth drivers that we had set up. Right. The team has been really focused on ensuring that we drive solid execution behind the strategy that we’ve kind of put together now. We continue to be confident that we will be able to post double digit growth for this year. Right now, as you mentioned, in terms of the tailwinds which are external, the government stimulus and the GST rationalization, etc.
We do believe that in the medium term that should help build the consumer demand and we remain hopeful that that will contribute as well. Having said that, I would still say that we are confident that we will start driving towards and we will maintain our trajectory of growth between 12 to 15%. We have been delivering at a little higher end of that and given the growth drivers that are in place, we believe that we will continue to clock in that direction. In terms of the second question that you asked around the adjacent categories, we are an overall from a portfolio point of view, our five brands are actually pretty solid.
And as I had mentioned last time as well that for us we do believe there is significant room for us to grow within this portfolio and our other categories obviously are a key driver of that. Having said that, the mainstream business and I’ll come back to the conversation on all our brand, the mainstream business actually, which is more more from an apparel point of view actually keeps clocking in the same range as well. Adjacent categories are critical because as you look at our brands, consumers are expecting this and our brands are actually more from a lifestyle positioning point of view.
These are end to end brands and hence for us the adjacent categories are critical. In terms of when I look at brand by brand, I think overall from a portfolio point of view, about 25% odd of our portfolio sits within the adjacent category and this drives significant growth. We do believe there is headroom for growth over here. Footwear has come back to 20% plus and so is in that range. Women’s has clocked about 50% plus growth. While all of this still women’s is still in very, very early days. But overall our belief is that these are some of the growth drivers of the future.
While we continue to drive it, I will kind of still emphasize that our mainstream from an apparel point of view, actually it’s quite heartening to see the way our brands have been growing in the men’s apparel space as well.
Prakash Kapadia — Analyst
Okay, okay. And if you could have that top 10 cities contributions from here on, you know, how does growth, you know, pan across? Is it pan India? Is it more aspirational? Is it beyond the top 20 cities? Some color or context will help.
Amisha Jain — Managing Director and Chief Executive Officer
So overall if you look at a brand portfolio, we are present across about 150 cities and you know, we will close the year at about in the entire portfolio we’ll close this year with about 1,000 plus stores within our portfolio. We do believe there’s a potential for us to expand within the top tier cities further and we will only keep going in that direction. We will also try to, we will continue to improve the boxes, the size of the boxes and our retail expansion will continue from a net square feet addition as well. Right. So from that perspective, to answer your question, we do have a focus on the top tier cities and we will continue on the specifics.
We will get back to you on those numbers.
Prakash Kapadia — Analyst
Sure. Thank you.
operator
Thank you so much. Our next question comes from the line of Palash Kawali from Noama Asset Manager. Please go ahead.
Palash Kawali — Analyst
Hi. Thank you for the opportunity. Hope I’m audible. My first question is on channel mix. So when do you see this growth in online D2C stabilizing or name to reversion in this channel?
Girdhar Chitlangia — Chief Financial Officer
Can you just, can you yeah, repeat the question.
Palash Kawali — Analyst
So my question was on channel growth. When do you see this growth in online D2C stabilizing? You have been growing pretty well in the channel. So when do you see the growth reversing to mean.
Girdhar Chitlangia — Chief Financial Officer
So over the last four years we have been actually trying to defocus on B2B while increasing our focus on B2C. I think the importance of both the channels will always remain. And as we go ahead, I think B2B is largely, you know, used during the last Tower events plus some other events that are there. But B2C will be a continuous focus. And as we, as of today we see there is a, there is a big traction and there seems to be quite, quite a lot of natural demand which is coming. So I mean we are currently clogging more than 50%.
And yes, I mean at some point this will become stabilized and we believe that it could be overall online growth will continue to grow at 20 to 30% year on year in the, in at least in the next near future.
Palash Kawali — Analyst
That’s really helpful. And is this one of the biggest driver for gross margin expansion for you?
Girdhar Chitlangia — Chief Financial Officer
There is surely an advantage of, you know, increasing share of the B2C. Whereas Misha said earlier we are able to control the pricing and discounting. However, I think a large part of our improvement is coming from, you know, both retail as well as B2C.
Palash Kawali — Analyst
So this expansion should continue going forward as well, right?
Girdhar Chitlangia — Chief Financial Officer
Yes.
Palash Kawali — Analyst
Okay. Okay. And the next question was on can you like, can I, can we see the success of adjacencies in other brands like Arrow and Smart? Is that possible?
Amisha Jain — Managing Director and Chief Executive Officer
See, I think like, I think every Brand has its journey and currently, you know, we are building adjacent categories where we believe there is relevance and we will continue to drive that and the scope of that and the scale of that is something that we will drive from where the brand stands. Right as we are looking at Arrow and FM and you know, we’ve been on this journey and Arrow is a little ahead of FM in terms of the direction and how the brand is now positioned and turned around. While we are on this journey, whenever it is relevant, wherever it is relevant, we will start driving additional build out of some of these other categories.
But it’s more to do with the way the brand is built out. And I wouldn’t say that all brands will go at the same pace on that.
Palash Kawali — Analyst
Okay, thank you. Thank you. Thank you so much. That’s it.
operator
Thank you. My next question comes from the line of Neeraj from White Pine Investment Management.
Neeraj — Analyst
Yeah, I want, I wanted to get the like for Life for the FM. Was it 11% or 17%?
Amisha Jain — Managing Director and Chief Executive Officer
The like for like for SM is 17%. But like I had said earlier as well, I think we need to keep in mind that it’s a very small, you know, part of our, from a retail portfolio point of view.
Neeraj — Analyst
Understand. And can you give the like for like Arrow and the easiest branch.
Girdhar Chitlangia — Chief Financial Officer
So usually, you know, the brand wise data we don’t share. I’m happy to connect with you offline so that we can discuss some of these.
Neeraj — Analyst
The reason I was asking, wanted to know on the at least the formal offtake in the market, how is it considering that there is a marriage season upcoming?
Amisha Jain — Managing Director and Chief Executive Officer
Yeah, I think see when you look at the quarter, right. I mean wedding season was earlier this year and like I had mentioned the formal, I mean for us Arrow has been doing well. It’s coming to the place slowly as we kind of, you know, drive the transformation of this brand. We are getting to a place and in a couple of seasons we will see a shift there as well. Further, we are seeing an offtake. But having said that, you know, Arrow participates more from a formal wear point of view. And for us the thing is that we partake in a very minimal level from a wedding perspective.
So our observation on a formal market would be only limited to the scope of what, what we cater to.
Neeraj — Analyst
Okay, and last question, on the margins on. I know you don’t give brand wise, but can you give a color when these arrow and FN can. Sorry, the arrow and fn, yeah. Can break even or move to a reasonable number in EBITDA margins.
Girdhar Chitlangia — Chief Financial Officer
So Arrow as we Speak post index is profitable and obviously there is a journey between the brands. Flying Machine, as we have said earlier also I think is still work in progress and it is about 2 to 3/4 behind Arrow and we are hoping that end of the next year probably we’ll see some EBITDA profitability in that brand.
Neeraj — Analyst
Got it. So once it stabilizes, whenever, maybe a year down the line or so, where do you see the margins stabilizing at range?
Girdhar Chitlangia — Chief Financial Officer
So Arrow can reach, you know, mid single digit in my view within a year and Flying Machine, as I said earlier, can near a precument.
Neeraj — Analyst
Okay, great. Thank you.
operator
Thank you. Next question come from the line of Ashutosh from ICSE securities. Please go ahead.
Ashutosh — Analyst
Yeah, thank you for the opportunity. So ma’, am, my question is on the overall demand scenario. So if you see that many of the value retailers have specifically highlighted that the demand is very soft and they have given reasons like it’s like overall subdued demand along with the competition that is there. But for Arvind, like how is the premium segment performing? And also just want to add in this, one of the largest value retailer in quarter two said that the initial GST benefits actually went to the large ticket items and they said that it will gradually flow to the discretionary side like the apparel.
So are you seeing any on ground trends regarding that and overall premium segment, how it is doing the customer trend given it’s almost like one month has already passed in Q4. Thank you.
Amisha Jain — Managing Director and Chief Executive Officer
So I think for us, you know, our brands, the one thing again going back to our strategy, we have been following a premiumization strategy and that we have seen has been doing well. The demand from a consumer point of view has been actually pretty solid for our brands and that stability we see and we are expecting that to continue in Q4 as well. While it is only a few weeks into Q4, we remain hopeful that we should be maintaining our trajectory of growth in the, in the 12 to 15% zone as we’ve committed in terms of the, I mean I can’t comment on the value retail part of it, but I will say that from a GST perspective, we do believe that, you know, some of these initiatives should come back to, you know, boosting demand in a positive way in the medium term.
While we may not have seen an immediate effect.
Ashutosh — Analyst
Okay, okay, understood ma’. Am. And my next question is on the Q3 growth. So you said that there was some Spillover from quarter 2. So what would be the normalized growth for Q3? Like we can exclude the spillover.
Girdhar Chitlangia — Chief Financial Officer
I think the impact could be, you know, less than a percentage. I would say not much.
Amisha Jain — Managing Director and Chief Executive Officer
I think the way to read it would be if you look at MBO between Q2 and Q3, it would look at a normalized growth of NBO both put together.
Girdhar Chitlangia — Chief Financial Officer
Yeah.
Ashutosh — Analyst
Okay. Okay, Understood. Thank you. Thank you, ma’. Am. Thank you, sir.
Amisha Jain — Managing Director and Chief Executive Officer
Thank you.
operator
Thank you. Our next question come from the line of Andre Purushottam from Cognito Advisors. Please go ahead.
Andre Purushottam — Analyst
Yeah, congratulations for a good set of numbers. I wanted to ask about margin levers on four sub dimensions. Okay, so I’ll just teach. Take each of the sub dimensions one by one and ask you, if I may. Firstly, you mentioned operating leverage right now. I wanted to understand apart from, let’s say, the spreading out of overhead to a large number of stores, etc. What are your sources of operating leverage and how do you see that panning out in the near future?
Girdhar Chitlangia — Chief Financial Officer
Okay, what is your next question? Keep going.
Andre Purushottam — Analyst
Yeah. Second question is very. Okay, the other c is premiumization. How important is premiumization to you and how much is that contributing to margins? The third question is cost control. How important is cost control and where are the areas of cost control? And the fourth question is that if you’re increasing percentage of online sales from the current 17% to whatever they might be in the future, how much will that contribute to improving margin? And have I captured all the margin levers or are there any other significant margin levers that I have missed out on?
Amisha Jain — Managing Director and Chief Executive Officer
I think at a broad level I’ll say that, you know, premiumization is a very important strategic lever. And when we look at our product portfolio across our brands, we have been driving a premiumization strategy. And what we have seen is that the consumer is responding really well to that. Our brands are not. While they are premiumizing, the product market fit is actually quite phenomenal and our brands are all positioned in an aspirational part of their own individual segment. Right. So from that perspective, premiumization is a very critical part of our strategy overall, as you as we’ve also communicated that gross margin expansion is something that is, you know, and premiumization is kind of driving that as well.
Our focus has been on both on product strategy, getting the right assortments out and ensuring that we are driving premium within that segment as well, while offering great value to the consumer. Further, this has led to GP improvement as we worked on the cog side of things. But at the same time our focus has been to continue to reduce discounting at an overall level as well. So I think all in all, that part of the strategy kind of hits very hard. We’ve also maintained that as a company, we are very, very sharply focused on driving operating leverage.
And hence you will always see EBITDA growing f than revenue. And that obviously brings in to the question that you asked. Obviously, cost controls are part of it. We have seen over the last two years, you’ve seen about 140 basis points, sort of an improvement in margin expansion with our focus on cost and efficiencies, and that includes fixed cost, etc. So, you know, we are, we continue to remain focused over that. We will keep driving it. We will. As we drive panel expansion. We do believe that OPEX will remain in line and that should lead to EBITDA expansion as well.
So operating leverage kind of comes and flows from there as well.
Andre Purushottam — Analyst
I’m sorry, I didn’t get any specific answers to my question. First of all, I asked about what is the source of your operating leverage and in terms of premiumization, could you explain what are you doing actually in terms of your assortment, et cetera, that is leading to premiumization? What are your initiatives and cost control and does the increasing percentage of online sales increase your margins in any meaningful way? So I would request you to give some specific color.
Amisha Jain — Managing Director and Chief Executive Officer
If I were to kind of go back to premiumization and I think we can talk about the merchandising strategy. You know, for us, premiumization comes from two parts, right? How are you looking at the brand and elevating the product portfolio in general to ensure that the product mix is what is right from a consumer, from a market and a channel point of view? So for us, premiumization comes in two lenses. One is a channel segmentation and ensuring that the product mix that we are aligning for that particular channel for that particular store is matched to what the consumer segment is.
And our merchandising strategy and our merchandising grid is getting more and more sharper and aligned to a more sharper segment of a store of one. Right? So that’s, that’s one part of it. The second from a premiumization point of view is you’ll see significantly improved product and innovation being brought to the market. And that also at a very solid. I’ve kind of mentioned this earlier, also very, very solid product market fit over there. What we are offering from a price value equation point of view is also extremely good. So, you know, while maintaining, maintaining the aspirational quotient of the brand, premiumization is being driven both from a product mix point of view, from the individual product and innovation offering point of view and how we are giving value to the consumer.
That’s all in all from a premiumization point of view. Does that, does that help you?
Andre Purushottam — Analyst
If I could just come in here. Not very much. And I’m still not getting an answer of the source of your operating leverage because, you know, I understand operating leverage a little better in the manufacturing situation.
Amisha Jain — Managing Director and Chief Executive Officer
I think you asked two questions. I think we’ll kind of park the premiumization part because I think you are talking about both in the same bread. So premiumization, I hope you understood that part of the merchandising strategy and maybe we can pass that question.
Andre Purushottam — Analyst
What I’ve understood what you said on premisition is that basically you are improving the product quality and you’re improving innovation. That’s what I got. Okay. I don’t quite understand what your linkage to merchandising to premiumization was. At least I didn’t understand the connection. So.
Amisha Jain — Managing Director and Chief Executive Officer
So if you want, we can have a separate conversation because I think merchandising is the key part of, from a brand merchandising grid point of view and product mix and product innovation are key drivers. So I think if you’re trying to relate this back to manufacturing, maybe there could be a separate conversation on it. If I could just come in here on a couple of examples of operating leverage in the business. First of all, on gross profit, one of the things we are seeing is constant sourcing advantage with scale. So I think one of the ingredients into GP is when you have larger scale, you are able to get sourcing efficiency. And of course, as Amisha was saying, there’s also we are working on better full price sell through and bringing our discounting down. So that’s not necessarily operating leverage, but that’s one of the very large things that is going into GP enhancement today.
On the select side, the best way to think about operating leverage is through the lens of productivity. So when your LTL is very high, your store level fixed costs remain the same, but your revenue goes up faster. So ltl, when it is in the high single digits, you are getting operating leverage on your select, which is again a good operating leverage point. And then below your channel margin is your overall company fixed costs. And we have reached a scale now where the fixed costs of the company will not in the years to come grow as much as the scale of our CBA growth and our revenue growth.
So that is a third source of operating leverage, but three levels you will be seeing operating leverage coming into the company.
Andre Purushottam — Analyst
That helps. And in terms of cost control and in Terms of percentage of online contribution, how does this, what are the cost control initiatives that are still relevant to you apart from what you’ve already mentioned in this list? And in terms of does the percentage increasing percentage of online also improve your gross margin?
Kulin Lalbhai — Non-Executive Director
I think online. And then Amisha can talk about cost. See in online we look at in all our channels a metric called CBA which is your contribution margin. And our online channel contribution is very similar to our offline direct contribution margin. So in terms of any shift between channels is not going to have a very major impact on our overall EBITDA because they are similar from a channel profitability. I hope that clears your question.
Andre Purushottam — Analyst
Yes, thank you. That, that helps a lot. Okay, thank you. Thank you. I finally got the answers to my questions. Thank you.
operator
Thank you so much. The next question come from the line of Pooja from Ingrid Asset Management. Please go ahead.
Pooja — Analyst
Good afternoon and thanks for the opportunity. Congrats on a good set of numbers. I just wanted to get some understanding on the aspect. So how is it balancing? Is it more towards the higher end brands or the lower end brands? If you could provide me some clarity on that.
Girdhar Chitlangia — Chief Financial Officer
So different puja, different brands have different positioning and I wish I can add and Tommy CK of course are in the premium segment. You know, ck, we call it as a Bristol luxury and Tommy is of course premium and different brands have different asp. So if you could be more specific or you know, we could of course catch up offline also. But we need more specific question.
Amisha Jain — Managing Director and Chief Executive Officer
So I mean to ask that how is the overall ASP shaping up? Is it more towards the premium brands? Are they contributing more or is it the lower end brands that are contributing more? So I think if you were to look at our portfolio, I mean our portfolio outcome is a mix of how our overall mix of the brand and we have our brands that are staggered up from time Machine, that is positioned as a denim oriented youth brand to as we scale up to us Polos positioning, laddering up to Tommy and then to ck.
So you know, an individual brand from that perspective will sort of, you know, overall from a portfolio mix point of view, the ASP will obviously inch towards the weighted average of these brands as well. Correct. So that’s what I wanted to understand that how is it, how is the segment wise from the higher end brands or the lower end brands you are seeking? Segment wise, which kind of segment are you seeking? Can we probably understand this question offline a little better? Maybe we can, we can connect with you. Girdha can connect with you and we can understand this better and maybe respond to you.
Sure, sure. Thanks. Thank you.
operator
Thank you. Our next question come from the line of Shreyas J from Sven Investment. Please go ahead.
Shreyas J — Analyst
Hello? Hello, can you hear me?
operator
Yes, we can hear you. Please go ahead with the question.
Shreyas J — Analyst
Yeah, this question is for you. So given your background, what in your sense is, is the market for denim in India? And when you sort of look at that market, you know, barring Levi, there has been no other brand, you know, which has been constantly amongst the top five, you know, so I’m just trying to understand, you know, what we hear and read is, you know, the top 2, 3, 4, 5. The number keeps on changing and you know, when you look at the growth rates of Spiker, Killer, Lee Wrangler, all of those brands and you know, even if I include FM in that dress, you know, FM is at multi 400 crores for the last four, five years.
So what gives you the confidence, you know, that the initiatives that you take will actually drive growth from your own? Because, you know, in the past also we’ve done a lot of things in the fnps, but you know, something sort of doesn’t work out. So I just wanted to understand, is it a category problem, is it a brand problem or what is actually happening underneath?
Amisha Jain — Managing Director and Chief Executive Officer
So I think I can, you know, given the denim category in general, we do believe that we have actually a very small, solid opportunity ahead of us. At the same time, our brands are very well positioned to cater to that category. You know, even, even if I were to just talk about our entire casual wear portfolio, which is, which is laddering up from Flying Machine to US Polo to Tommy and to CK Denim as a category. We are looking to serve that and we believe that we have an opportunity to lead in each of these consumers demand spaces at that particular consumer cohort.
We believe that we can kind of drive to a number one player in all of these spaces. Now, coming back to the specific question, I think for us the way we will go about building our brands is we are ensuring that we are a catering to the consumer and ensuring that we are catering to a specific consumer need. And that’s the first step of it. And then what we will line up is three big things which will yield the results that we’re seeking. I think it’s important that we have the right product portfolio and we feel extremely confident that with Flying Machine, we’ve kind of honed in on and as I’ve seen now, the recent seasons, we’ve honed in on what the right product portfolio is from a consumer point of view, we’re building out the assortment and ensuring that our overall merchandising strategy is aligned from that consumer profile point of view.
That’s step one. Step two is we’re also sharpening the way we serve and reach our consumer. And that is another critical piece of it. You know, how do you speak to that consumer? How do we serve that consumer is an important part. We are actually doubling down on our marketing capabilities and going after this part of it. So, you know, I have spoken about this earlier as well. As part of our strategy, we are ensuring that we are going to segment the market. We’re going to make sure that we are going to start communicating in a more sharp manner and in a more current, digitally oriented world.
And this consumer, we’re going to kind of drive that as well. So the way we are going to build the brand is going to be a second significant piece of how we will go about it. The third is ensuring that we are serving the consumer through the channel of choice. This particular consumer sits within a certain type of channel and we want to make sure that we are catering to that consumer that way as well. So how do we go about the social media strategy? How do we go about our digital strategy? How do we make sure that our digital commerce, our retail, is lined up to serving the consumer as well? So that’s what we’re after and you’ll see us come out from a brand point of view in a more sharper way.
Having said, all of that brands are built over a period of time and what we are now seeking to do is build this consistency and consistently season over season, ensuring that we have a sharp brand positioning and we continue to cater to that consumer with the right cultural hooks, with the right medium of communicating with the consumer. So to the question you’re asking, I’m actually extremely confident and bullish. I do believe that we have a great opportunity to take on this market. We do believe that building out a brand of India and building out this brand for the youth is also going to be a pretty solid positioning and the future of flying machines.
Having said that, I do believe our brand, other brands like us, Polo, Tommy and CK are all extremely well positioned to service the consumer cohorts. They service that consumer from a particular price point perspective as well.
Shreyas J — Analyst
Okay, and my second and last question is, you know, when you look at the overall business, you know, last two years, if I just, you know, dial back four and a half percent growth and FY25, eight and a half percent growth. And obviously you know us. Polo and TV.
Amisha Jain — Managing Director and Chief Executive Officer
Hello, 130 Oval.
Girdhar Chitlangia — Chief Financial Officer
Are you there?
operator
Yes, I’m here. So, participant has left the queue, will go forward to the next participant. You want me to go ahead with the next participant?
Girdhar Chitlangia — Chief Financial Officer
I will reach out to the person who was speaking and I will finish the call. Thank you everyone, for joining us on the call today. If you have any more questions, please feel free to reach out to us and we would be happy to answer them offline.
operator
Yes, I’m here. We can close the call, right? Hello?
Girdhar Chitlangia — Chief Financial Officer
Yes, sir.
operator
Thank you on behalf of Urban Fashion Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.