Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
ARVIND FASHIONS LTD (NSE: ARVINDFASN) Q4 2026 Earnings Call dated May. 07, 2026
Corporate Participants:
Girdhar Chitlangia — Chief Financial Officer
Kulin Lalbhai — Non-Executive Director
Amisha Jain — Managing Director and Chief Executive Officer
Analysts:
Deep Shah — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to The Urban Fashions Limited Q4FY26 earnings conference call. As a reminder, all participant lines 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 this conference call, please signal an operator by pressing Star zero on a Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Girdhar Siplangia.
Thank you. And over to you sir.
Girdhar Chitlangia — Chief Financial Officer
Thanks Waknali. Hello everyone. Good afternoon. Thank you for joining The Urban Fashions Limited earnings call for the quarter and year ended March 26th. I’m 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 and these are available on our website www.arvinfashions.com. I hope you had the opportunity to browse through the highlights of the performance.
We will commence the call with Kulin providing his key strategic thoughts on our quarter and year performance. Post that Amisha will cover the financial performance and the business highlight. At the end of the management discussion we will have a Q and A session session. Before we start I would like to remind you that some of the statements 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 on the quarter’s earnings 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 Kulim.
Kulin Lalbhai — Non-Executive Director
Thanks Gudrat. A very good afternoon to you all. Thank you for joining us for the Q4 results. FY26 continues our trajectory of impressive growth and high performing business outcomes. I’m very happy to share that this quarter we have again achieved a very strong growth of 14.8% and a full year growth of 14%. This highlights our disciplined execution across all growth drivers enabling us to successfully deliver on our FY26 objective that we set at the beginning of the year. The demand environment remains stable.
Investments in brand and people and our consistent and superior retail execution. Sorry, I’ll continue the demand environment remains stable. Investments in brand and people and our consistent and superior retail execution have enabled us to deliver a very healthy LDL growth of 7.8% in retail and over 40% growth in the online direct to consumer channel. Our EBITDA grew by 19% with a 50bps margin expansion. Our pat on a comparable basis has grown by 56% in Q4 and 62% in FY26 which shows strong operating leverage in our business.
We have also achieved the milestone of generating more than 23% return on capital employed which remains our North Star metric and this is likely to improve going further. The seamless transition to new leadership has ensured continued growth momentum and sets the company up for its next phase of growth and transformation. Moving forward, we remain committed to maintaining our growth trajectory through investments in marketing, tech and the AI initiatives while keeping consumer at the core and continuing to drive operating leverage and stronger cash flows.
We continue to stay focused on our mantra of profitable growth which should result in further improvement in return on capital employed. 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
Good afternoon everyone and a warm welcome to our Investor call for Q4 and the full year ended March 31, 2026. Let me start with key highlights. FY26 was a year of profitable broad based growth with 14% revenue growth 40bps EBITDA margin expansion PAT up 62% on a comparable basis and a roti crossing 23%. Importantly, this was not driven by a single channel of ramp, it was execution across the board. Three things I would like for you to take away from today’s call. 1. Our D2C engine is compounding.
Direct channels now account for 56% of sales up 300 basis points year on year. Online B2C alone grew 40% in Q4. Number two, profitability is structural, gross margin is up, EBITDA is up roce at a new high and the inventory is the freshest it has ever been. And number three, we are entering fiscal 27 with confidence. We expect to sustain mid double digit growth with another 30 to 40 basis points of EBITDA margin expansion despite a more uncertain macro. Now coming back to Q4 performance. Q4 revenue grew 14.8% with NSP at 1,365 crores versus 1,189 crores in the same quarter last year.
EBITDA excluding other income was 189 crores versus 159 crores. A 50 basis points margin improvement PAT came in at 47 crores versus a loss of 93 crores in Q4 last year on a comparable basis, I.e. 56% growth. Q4 marked another strong quarter for us driven by consistent execution in our direct to consumer channels. These together account for nearly 56% of sales, 300 basis points higher than same quarter last year. Our gross margin improved 20 basis points in Q4. Inventory freshness is at an all time high despite the channel mix shift to D2C carrying slightly more inventory.
Working capital has been well controlled on channel performance. In Q4 we delivered a robust L2L of 7.8% in retail with overall retail growing at 14%. Retail growth was impacted by a transitory GST rate change impact on PBH brands for a few weeks. That dip is behind us and both brands are back to double digit growth. Online B2C grew over 40% taking its share to 14% from 11 which is in line with our intent to pivot away from B2B. Online wholesale and department stores delivered strong double digit secondary sales growth as well.
50 evos were added in the quarter. Coming to brand performance in the quarter, USBA led the pack delivering its highest ever growth this quarter. PVH Brand and Flying Machine each grew over 10% and arrow was subdued a one time due to a one time model change and a weak wedding calendar. Both are timing related and not structural. I’d like to highlight that Flying Machine deserves a special mention. Flying Machine clocked retail LTL of double digit and a B2C growth of 70%. We have sharply positioned Flying Machine as a unisex denim anchored on trend youth brand and that has shown good early traction.
Flying Machine is now live across multiple E commerce platforms. We will also launch flyingmachine.com in H2 fiscal 27th to build a direct community of consumers. Coming to full year fiscal 26, our revenue grew 14% with growth across every channel. Retail LTL was remarkably consistent at 8.1% for the year and overall retail was in mid double digits reflecting strong execution rather than a single quarter tailwind. We added more than 1.4 lakh net square feet of retail space. Other categories beyond men’s Apparel now contribute 24% of our business and were a meaningful growth driver.
On profitability. EBITDA margin is at 13.4% up 40 basis points year on year PAT at 124 crores up 62% on a comparable basis ROCE at 23% plus is a multi year high and in my view the single best indicator of how our business is consistently improving. Let me shift Gears towards fiscal 27 Outlook and vision now as we enter fiscal 27 I would like to take the opportunity to talk about two things. First is on the macro. Government measures around gst, interest rates and income tax have supported demand.
The West Asia situation is a watch item for us. We expect mild pressure on certain raw materials, forex and Capex over the medium term with the risk of a consumption slowdown due to a supply led inflationary pressure. Our mitigation actions are already in motion. A couple of points to highlight there. We bought inventory slightly ahead of the curve for SS26, locking in costs before the increase for AW26. We are actively monitoring and hedging where required. Our sourcing remains predominantly India based and we are deepening that further.
Lastly, to navigate the volatility we plan to remain nimble, we intend to double down on our cost control measures and we will selectively implement price increases while safeguarding growth. Moving to the second point on fiscal 27, I’d like to share our vision and way forward with you. Our strategy rests on five pillars. I will list out the five pillars, first being Portfolio diversification. We aim to deepen our leadership in menswear by establishing a top position in the country’s five largest apparel categories shirts, polo, denim, T shirts and blazers while doubling down on adjacencies like footwear and innerwear that are already contributing 24% of our business.
Number two building a differentiated brand. Building differentiated brands of scale and desire. Our portfolio of five brands has meaningful headroom to grow. The unlock is sharper positioning, deeper consumer connections and a strong merchandising grid led by innovation across our brands. Hence, we expect growth from each of our brands. As we have said earlier, we will continue to invest more towards marketing. Number three Building a world class direct to consumer organization. We will continue to double down on our D2C journey with the vision to take the share of D2C to 65%.
Driving retail excellence and building a digital powerhouse remains our priority. Talking about offline retail, we will continue our expansion and upsizing journey with a relentless focus on LTL and conversion driven by right product, brand experience and service. Further, we will build a digital powerhouse through our.com and marketplace partnerships. We expect each brand to have its own.com and app live this fiscal year which will be the foundation for great brand experience and commerce. Number four Transforming Urban Fashions limited With data analytics and AI.
This is a key growth driver for us and not a back office initiative. Our investments will target two outcomes. First is leveraging AI to drive cost efficiencies across functions and second to leverage analytics and AI to drive front end effectiveness. Retail excellence, pricing assortment, marketing effectiveness are some of the examples of the same. Lastly and importantly, a nimble supply chain that sits closer to demand which should yield shorter cycles, faster REITs and less inventory risk. Those are our five growth drivers.
I also want to highlight the fact that in line with the above strategy, we have already put a few things in motion over the last two quarters. We took a deep consumer work we took up deep consumer work to map the market opportunity and consumer demand landscape which is now informing our portfolio and where to play choices. We are putting structured investments in tech and AI with a dedicated specialist team built over the last two quarters which is now working towards tech, AI, consumer analytics and growth.
We have also reorganized ourselves into a business unit structure for sharper accountability and speed while centralizing consumer brand marketing, digital and data AI initiatives to build deep leveraged capabilities. These things are already in motion. To summarize, with a clear strategy and right organization design now in place, we are reasonably confident of sustaining mid double digit growth in fiscal 27 with 30 to 40 basis points of EBITDA margin expansion. With the unifying goal of one team, one mission driving cohesiveness and collaboration and Urban Fashions Limited, we are poised to embark on the next phase of growth.
Thank you so much. We’re now happy to take your questions.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and then one on the Touchstone telephone. If you wish to remove yourself from the question queue you may press Star and then two participants you are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question is sent. A reminder to all. You may press star and then one to ask a question. We have the first question from the line of Deep Shah from Equity Securities.
Please go ahead.
Deep Shah
Hi Deep, thanks for the opportunity and congratulations on good set of numbers. First of all on the guidance which we have given around metrics mid double digit sort of a growth. I just wanted to if you can help me and give me some color around the brand wide performance because this year if we see us Polo has been a standout performer throughout the year for us. Should we expect the same sort of growth for us Polo continuing in the years to come and how do we brand wide how do we see growth coming in the future.
Period.
Amisha Jain
Hi, thanks for your question. I think as we have seen our portfolio and like I mentioned earlier, we are sort of committed to building a portfolio of differentiated brands and each of our brands have a very specific role to play. As we have seen US Polo obviously ahead of the curve and it’s now reached its potential with product innovation. Right product market fit, a great retail presence and it continues to clock solid growth across our channels. Having said that, our PVH portfolio is really well poised to service the premiumized end of the consumer demand and we expect that this portfolio will continue to drop growth as well.
What we are bullish about is also Flying Machine with the positioning getting deeper and sharper with it being a denim oriented youth brand which is on trend and Unitex, we believe that Flying Machine will continue to crop solid double digit growth as well. Having said all of that for us, Arrow is our unique position in terms of the formal wear workwear market and we believe that with some of the measures around store expansion, the right merchandising grid and the right store formats, we should see again a solid growth coming out of Arrow.
All in all I think what we believe is that from with this diversified portfolio that we have we should see consistent growth across our plans.
Deep Shah
Got it. Just a follow up over here. See If I’m not wrong, US Polo would be roughly around 2400, 2500 crores of top line. And what I wanted to understand is that on this base do we expect us polo continue to grow at 13 14% CAGR in next 34 years or should we say look for a natural growth?
Amisha Jain
We expect our brands to grow at mid double digits.
Deep Shah
Okay, got it. Second question is on the margin side, while it’s extremely positive that we are riding for 30 to 40 basis points of EBITDA margin expansion, but what I understand is that the cotton prices are on the uptrend plus we are focused on investing behind ant and all. So shouldn’t we consider 1H margins remaining under pressure and how confident are we of achieving this? 30 to 40 basis points of EBITDA margin expansion and how will we value this EBITDA margin expansion?
Amisha Jain
So I think just a couple of points here. As I mentioned earlier in my opening remarks, our sourcing remains predominantly India based and we are deepening that further. And second also we are watching the overall watching this environment very closely and to navigate the volatility we do plan to remain nimble. While we on one hand we will double down on our cost measures but at the same time we will be selective in driving price increases where required while protecting our growth as well.
Deep Shah
Okay, got it. One last question. If I can squeeze in.
Girdhar Chitlangia
Yeah. Yes.
Deep Shah
Yeah. So on the store side we have been constantly seeing new store addition, but on the other hand we are seeing store closures as well. So this quarter as well, we have closed down somewhere around 45 odd stores. So can we just give some color? What are the. Which are the brands for whom we are closing down the stores and are we done with this store closure initiative or not?
Amisha Jain
So I think, look, I think store closing is a journey of retail, right? I think broadly speaking, as we continue to build retail, this journey will continue. Right. We should see approximately about 5% closure going forward. And I wouldn’t say it’s one higher in one brand over the other. This is just how overall the retail journey will look like.
Deep Shah
Okay, got it done. Thank you so much. Thank
Amisha Jain
You. Thank you so much. Thank you.
Operator
Thank you. We will take the next question from the line of cost of Pavaskar from ICICI Direct. Please go ahead.
Deep Shah
Yeah, good afternoon. Thanks for being with Dr. Kennedy and congrats for good set of numbers. My question is on online B2C business. So that part of our business is doing extremely well this quarter. Also we have seen strong growth. So considering the competition building around in this space or on this channel, in this channel, do we see, you know, this growth momentum to continue or what is helping us, you know, to be a standout player in this particular channel, you know, and we are doing extremely well in terms of growth.
Amisha Jain
So thanks for your question. I think one thing I’d say broadly is D2C is a core channel strategy for us. Right. Like I said that overall, as we look forward, building a world class D2C organization that is built of retail and online is a priority for us. We have key initiatives in place to drive our D2. So whether you think about product, the way our brands show up, how we control our pricing and how we manage our last mile, these are the certain few things that is actually driving growth for us.
Over the years, we’ve also been able to actually drive full price sell through and reduce our discounts on our online channels as well. So it’s a solid channel which delivers profitability as well. Now in terms of your question, when you said that online B2C competition increasing, in fact we’re seeing this channel stabilizing. We have seen advent of certain B2C brands, but with the brands that are there in our portfolio and the product innovation and the offering that we bring to the table, with the pricing that we bring, I think our brands are pretty solid and from a competition point of view what we’re seeing is the uptake in the market is actually much better and we continue to drive that through, driving brand experience, great assortments and overall last mile service as well.
Hope that answers your question.
Deep Shah
So should we expect this momentum of 30 to 40% kind of a growth to continue in the coming years and that will help us this mix to further improve towards online B2C?
Amisha Jain
Yes, I think for our online B2C like I said, continues to remain solid and we expect that over the years this should continue to be at a 20% plus.
Deep Shah
Right. My second question is on the margins. Like you just mentioned that we are expecting 20 to 40bps improvement in the margin despite the fact that currently there is uncertainty related to volatility of the commodity prices. And you mentioned in your comment that you are focusing more on or sourcing from India and you also have good cover in terms of the raw material prices which will take a large part of your season. So however, if this continues, if this volatility continue or uncertainty continue, should we expect some kind of deceleration in what you have guided or should be whatever uncertainties it would be, you will still manage to block 30 to 40% EBITDA margins expansion
Amisha Jain
At this point in time. We, like I had mentioned earlier that while we are seeing mild pressure on raw materials products capex over the medium term, we do expect that there could be a potential risk of a consumption slowdown due to the inflationary pressures. Having said that, we are reasonably certain about our mitigation actions and given that we are, you know, at this point in time we are cautious and at the same time optimistic about our guidance.
Unidentified Participant
Okay, got it. Thank you.
Operator
Thank you. A reminder to all the participants, you may press star and then one to ask a question. We will take the next question from the line of Avinash Karamunachi from Motina Rosemar Financial Services Ltd. Please go ahead. I
Deep Shah
Think congrats on good set of members. I’m audible.
Girdhar Chitlangia
Yes.
Deep Shah
Hi. Hi. Congrats on good set of members. So this year both Flying Mission and us have seen a very significant rebound. So what are the things that you could highlight for this kind of rebound? What are the changes that has happened in these two brands?
Amisha Jain
Sure. Thank you so much. You know, I think I’ll talk about both the brands one at a time. So when we look at Slime Machine, as you know that you know we’ve just gone through a very recent sharper Positioning and deeper work with Flying Machine. And with that, the one thing that we’ve done is actually gone deeper with how do we drive consumer connect? Flying Machine now is positioned as on trend youth brand, which is more focused on denim and also pivoting towards unisex. Right now, what that does is and what we have seen with that initial season that we’ve launched is a great offtake across our channels.
The other thing with us kind of taking over Flying Machine fully, the one thing that we’ve been able to also do is now been able to kind of make sure that this brand is available to our consumers across the channel of their choice. So you will find Flying Machine distribution now in retail and across various e commerce platforms. We’ve actually seen a pretty healthy growth across the board, both in retail and online. So with those measures, with a great product positioning, we believe the Flying Machine is actually well poised to grow from an overall youth and Gen Z point of view.
If you look at it in the denim space, there isn’t a strong player out there beyond barring one. And we believe that Flying Machine has a very, very strong positioning. And with that, we believe that we should be able to take on a much larger market share over a period of time. So that’s about Flying Machine in terms of U.S. Polo. I think U.S. Polo has been on a fabulous journey, you know, with the way the US Polo is set up across the consumer landscape. You know, it caters to various occasions for men’s apparel.
With our leadership in Polo’s shirts and as you can see in denims, US Polo is actually very well poised in terms of the way we are expanding ourselves across various channels, both online and offline. We’ve been able to bring great innovation in US Polo across the pricing merchandising grid at great price points as well. And we’ve seen really good offtake across the board. So I think all in all, if I were to look at it all three pillars in terms of product merchandising, the way the brand is connecting with the consumer, and the strong spread we have from a channel point of view, we believe that US Polo is actually set for a very strong trajectory ahead.
Having said that, we do believe that there is potential for us to expand the network from a retail point of view and also drive uspolo.com and our marketplace presence in a much stronger way. So we expect and we remain bullish on US Polo going forward as well.
Deep Shah
Okay, got it. And regarding the channel mix, how does the channel mix vary for bands like Arrow or flying machine us below it’s already at 400 stores in your article. Largest store with a different outlook there. But how does this channel mix looks like in case of Flying Nation and narrow?
Amisha Jain
So I think look, each brand has its own channel journey and like I said, I think for us the channel mix is more coming from consumer demand. And where do we believe that there is pockets of growth Us Polar is a brand which is, you know, which addresses a certain demand and it has got a much wider, wider distribution in terms of stores. We do believe that there is a lot more potential for our network to actually expand from where it is. Similarly, Arrow and Flying Machine are on the beginning of their journey and we do believe that as we go and as we rethink the product line, as we expand the product mix and drive assortment in a certain way, we believe that both these brands will see an evolution of their retail further.
So both you should see export expect expansion of retail. At the same time we will go much deeper with our online business as well in both these brands.
Deep Shah
Okay, understood. And the next question is to regarding the capex and debt. So if you look at it like this year the capex was around 110 crores. Can you give the breakup for that?
Girdhar Chitlangia
Yeah, I’ll take that. Hi Vinas. I think you know the capex includes besides investment in stores, it also includes investment in MVO the department stores. It also includes deposits that we give to the landlords where we sign up cocoa stores. So if you look at the breakup it could be, you know, we opened about 50 cocoa stores and deposit for those stores plus investment in department store mbo. We also, you know, invested some in IT and administrative debt capex.
Deep Shah
Okay, okay. And regarding the other point of debt, so how should we see the net debt going forward?
Girdhar Chitlangia
See in the quarter just ended our debt was higher because we took some borrowing to fund the flipkart transaction. I think apart from that we have been quite efficient. And this, this basically, you know, changes our goal of becoming a net debt zero company by about maybe 9 to 12 months. I think we are in the right trajectory. I think apart from this one off transaction, we are in line to reduce our debt on a year on year basis.
Deep Shah
Okay. And a little bit of the debt also sits in payables, right. In form of acceptances. So how does it move going forward?
Girdhar Chitlangia
You see this business always has, you know, purchases from small suppliers and small vendors, MSME vendors and you know there is obviously we all know that there is a cash cycle that has to be managed and hence we Use some kind of, you know, funding to manage that purchases. But you know, usually it is to manage our payables. I mean there is nothing extraordinary. It has always been there and it has always been reported as part of our annual report.
Deep Shah
I mean should we see like historically if I look at it like it is somewhere around 5 to 6% of the sales. So are you trying to get this bad debt as well or that would continue
Girdhar Chitlangia
As there is cash generation. Primary objective is to reduce the debt, which is the term loan and then secondary of course is to reduce the working capital.
Operator
Thank you. We will take the next question from the line of Abhijit Kundu from Antique Stock Token. Please go ahead.
Deep Shah
Yeah, hi. Congratulations on a great set of numbers. One was on the overall macro environment in the sense that we have been seeing that premium brands have been growing at a better rate. There has been some amount of pressure on the value brands and some of the pressure on the mid premium price brands. So what is your view on that and how the overall scenario has evolved? Because March quarter, quarter there has been some amount of recovery, I mean perceived recovery in apparel and fashion brands.
So just wanted a view on that. And then secondly, you know, you have been, you have, I mean out of all the denim brands, a single brand has done very well in the last seven, eight years. That gives you a very strong ground on how to revive the Flying Machine brand. Through our Channel 6, what we understood is what you read in UI’s. Sorry, You have brought down the SKUs or the designs or the most, you know, drop down to the most selling designs in Flying Machine and hence you’ve done a lot of restructuring.
So just, you know, how much is the confidence that Flying Machine will revive from this level? Because Flying Machine used to be a very strong brand. 2025, 2025 years back. So yeah, just view on that. I have my second question,
Amisha Jain
So thank you so much. I think, you know, on your first part, you know, premiumization has been a trend for us and we’ve seen seen that both across our brands. That, that is kind of something that is paid off very well for us. Our brands have actually premiumized while at the same time ensuring great value at fabulous prices. Right. So from that point of view, all our brands, when you look at a PVH brand, when you look at us, Polo Arrow, Flying Machine, I think from a premiumization trend point of view, we’re definitely seeing that and we see that constraint consistently quarter over quarter as well.
Right. So that to the question that you asked first, I think that trend is something that we expect to continue coming back to Flying Machine. We’re actually quite bullish on Flying Machine. If you look at it and I think you touched upon this. Flying Machine has a fabulous equity. And with the latest consumer work that we’ve done, what we found is that consumers actually resonate really well with the equity. And for us, the question has been about how do we go and drive this brand much deeper, bring great products and ensure that we drive much deeper consumer connect as well.
So we’ve gone in and done some work on Flying Machine and from a brand positioning point of view, here are the few things that we’re driving. We believe that this equity is actually well poised and connects really well with the youth and, and the Gen Z consumer. That’s number one. The second is we also strongly believe that it has a potential to drive both for men and women. And you will see that coming out of Flying Machine also. The third being that Flying Machine has always been a very strong denim equity and we are going much deeper with that, offering really great products for the consumer from a Gen Z point of view.
And if you look back at the point you made, I think this is again a very strong anchor for Flying Machine. The last part I’ll touch upon is that the one thing that I feel that the Flying Machine will bring to the market and again kind of connecting back to its equity is ensuring that it is on trend because that’s what this consumer is seeking. And we believe that given our strength in denim, given the strength in product and innovation, we are very well poised to bring that to the market. We will definitely cater to the consumers through their preferences.
You know, we have. The one thing that we’re doing is actually staying very close to the ground, ensuring that we understand what are the trends they’re seeking, the price points they’re seeking, the silhouettes they are looking for and you know, making sure that our offering is tight and our product assortment is actually right sized for, for the right product mix and pricing as well. So with that we believe that it has a very unique position that it can take in the market.
Deep Shah
Understood. And so two things here. One is in Arrow only one year back, you know, in the last three before that, I mean in all three seasons, a lot of new products were launched in the semi casual segment and which were looking extremely great. What would be the, I mean, in the last two years and after you have joined, what have been the changes in Arrow and what has been the progress there? And secondly, in terms of profitability in these two brands, I don’t need a figure, but has there been a profitability improvement in Arrow as well as flying machines?
Because this is a, this is one of the, you know, very, very frequent questions asked by the investor community. Yeah, sure. Thank you
Amisha Jain
So much for asking that. We’re actually, you know, when you look at Arrow from our portfolio point of view, Arrow is actually one of our brands that is all set to kind of cater to the innovation and the workwear market in a much sharper way, actually pivoting towards how the modern professional seeks to go about his day. And as we look at it, we’ve kind of looked at this brand closely, we’ve looked at the consumer demand, we’ve looked at again done some deep work around consumer and we are again sharpening the offering in arrows.
So the one thing that you will see happening is we are relooking at the line and we are actually simplifying the merchandising grid and going much more sharper in terms of the benefits that the consumer is seeking on a day to day basis. And that’s one shift you will see. The other thing is as you look at our stores, you see a little more simplification and navigation happening at our retail and online as well. Third, we are also relooking at the store formats to see that it is allowing us to cater to the consumer, the navigation, all of those pieces in a much tighter way.
All of this should yield much better sell through. Should yield much better full price sell through. And with that we expect that the profitability will only improve. So all in all, again like I said, I think in our portfolio this is one brand that we believe is actually very well positioned to cater to the formal workwear market and some of the special occasions as well.
Deep Shah
Understood. Thanks. Thanks so much.
Operator
Thank you. We will take the next question from the line of Swapnil Gupta from White Pine Investment Management. Please go ahead.
Deep Shah
Yes, thank you for the opportunity. Just a bookkeeping question, why our reserves have declined by about 13 crores. Because
Girdhar Chitlangia
When we did this transaction with Flipkart and there was some equity adjustment because of that.
Operator
Thank you. We will take the next question from the line of Naveen from Nuvama anc. Please go ahead.
Deep Shah
Thank you. Thank you for the opportunity and congratulations on a great set of numbers. Just wanted to check on what is our store area store expansion plans for FY27. And secondly in terms of our existence we are already at 24%. So from here on, by your guidance for mid double digit sort of growth for FY27. But is it the Ford portfolio which will have to do the heavy lifting from now on, considering that on existing fees we are already at 24% or do you think that investment fees will continue to grow?
Amisha Jain
So I think the first question you asked is around the store expansion, right. For the next fiscal year. So I think like I mentioned earlier, I think when you look at our store fleet, we do believe that there’s a great opportunity for us to expand our store fleet at the same time, upside our stores as well, because our offering is increasing and our consumer offtake of some of our brands is also great. So we expect to drive about 1.5 lakhs net square feet addition over the next fiscal year across our portfolio.
Right. That’s kind of answering your question number one. On your second question, the way we I would, I would look at our brand, right. As you look at our brands, what we are seeing is that there is a significant potential for us to grow even in just the men’s apparel space. And for us, we’ve kind of set a goal for ourselves to establish a strong leadership position across the top categories in the market. Right. So there is a significant opportunity headroom for us to grow just within that second.
We’ve also identified that there is opportunity for us to grow across other categories and footwear, innerwear being the key ones that we’re driving over a period of time, we will also start scaling womenswear as well. So to answer your question, we do expect that growth to come through our brand through the network. At the same time, the adjacencies will continue to clock growth as well. So we’re quite confident about the mid teens that we’ve talked about.
Deep Shah
If you can just add in one more question. So in the past you said that beyond these five brands, you aren’t actively looking to sort of expand the portfolio. Do you still hold on to that position or are we in active evaluation of new brands?
Amisha Jain
So I think what we’ve maintained is that, you know, obviously our five brands are key and we see significant headroom of growth. Right. Having said that, over a period of time, if something comes up which is strategically makes sense from a portfolio point of view, we will be open to looking at it.
Deep Shah
Thank you. And all the best.
Amisha Jain
Thank you.
Operator
Thank you. We will take the next question from the line of Muskaan from Swan Investments. Please go ahead.
Unidentified Participant
Hi, thank you for the opportunity. Just wanted to know that what is the size of the business we had for Fitzware in FY26? How many stores like we open for 26. And how many stores do we plan to open in the coming years like FY? 27, 28. And how many stores are there for stripes?
Amisha Jain
I think broadly speaking, if I were to talk about the adjacency growth, our adjacent category has grown at 25% and it is now sitting at up about a 24% share of our business. And we expect the adjacent parts of their categories also to continue to grow as well. Right. In terms of our growth, like I said, we are expecting to expand at a portfolio level to about 1 1.5 lakh net square feet addition next year. We don’t give out brand wise numbers so hopefully the 1.5 lakh net square feet helps. You. See, I think footwear also for us is an expansion through our, you know, US Polo footwear, our stores and our Stride formats.
And this year you know stride grew by about. We’re currently at 19 stores of Stride and you know we will look at it from an opportunity and a catchment point of view and we will continue to expand. I would also want to highlight that for us online is a very important channel for footwear and that will continue to be the case.
Operator
Thank you. We will take the next question from the line of Ankit KDM from Philip Capital India. Please go ahead.
Deep Shah
Hi. Inventory days have increased by nearly 20 days over last two years. So what is leading to this inventory day increase While at the same time you are commenting that the inventory the freshest ever. So have you know what’s changed out here?
Girdhar Chitlangia
Ankit. Hi Guitar. Here you see inventory days is a function of channel mix and as we will increase our channel towards more D2C which is basically retail and B2C you know the inventory sticks are now in our books. In a wholesale business they actually move out of our books. So correspondingly if you see our. While our inventory days have gone up over, over last two years receivable days also has correspondingly reduced. So you know, all in all it’s a balancing within the DWC section within the balance sheet.
So as we increase and just to let you know, as we increase and focus our energies on the B2C business or the D2C business rather this is likely to remain like this or maybe increase a little as we go along as the channel share data.
Deep Shah
So the receivable days have reduced only by 3 days versus 18 days increase in inventory. So that the right way to look at the business.
Girdhar Chitlangia
Yeah, there was a, there was a small B2B transition done on the Tommy side at the end of March. Other Than that, you know there is a corresponding reduction in receivable building.
Deep Shah
Sure. My second question is regarding the stores. You know the previous participant you mentioned that there were 50 Coco stores open for which security deposit and others were paid. Now the next store opening in the quarter or the year is also 50 stores. So how many cocoa stores have you.
Girdhar Chitlangia
Sorry, that number of 50 was for the year. I think the question was on the capex for the year and the answer was for the year, not for the quarter. Right.
Deep Shah
So my question is also for the year we have met opening of 50 stores for the year and 50 were Coco stores which you opened while gross opening is around 150. So how many Coco stores during the year have we closed?
Girdhar Chitlangia
I don’t have this data handy but I will. We can catch up separately on this one.
Deep Shah
Sure. My last question is on the retail like for like growth, this 8% growth which we have delivered, is it only for Poco stores or full franchisee network of full thousand stores and is it the primary which we give to franchisee, does it capture that data or the consumer data? This is
Girdhar Chitlangia
Consumer data and this is across the network. This is basically across our network. If you know our business model we are on a consignment basis for on all our stores and the sale is recorded in our books when the final consumer buys out.
Deep Shah
Sure, that’s helpful. Thank you so much and all the rest.
Operator
Thank you. We will take the next question from the line of Prakash Kapadia from Kapadia Financial Services. Please go ahead.
Deep Shah
Yeah, thanks for the opportunity. Couple of questions. What is the share of adjacency we are targeting in the coming years and if that share, you know, further increases, would the margin see more expansion? Is that the right understanding? Secondly, on you know, Tommy and Calvin Klein any major cost pressures we are seeing, what is the price hike mechanism, the frequency, frequency of, you know, price changes and something on arrow. I think in the PPT you mentioned some new products in linen. So are they launched?
What kind of products are we looking at? If you could give us some sense, these were my three questions. Thank you.
Amisha Jain
So I think coming back to your question on gross margin, I think we do believe that with that work around overall I’d say that, you know we do believe that over a period of time we would like to take this to high fixed cost fees and it’s not just about the adjacencies but I think overall we believe that there is some headroom for growth over here. And as we drive full price sell throughs through our Consumer analytics, et cetera. We do believe that we should be able to drive that. Now coming to your question on the PBS side, there definitely was an impact of GST right from a slab movement to about 18%.
Those are the brands that kind of got impacted and we did see an initial and a transitory sort of impact. Having said that, I think both our brands were starting to see now a double digit traction there as well. So those are the two questions. In terms of Arrow, I think that’s a great question. You know, innovation has always been at the heart of everything that we do. And that is true for across our portfolio, especially talking about Arrow. We’ve always been one of those companies that has been known for to be bringing the best shirts in the market.
And with linen linen on trend, we’ve been able to kind of capture that and bring some great products out in the market. And you would have seen that we are kind of leading with that as well in terms of some of our more localized tour campaign as well. So this is something that is part of our DNA and we will continue to drive more of that as we go along.
Deep Shah
And in the adjacency, U.S. Polo would have the largest contribution in a brand salience adjacent contribution.
Amisha Jain
That’s true because U.S. Polo is at a certain size and scale. We’ve also built out the other categories for US Polo factor, so. That’s absolutely right. I think US Polo is a little ahead. Having said that, our PBH businesses also have a strong adjacency business as well. And both of those, you know, all three of those kind of look in the same zone also.
Deep Shah
And directionally, you know, you said would look at 50% gross margin. So the next two, three years, would that be possible to achieve? Is that the direction we are working on?
Amisha Jain
We have directionally been working on delivering towards the high 50s. Right. And that’s what we will go towards the next two to three years. We continue to drive gross margin upwards as our direct channel also bowled up. We drive efficiency through cogs and also reduction of discounts. We’ll continue to drive that.
Deep Shah
Thank you. All the best.
Amisha Jain
Thank you so much.
Operator
Thank you. We will take the next question from the line of Varun Singh from Alpha Acidate Advisors. Please go ahead.
Deep Shah
Am I audible?
Operator
Yes. You are
Deep Shah
Sure. Thank you for the opportunity. The question is, you know, I think the previous participants has asked on a growth in the inventory. So if we just compare FY25 inventory with 26, there is almost more than 30 growth. And historically we have not seen similar kind of A growth given the change in the business mix and the revenue growth that we have delivered. And honestly, I mean if you look at FY25 and 26, the mix of the business in terms of revenue looks not significantly different. So in front of 15% revenue growth, 30% inventory growth, please help us, you know, under deconstruct the maybe how to look at it.
Girdhar Chitlangia
So. Hi. Hi Varun. As I said earlier, change in channel which I think you cannot look at the full year number. You’ll have to look at a quarter on quarter number which is more representative of how the inventory is moving. So our channel mix has changed by 3% towards the direct. That itself is almost a six days impact. As we also mentioned in our investor deck, as well as Amisha mentioned in her opening comments, we had an early invert which is also to mitigate some of our basically risks that we saw.
If you recollect our previous call, we had mentioned that there were delays on account of the geopolitical issues, Bangladesh shipments and so on and so forth. So we were really converted a lot of our SS26 merchandise before March. Having said all this, you know, we of course used to have a 4 inventory turn but that was at a certain channel mix which was more skewed towards wholesale channels. As we move down our path of achieving a larger business in retail and B2C we expect our inventory terms to improve to 3.7 to 3.8.
The last point that I want to make is while this inventory is of course there in our books, it is a large part of the late invert also gets mitigated by higher creditors. So in terms of net working capital, if you look at it, I mean over December quarter for example, there was hardly any change and we continue to focus on reducing our inventory.
Deep Shah
All right, understood. And secondly, maybe if, if you could call out that full price sale compared to the overall sale in our revenue has been how much in FY26 compared to FY25.
Amisha Jain
I mean the only thing I will say is that we continue to clock and when you look at our gross margins as well, I mean we are looking healthy and positive which is an indicator of the fact that our overall sell throughs are in a good place. We expect that we will keep improving on it and it has improved over a period of time as well. Right. So while we don’t give out specific numbers there, but we’re actually seeing a good traction in that direction with our initiatives around pricing and analytics coming in, we will only continue to see improvement in that area.
Deep Shah
Understood. Reason I was asking that is, you know, when you call out 40 to 50 bits expansion in margin. So where exactly should we expect those margin expansion to come from? Is it only from the maybe you know, store maturity and improving output from the existing stores or from increasing full price sale of merchandise also. So just wanted to understand that maybe how much of that journey has already been revolved.
Amisha Jain
So absolutely we will expect to see our GP improve, you know, powered by a couple of things. Right. So. So as we kind of drive premiumization and product innovation with a great product market fit, we’re expecting to see a better sell through. And we’re also continuing to see that with some of our initiatives around analytics etc. Our pricing and full price sell through will also get better. Right. And with further cogs improvement, all in all we expect to see an improvement in gp. That’s one. The second is know on an ongoing basis we expect that our select should continue to improve as well.
So all of those pieces should kind of drive operating leverage for us.
Deep Shah
All right. And just one last question if I may. If you could, you know, just deconstruct the 15% growth expectation. So how much you think you know you would be extracting that growth from like to like and how much from retail area expansion? What is our maths behind the 15% growth expectation guidance?
Amisha Jain
We’re expecting to see about 7% to 8% of like for like and the rest of it to come from an expansion, upsizing, etc.
Deep Shah
And even in like to like it should be largely what mix led, price led or how should we expect it to be?
Amisha Jain
Again there I would say probably an equal split in terms of driving through pricing and volume growth.
Deep Shah
Okay. Okay, sure. Thank you very much. And which you want the very best.
Amisha Jain
Thank you so much.
Operator
Thank you. We will take the next question from the line of chairman from Edeco Asset Management. Please go ahead.
Deep Shah
Thanks for taking my questions on this. I have one question for you. When you say I mean you would be open to something strategic at a portfolio level, does that imply that the current portfolio alone may not be sufficient to deliver the growth momentum or that you are targeting at a company level Also, given the capabilities of the company, can you elaborate more on your thoughts on bail versus buy strategy?
Amisha Jain
Sure. So I think one thing that I do want to highlight is that our overall plan is around driving growth through our own five brand portfolio and the strategy that I just laid out in my opening comments, which is our own organic growth around 6 15%. Right. That’s what we’ve spoken about in the mid double digit is what we’ve spoken about. Right. The only thing that I’ve highlighted is that the question on are we open? Yes. If something comes which is more relevant from our strategic direction point of view and it looks like something that will allow us to double down from a capability or from a future growth point of view, we might look at it.
Hope that answers your question.
Deep Shah
Okay. But any white space you are seeing in a portfolio debt, I mean would I feel. I
Amisha Jain
Think it’s too early to comment on that. Like I said, we picked up some deep consumer work and we are very, very clear on the areas that we want to double down with our brands in terms of menswear, men’s apparel space itself. And we believe our portfolio is actually really well poised to service some of those specific opportunity areas. There are a couple, couple of spaces that we want to build and we might still seek to build it organically.
Deep Shah
Well, it’s great to have. And the last question, I mean right now the demand seems to be holding for now and you are clearly investing behind it through the marketing investments. But you also flagged out the influencer replacer. I mean it was to consumption in that context when we can elaborate more on the internal cost control measure data already underway at the company level that can help you to protect the margins in the coming times versus just simply cutting down your marketing spend.
Amisha Jain
So we are always continuously looking at it from an organization point of view and we are quite nimble about looking at cost structure across the board. And as we look at the next few months and some of the inflationary pressures, we are conscious of it and we’re just putting in cost controls in various areas. So I know nothing one point to specify but I think that’s something that we’re looking at across the board.
Deep Shah
Okay, that’s it from my friend. All the best for the future.
Amisha Jain
Thank you. Thank you so much.
Operator
Thank you very much. Ladies and gentlemen. That was the last question and with that concludes the question and answer session. I now have the conference back to Mr. Girdhas Chitnangya for the closing comments. Thank you. And over to you sir.
Girdhar Chitlangia
Thank you everybody for joining the call today. If you have any questions, please feel free to reach out to me and we would be happy to answer them offline. Thank you so much. Have a good day.
Operator
Thank you members of the management, on behalf of Urban Passions Ltd. And that concludes this conference. Thank you all for joining with us today. And you may now disconnect your lines. Thank you.