Go Fashion (India) Ltd (NSE: GOCOLORS) Q1 2026 Earnings Call dated Aug. 01, 2025
Corporate Participants:
Unidentified Speaker
Gautam Saraogi — Chief Executive Officer
Analysts:
Unidentified Participant
Sameer Gupta — Analyst
Avinash Karumanchi — Analyst
Harsh Shah — Analyst
Devanshu Bansal — Analyst
Rahul Agarwal — Analyst
Prerna Jhunjhunwala — Analyst
Gaurav Jogani — Analyst
Vatsal Mody — Analyst
Rajiv Bharati — Analyst
Presentation:
operator
Conference is now being recorded. It. Ladies and gentlemen, good day and welcome to the Go Fashion India Limited Q1FY26 earnings 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 continues. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your Touchton phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gautam Saraogi, promoter and CEO of Go Fashion India Limited. Thank you and over to you sir.
Gautam Saraogi — Chief Executive Officer
Good evening and a warm welcome to everyone present at the call. Along with me I have Mr. R. Mohan, our chief financial officer and SGA, our investor relation Advisors. I hope you have all received the investor deck by now. For those who have not, you can view them on the Stock Exchange and the company website. In Q1FY26 we reported revenues of rupees 223 crores, broadly stable on a YOY basis. The quarter witnessed some temporary headwinds in our LFS channel and a few key partner stores and supply chain disruptions arising from Bangladesh route blockade. Despite this, we are encouraged by a strong recovery in the later part of and particularly during the EOSS which reflects improving customer traction across our network.
We continue to see improvement in our gross margins which stood at 63% driven by further easing of raw material costs and favorable product mix. Our ASV stood at Rupees 805 as of June 2025 driven by continued shift towards value added products. This transformation of a more premium offering highlights our evolution into a comprehensive bottomware brand with increasing relevance across multiple product categories. We at Bow Colors remain firmly committed to a strong unit economics and maintaining healthy balance sheet. We continue to deliver best in class unit economics reflecting in our full price sell through ratio of more than 97%.
Our inventory day stood at 98 days which we are going to further look to optimize further. Our strategy continues to center on positioning ourselves as a go to destination of all our women’s bottom end needs by offering a wide range of products at accessible price points and catering to a diverse customer base. Moving to the Operational metrics for Q1FY26 Moving on to store additions in Q1FY26 we added 27 new stores taking our store total to 803 stores. We remain on track to achieving a target of 120 net additions for the full year. During Q1 FY26, SSG declined by 2% primarily due to softer footfalls Additionally, temporary supply chain disruptions from Bangladesh route led to a limited availability of the selected SKUs across some stores.
Our advertising spends for the quarter stood at 2.1% in Q1 FY26. Moving to new Business Updates, we are in the process of rolling out new categories including Women’s Software and select menswear across 15 to 20 stores. The launch the initial launch will begin in the first week of August with a few stores and then the rollout will happen over the coming months. Lastly, on our new business update, I’m also happy to share that our international forays has been well received. Our first store in Dubai is witnessing positive initial traction and customer response way forward. Our first step would be to achieve low single digit SSSG and improve store level productivity and throughput.
Second, we would grow our footprint by increasing the number of stores in our portfolio. FY26 onwards we aspire to open 120 to 130 stores plus net additions going forward given the lower store closure rate this year. Lastly, our focus would be to maintain a strong check on inventory levels leading to a healthy balance sheet and improving ROCE and efficiency of the company. We remain confident in the strength of India’s consumption story and expect to see revival in demand in the upcoming quarters driven by a successful coming festive season as the environment improves. We are well positioned to capitalize on the recovery through our strong brand, disciplined execution and expanding footprint.
With this, I would like to hand over the call to our CFO Mr. R. Mohan for the update on Q1 FY26 results. Thank you, thank you Gautam and good evening everyone. I would now like to share the financial highlights for Q1FY26. Our revenues for the quarter stood at rupees 223 crores. Gross profit stood at 140 crores with GP margin of 63% for the quarter. Our EBITDA for the quarter stood at 69 crores with the EBITDA margin stood at 30.8%. Profit after tax for the quarter stood at 22 crores with a packed margin of 10%. ROCE and ROE excluding India is impact as on June 25 stood at 17.3% and 13.5% respectively.
Cash and cash equivalents including mutual funds and fixed deposits stood at 247crores as on 13th June 2025. With this we will now open the floor for question and answer.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone’s telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have a first question from the line of Sameer Gupta from India, Infolin. Please go ahead.
Sameer Gupta
Hi sir, thanks for taking my question. Firstly on the store closures. Now last quarter the guidance was that this year will be very low in terms of store closures, probably 4 to 5 max maximum. This quarter itself has witnessed four store closures. So I understand you’ve retreated the store guidance but any color on, you know, overall gross additions and I mean is there a risk that this year also will be underwhelming in terms of store additions given the environment? We have started the call the year with.
Gautam Saraogi
Thank you, thank you for the question. See these four stores. Out of the four stores, one was an airport store and that airport store basically went under renovation. So our store got closed because of that. And the other location and the other second location, the location where our store was, that mall itself was doing a shutdown and transformation to a commercial property. So we lost out space because of that. The other two stores which have closed have closed in the normal course of business. But two stores have closed because of temporary shutdown in the facility where we were present.
One being an airport store and one being the other mall. As far as guidance is concerned. See I think, look, I think our business development team also is well equipped and I think we see a good number of stores additions in the coming quarters. So positively 120 plus, 130 plus stores we should be able to deliver in this fiscal year.
Sameer Gupta
Got it. Second is on the LFS channel. There’s a decline of 13% this quarter and this is despite healthy additions in terms of outlets to LFS. I think there’s a 12, 13% growth on a yoy basis. So any color on this decline and how should we basically look at this channel going forward? Is there a full year number you have in mind? And quarterly waveries can continue.
Gautam Saraogi
See so Sameer, I think look difficult to give a guidance on LFS right now for the next quarter. But see in April and May, April and May falls were quite soft across retail. I mean from June onward definitely the industry has seen a recovery in demand. But April and May was quite soft due to many, many reasons. One had actually come in March and not in April in May. There were some geopolitical political reasons also which affected certain store sales. So I think LFS also got impacted because of that. But we are quite optimistic that in the coming quarters the LFS business should recover.
Gautam Saraogi
I think this has been more of a one time experience. I think from the next quarter onwards, I think the business with LFS should stabilize.
Sameer Gupta
If we even look at it a few quarters back, it has always been a very volatile channel for you. Last quarter before this was 29% growth and a quarter before that was 3%. So any particular reason why it has been such up and down? I believe Reliance is the big customer here and they have gone through some consolidation phase. Is that really affecting, you know, the business?
Gautam Saraogi
Well, I think see also one of the reasons for volatile growth sometimes also happens because of the sudden additions of stores. We also do with our LFS part. So in a particular quarter or in a particular window period, if you add more number of stores, the revenue obviously will show higher. So that is obviously one reason. Second reason, I think last year, same quarter, the USF was a lot earlier in one of our key LFS partners. And that’s why when we compare this Q1 with last year Q1 there is a decrease also showing. So I think the volatility is also to do with the new store editions, what we have done because it gets booked in revenues and obviously there are footfall issues as well.
And yes, in some of our LFS partners we’ve also seen a lot of consolidation at their level as well in terms of number of stores. They’ve also changed format and moved it from one format to the other and we’ve lost out space. So I think over the last one year we have seen certain consolidation with our key LFS partners which has also resulted in this volatility.
Sameer Gupta
Okay, got it. So I mean I don’t see any reason why this should not continue to be volatile in future also because all these factors are going to stay right?
Gautam Saraogi
Well, I think the volatility should be less. I’m quite optimistic that the coming quarters in the LFS business should be good. So hopefully, fingers crossed, I think we should be able to deliver good LFS numbers over the next few quarters.
Sameer Gupta
Got it. I’ll. That’s all from me. I’ll come back and look you for any follow ups. Thanks.
Gautam Saraogi
Thank you.
operator
Thank you. A reminder to all the participants, you may press Star and one to ask a question. The next question is from the line of Avinash Karumanshi from Motil Oswald Financial Services. Please go ahead.
Avinash Karumanchi
Hi. Thank you sir for asking. So this quarter employee cost has seen a sharp increase by 19%. What would be the reason behind that?
Gautam Saraogi
So two reasons, Avinash. One was obviously because we’ve added stores as well in Q1 and the earlier quarters. So one is because of store reductions, the number of employees have gone up. And secondly, our annual increments, what we give in our company usually happens in April. So the annual increments also is another reason for the employee cost to go up. So two reasons. One is obviously addition of new stores and new employees across video and lfs.
And as well as increments. Now, one of the reasons why the percentage of revenue is showing high is because our revenue has not grown. So that’s also one of the reasons why employee cost as a percentage is high. So I think it’s three factors. One is new employee additions across new stores in Edu lss. Second increments. The third is revenue being flattish.
Avinash Karumanchi
Okay, so is it safe to assume, like from on this quarterly basis or whatever, the new solution that will be. The only incremental employee cost growth, or.
Gautam Saraogi
It’S like quarterly content that you would have as an absolute number. As an absolute number of employee costs, whatever employee cost would be increased will be basically the new stores, what we add.
Avinash Karumanchi
Okay. Okay. That’s right. And can you dwell more on this Bangladesh issue? So are you still continuing to see because close to 35 to 40 of your fabric inputs will be coming from Bangladesh?
Gautam Saraogi
Well, it’s not so high, but see, during Q1, a lot of our shipments got delayed. So usually what used to happen, many of our size are made in Bangladesh and it used to come by road. And as you must be aware, the government of India had put a restriction on road transport and all shipments had to be routed through the sea route. Now, when we were calling in shipments from the sea route, and because of limited availability of vessels, the goods came in very late.
So many of our SKUs, which do well in Q1 actually reached the store level pretty late. It reached probably middle of June and that impacted our phase a little bit. So from moving forward, I think some size we have moved production to India and which will be rectified by winter, by winter 26. So I think some of the size we moved here and the other side, we have ensured that the shipment timelines are met so that this delay does not happen again.
Avinash Karumanchi
Can you quantify, like, what would be. The impact because of this issue on the growth level?
Gautam Saraogi
Very hard to quantify, Avinash. Very little difficult to quantify. But I am guessing the impact would be. It would be a little impact. I wouldn’t say that our revenue growth has got hampered only because of Bangladesh. I wouldn’t say that, but I’m sure it would have had a small impact.
Sameer Gupta
Okay. Okay. And the last one is on the the newer categories that you’re going to. Introduce like the top or bottom where. I know that. Me too. But have you finalized the strategy? Like what you’re going to do or. Is it going to organic or inorganic routes? How is it going to be?
Gautam Saraogi
See, I think, look, we are launching our first pilot store by end of first week of August or maybe over the next 7, 8 days. Our first pilot store will open in Chennai and our second pilot store also will open in Chennai. So I think the first phase anyway, we are trying to open 10 stores to 15 stores of pilot stores. So over the next few months, once these stores open, then we will be able to throw more color of how these new categories are performing. Okay.
Avinash Karumanchi
When you speak of store openings, like. Are you going to like earlier we are in last quarter, you said like. You’Ll be deep overpacing the existing large. Like slightly higher to this one. Is that the case or are you going to open.
Gautam Saraogi
No, no, no. We are basically using our same stores which has extra space and we are going to start using the additional space which was unutilized earlier. Okay. So we are not as such, we are not doing any new signings out of the ten. Out of the ten. Maybe there’ll be one store which is a new signing, but nine of them is existing stores which we are extending our space.
Avinash Karumanchi
And this, this topic, this carrier extension. You’Re applying only to organic or you aren’t looking for because there’s cash sitting on books.
Gautam Saraogi
You know, I mean look, I really look. Anything you do new in fashion and retail, right. You have to be. We have to be very, very careful because inventory is a very big risk in, in retail business, especially in apparel business. Right. So I think, look, our first idea and objective is to get this pilot right in the 10 to 15 stores. And once we have that experience, then only we will decide how to take this pilot forward. Okay. We are keeping ourselves focused only as far as this new pilot is concerned. We are keeping ourselves very focused only to these 10 and 15 stores.
Avinash Karumanchi
Got it. That’s it for my end. Thank you. Thank you.
operator
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Harsh Shah from Bandhan amc. Please go ahead.
Harsh Shah
Yeah. Hi Gautam. Trying to understand the same you said. That some part of our revenue was impacted because of, you know, this supply chain disruption. And at the same time we see that our inventory days have gone up. Right. So how do we ideally basically revenue would be, you know, basically disrupted because of stock outs, I would assume. Right, because you would not be able to supply the relevant article. Right. At the Edo revenue and which would have actually led to lower inventory days. Right. So how do I kind of tally. These two data points?
Gautam Saraogi
No, no, harshly I understand your question. See, basically what has happened is the goods which had come in has come in in June itself and inverted in June. So it’s not that the goods from Bangladesh did not hit the books in quarter one. It got inverted in probably a little later in quarter one. And it is showing in the inventory of the balance sheet. And from an inventory based perspective, our endeavor is obviously to maintain inventory days around 90 days. It is like it is at around 98 days which will stabilize in the coming quarter.
So I think from an inventory perspective, we have maintained a lot of discipline. You see this 98 days of inventory also includes the inventory which we have done for the pilot. So if you actually see our bottom where inventory it has been getting optimized over a period of time. See, my question was not on invalidity is behind my question was just to link these two statements. But yeah, from the sales perspective, so harsh. From the sales perspective, it’s very difficult to quantify how much impact that the supply chain issues have. So I mean it’s very difficult to quantify it because once a piece, an inventory does not hit a store, you cannot.
It’s very difficult to calculate loss of scale. So we are estimating that it would have had a small impact on the revenue.
Harsh Shah
Okay, okay, got it. And this new store is in terms of size, right, Store size, are we opening slightly bigger stores now? Because you know, obviously.
Gautam Saraogi
Well, see, I’ll tell you what we’re doing. See, our average bottomware store is about 400, 500 square feet. This sold the new concept what we are doing for the women’s wear and small menswear format. I think, look, the store range, the store sizes will range anywhere between 1500 square feet to 1900 square feet.
And because luckily from our network of stores we had many stores which were more than 1500, we were able to accommodate this earlier. What happened when we had already 1500 plus how many stores were already 1500? Very less. I mean we would have probably had about 20 out of our 800 store network, maybe about 25, 30 stores we would have which are greater than 1500. In those 2025 stores we have selected only those stores which are performing very well. Probably a good category stores. And in those stores we are doing.
Harsh Shah
The pilot and incrementally this 30 store. What in the store size. I mean if you open this this quarter.
Gautam Saraogi
No, no, see that the stores what you’re going to be opening new stores what we are going to be working are only bottomless source. See we are not going to be opening any new store as far as the pilot is concerned. See we are 10 stores are majorly our existing stores pilot is very much restricted only to stores 10 or 15 stores which I mentioned. As far as new stores, what we are going to be opening through the year the 120,130 stores guidance what I’ve given is purely related to a bottom bed business that 400500 ballpar claims.
Yeah, 400500 square feet is going to be the average size. Absolutely. Because still we don’t have proof of concept. We are not in a position to expand anything on the pilot.
Harsh Shah
Okay, thank you.
Gautam Saraogi
Thank you.
operator
Thank you. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Thanks for taking my questions. So again Gautam, so realizations have ended up like 4% this quarter. Right. So decline at the same store level is even lower. Right. So and this has been a trend not only this quarter. There may be some disruption but at least in the foreseeable period that has gone behind we have seen such kind of a decline. So wanted to understand as in what steps are we taking to address this? And you mentioned that premium products are doing better. So are we sort of planning to change the assortment at store? So I want to sort of hear your thoughts around that.
Gautam Saraogi
I think look, we are not see our assortment is very we have a very strong assortment in place. And I think look product innovation and product placement has been our strength. Not from today, even earlier times. So I think we are not dramatically changing any assortment. We are just strengthening our product portfolio by coming out with new colors by coming out with new products in the browns pants and trousers category. So even though sales have been low and it has been a tough quarter, we are not dramatically changing anything in our product strategy. I think we have a good set of products coming in over Q2 and Q3.
We have at least six to seven new products for bottom coming in which have been in the pipeline for the last six months. And I think by the launch of these few products I think we Are looking at a good quarter two and a quarter three ahead. Starting from a product portfolio perspective we have really strengthened our team and our portfolio and we are, we are very bullish that we are looking forward for a good assortment over the next few months starting from September end.
Devanshu Bansal
Can you talk a bit about these products as in which all are these in existing categories like leggings or.
Gautam Saraogi
See I think look a lot of the. I think we are strengthening our product, our pants and trousers category. I think this category has done fairly very well for us and you see that is the future of bottom there. So I think the five, six products we are introducing are more in the lines of pants and trousers only.
Devanshu Bansal
The range would be around 1200 or these are only.
Gautam Saraogi
Yeah I know we’re trying to keep it, we are trying to keep it very sharply priced so I think it will range between thousand and twelve hundred.
Devanshu Bansal
Okay, understood. And say we did invest in some leadership team team in our MBO channel and that is showing some level of traction. So what kind of scale are we targeting in the near to medium term? If you could sort of share some insights.
Gautam Saraogi
Very, very early days right now. So I think look, obviously the growth in NVO is showing very high because the base is small. Right? And I think, I think look we don’t have any large, we are not having very large growth expectations in the channel. Yes, the channel will do very well. Like I said that channel for us is more of a marketing channel like how LFS used to be where we are able to acquire customers who will eventually shop in. So for us we are not going to go very gungo on MBO and try to make it like a very, very big channel for us it’s more of a product placement channel for us to acquire new customers.
So I think we are going to let it grow at the speed at which at a healthy rate we are not going to try scaling the channel too soon too fast. But early days I think the traction has been good. I think we’ve had decent growth. Obviously the base has been small so we’ll have to wait and watch how this channel evolves because we as a company strategy also I don’t want to place our product in every MBO out there. We want to place it in those select large nbos where our profile of customer is there and is also likely to shop in the ebo.
Post that.
Devanshu Bansal
Lastly from my end from network expansion perspective we are seeing that major expansion for you if we see last 12 months has happened in tier 23 town site. So, so what is driving higher focus on these towns and cities for us and for from LFS perspective also, that store count has seen a major increase which are the major players that we have added here. And the expectations of revenue per LFS is broadly similar in these stores as well. Those were.
Gautam Saraogi
See, I think, see, I think. Look, I think as. As an expansion strategy, right. We have always continued growing very well in tier one. And as we have grown our network we have started touching more tier two, Tier three now. And initial. I think initial responses have been very positive. We continue to grow in metros. I think tier one and metros have always done very well for us and we will continue growing there as opportunity increases. But a lot of our focus now is also to have horizontal growth and adding more new towns and adding more new markets.
So I think we’ve done that in LFS also and in our EU network also. And the initial response has been very encouraging. So no, we’ve grown deeper. We’ve grown deeper with our existing partners. See, in Pantaloon we were under penetrated. We’ve added more stores in Pantaloon in Reliance also we were to a certain extent under penetrated where we’ve added those certain pockets of stores. So I think in our existing partners itself, we’ve had a good expansion over the last three, four months.
Unidentified Speaker
Okay. And there were some challenges. I’m sorry to interrupt. No issues.
Gautam Saraogi
Yeah. Please finish your question. Yeah, sorry.
Devanshu Bansal
I was checking from Reliance, which is our largest partner. So they were. There were some challenges. So are those challenges behind us or.
Gautam Saraogi
See. Well, I think it’s behind us. I think majority of the consolidation which was happening with Reliant, I think it’s. I think it’s done. I’m guessing so. And I think in the coming quarters the volatility, like I mentioned to even Samir, I mentioned the volatility should be less. I think this over the next few quarters the business in LFS should do well.
Devanshu Bansal
That’s it from my. Thank you.
operator
Thank you. The next question is from the line of Rahul Agarwal from Ikigai Assets. Please go ahead.
Rahul Agarwal
Hi. Hi. Two questions. Firstly, just to start with on SSG now it’s been some time, lot of Indian retail brands are going through this slow down into sfg. Obviously they’re positioned differently for their own categories. But as I have to consolidate everything looks like we have seen some slowdown. Of course in terms of growth now if I look at same cluster growth now, that is also come down to very low single digits. Now other retailers do look back internally to figure out how can we ramp up. So there are a lot of things which are working on product, you know, creating customer delight, maybe something on the marketing side, on the channel side and stuff like that.
Most of our reconfiguration of stores is already done, which I think that was more of an internal decision purely because you know, this, this, this environment gives us time to do that and you know, focus on our productive stores. Now going forward, is there anything more we can do? You know, because my sense is that if we add 120, 130 stores this year, that would of course entail some cash outflow that will for temporary periods will have impact on consult PNLs because new stores will have higher throughputs but they will have higher cost to start with.
And then maybe if this environment doesn’t really improve. We all hope that festive season brings more positives here. But in case doesn’t improve it will add a lot of pressure on both PNL accounting profitability as well as both on cash flows. So anything internal you would like to highlight where we can actually also put some more time there maybe to increase variety of whatever else it is to figure out first figure out SSGs and maybe SCSG and then maybe just go a bit slower on new additions. Because my sense is even these rentals, you know, the retailers have been talking about not materially declining some pockets yes, but some pockets, no.
I’m, I’m sure that T2 tier 2, tier 3 cities won’t have that kind of inflation, but I’m sure that also adds to cost. Right? Sorry for the long question, but question.
Gautam Saraogi
No, no, I know, I understand. No, no, I completely hear you and you made a very, very valid point because P and L unit economics, balance sheet cash flow are very, very important line items. And we also as a company have always endeavored to grow profitably with maintenance of margins. See I think look as senior management we are trying all levers to ensure that we reach a mid single digit type of SSG over the next few quarters. We are not, we are turning every stone. We are putting an effort in every aspect to make that happen.
So I think that is something we as management will achieve and we are very positive that we will do it over the next few quarters. Now as far as expansion is concerned, your point is very well right? That’s in a slow environment expansion can be a picky subject. I think here the idea is expansion with caution and we always expanded very carefully where we know that where our format of store will work and if you see in the recent store openings also and the store openings, what is going to be coming in the near future, we are focusing to go into more virgin markets where we are not present.
So we are meeting a new customer base and that will give us additional revenue. So I think one aspect is in our existing current markets to drive SSSG and enter new markets cautiously select the right real estate so that it does not have an impact on our P and delivery. So I think these are two separate things which we are approaching with two different type of strategies. One portion as far as expansion is concerned and the other is trying every lever possible to ensure that we are able to get xssg. Now, whether it is through product evolution, whether it is to explore interesting marketing opportunities, we as senior management will do every lever to ensure that we get to that number.
Rahul Agarwal
Like is it, is it like any new competition you are seeing in your category purely from a like to like product perspective? Any thoughts on that?
Gautam Saraogi
See well, I don’t see honestly from a competition perspective there is no direct competition. There’s no real development as far as direct competition. Yes, there are some few direct competitors like I mentioned in my earlier calls as well. But yes, there is a lot of indirect competition which is happening not only for bottom wear but even for topware as well. Today there are many entrants in retail. Many brands have come into retail in menswear and womenswear who are having extensive bottom wear and topware collection. And I think new entrance of brands in the market have not impacted only us but even the entire retail ecosystem.
So I think competition more from a wider subjective perspective, yes there are new entrants but not for dedicated bottom wear alone.
Rahul Agarwal
Got it. So you know the takeaway essentially is that there is no stone which is on, you know, unturned on getting the SSG back and intentionally we’ll try, you know, in terms of just whatever internally we can do apart from you know the external will do whatever they want. But that, that is taken care of, right?
Gautam Saraogi
No, no. And I would read, I would like to put. I would like to re emphasize on one thing what we will try to recover SSD and we will recover SSSD and also whatever expansion we do, we will ensure that the unit economics of the business as far as cash flow, balance sheet, ebitda, all those unit economics and hygiene sectors are well maintained.
Rahul Agarwal
Perfect. Moving to the second question on the LSS side. 2600 outlet like just from a potential perspective, my sense is LSS at 2600 should cover, largely cover most of the LSS network available for go fashion. Is that understanding there is enough?
Gautam Saraogi
No. See I think look as of now if I look at my current channel partners I think we are very deeply penetrated with all our channel partners. Maybe a few stores here and there might be missing but we are majorly covered. Future LX expansion is going to happen. Like how the LFS partners are going to be also adding stores. I think like the likes of Reliance Entrepreneur Shoppers lifestyle are continuing to expand. And as and when they keep expanding our network of stores also with them will increase. As far as adding new partners are concerned we have more or less added all LFS partners who are keeping external brand.
Except Max. Max is the only partner where they’re having external brands. But the vocalist is not present apart from Max. We are present in lifestyle. We are present in shoppers. We are present in Bantaroon Reliance. I think from that perspective we have covered all channel partners. So as and then how they keep increasing their network of stores we will also keep increasing our network with them.
Rahul Agarwal
Right. So going forward this 2600 and this volatility in terms of the store additions will be more linear in line with how the lfs.
Gautam Saraogi
Yeah, more linear and more stable. Yeah, more stable.
Rahul Agarwal
Okay, get it. And just one last question on lfs. I mean I’m sure the current network is not like fully utilized in terms of their own throughputs, seasonal weaknesses. I understand. But let’s say environment for the 12 months is normal. This 200 crore business from LFS from the current network. How much, how much can it be?
Gautam Saraogi
Catch Very hard to estimate right now Raul. To give guidance on how much LFS business will grow is very difficult. Look, our company endeavor as a company is always to grow positively across all our channels. But right now for me to give a guidance on LFS business will be little tough. Maybe end of quarter two. Once we know how quarter two has done. As far as LFS is concerned, I’ll be in a better position to give a guidance maybe at the end of quarter two.
Rahul Agarwal
I was asking the potential not the guidance. Like in terms of if I have to utilize all these 2600 LFS tool, it’s not fullest. What could be the when it happened? Doesn’t matter. Just wanted to know the potential.
Gautam Saraogi
If we have probably added 200 plus shows in quarter one which is a 10% increase on our current LFS network. So it should result in the short term of at least 7 to 8% increase in revenue of our LFS business. Because we’ve added 10% of our LFS network. So if I offline, if I have to tell you what it would peak at currently, whatever number is achieving, it should at least give 8, 9% more sales because we’ve added 200 clusters.
Rahul Agarwal
Got it. But that basically means that existing network prior to 1Q is fully utilized. Like you know, whatever. 200 crore sales.
Gautam Saraogi
Yeah. Of course there will be an SSG element in that as well in your existing network that is very hard to estimate right now. But from just pure from a network expansion perspective, because you’re asking what can be the peak sales based on the current number. Because we’ve added 200 stores. That 200 stores which is 10% increasing network should bring in 8 to 10% of increase in revenue. Perfect.
Rahul Agarwal
Got that. That’s it really from my side. And I wish things to improve further on all the best for the rest of the year. Thanks.
Gautam Saraogi
Thank you Raul. Thank you so much.
operator
Thank you. The next question is from the line of Preena from Ilara securities. Please go ahead.
Prerna Jhunjhunwala
Thank you for the opportunity. I just wanted to understand. You mentioned that there were softer footfalls during the quarter. Any particular reason that you could attribute this and how much impact it would be having? Like what kind of conversion rate?
Gautam Saraogi
Well, supremacy. April and May had softer footfalls because EID this time came early. So EID the E footfalls. Actually the benefit came in March and April was little subdued because of that. And May, some part of May got impacted also because of some geopolitical reasons in certain regions. So I think April and May were quite soft. Also there was a slowdown in retail which has been continuing in June onwards. I’m sure you also heard other retailers also saying that there has been a recovery June onwards. And we’ve also seen that recovery. So I think April and May were little subdued because of some external factors.
Prerna Jhunjhunwala
Okay. And. How do we see the store openings that you mentioned that you are opening in new Virgin Market? From 120 stores that you are planning to open this year, how much would be in new Virgin markets and how much would be in the.
Gautam Saraogi
Well, our endeavor is to do at least 60 to 70% of our store openings in new Virgin markets. See what happens is even our existing market, right. New opportunities come up. So we are very committed to also adding stores in our existing markets and. Well, but I think our endeavor and try would be to do at least 60, 70% openings in new tier 2, tier 3 virgin markets.
Prerna Jhunjhunwala
Okay, understood. And so how much of your sourcing will be from Bangladesh after shifting the new. After shifting all the SKUs to India.
Gautam Saraogi
I mean major, very, very little. I mean to begin with it was not so much. There were certain important signs which we were doing from there. I think they’re moving some of our sales to India because we don’t know how India Bangladesh exports team will be maybe after a few quarters. We don’t know so we don’t want to take the risk. So we are moving some of our size there. So I think after moving some of our size here, our exposure there would be very limited for difficult to give a percentage number. I’ll have to arrive at the number and I’ll probably share it offline with everyone but I’m not.
But it will be, the exposure will be limited.
Prerna Jhunjhunwala
It will be very beautiful if you share it at any point in time. Yeah, of course I understand this.
Gautam Saraogi
Definitely. Yeah definitely. I’m not having it handy. Apologies for that. I’ll definitely share it. I share it offline with everyone.
Prerna Jhunjhunwala
Okay. And so if I want to understand the SSGD growth of like 2% that you’ve achieved in this quarter, will it also be an impact of each shifting? So if I mean the way you mentioned it, footfalls were softer and it will be a one off event rather than calling it softer quarter.
Gautam Saraogi
See I think look it’s very hard to put a number to how much need has impacted our xssg. It’s very difficult to do that. I think EID was one of the factors even obviously our supply chain goods coming in late was a small factor. So I think the slowdown what we have faced is multiple reasons. One of course the market also retail market also being very slow. So it’s across all sectors. So it’s very difficult to say how much EID would have had an impact on our fsg. Definitely at April FSSG was deeply impacted because of EID moving into market.
Prerna Jhunjhunwala
Okay, understood. And so we, we saw some pledge related movement in the month of July. Could you help us understand what will be the current pledge position? The promoter?
Gautam Saraogi
Yeah, currently I’ll just tell you, just give me a second. Currently the number of CB had reduced about 9 to 9.5 lakhs shares. We had released the pledge in the month of, in the month of July. July and we just released. So now our pending shares which are pledged are about 48 to 49 lakh shares if I’m not wrong.
Prerna Jhunjhunwala
Okay.
Gautam Saraogi
Which I think which on a. On. On our holding would be 1617 and on the cap table would be about 8%.
Prerna Jhunjhunwala
Okay. So approximately 2% release on 200 basis.
Gautam Saraogi
Points is what we’ve reduced in July end.
Prerna Jhunjhunwala
Okay, okay. Understood sir. Thank you sir. And over all the best.
Gautam Saraogi
Thank you.
operator
Thank you. The next question is from the line of Giovani from GM Financial. Please go ahead.
Gaurav Jogani
Thank you for the opportunity. My first question again is with regards to the SSD. Now you know, even if we total up the Q4 and Q1 numbers to you know, weed out the volatility of the LFS and even to do away with the volatility of the eponing, still, you know, the numbers look weak as you know the quarters, the previous quarter’s base is also weak. And if you can dissect, you know, in terms of the volume growth also because the volume growth on a per store review basis seems to be declining by around 78% there too. So you know, apart from this slowdown, what, what according to you is really impacting the growth?
Gautam Saraogi
Yeah, I think, look Gaurav footfalls have definitely been weak over Q1. I would not, I would not disagree on that. And the footballs obviously the market sentiment to begin with was weak and obviously there are other things which have come in between has made it weaker. The positive thing is that June onward the overall retail industry has seen an uptick. I’ve seen uptick in demand and hopefully I think this for the industry should continue. When I look at my SSG, yes we are at minus 2%.
But the one thing what we notice in our SSG is that even our oldest store which is a FY15 or FY16 stores, they are still at a minus 4 or minus 5%. Usually what happens in a minus 2% kind of situation is that your oldest FY15 stores or FY14 stores are probably DE growing at 20% which is not the case in our situation. Our old store also is probably only at minus 4 or minus 5. So when we see a recovery in demand it will be across the stores of all financial years. So hopefully in the coming quarters, like I was also mentioning to Rahul, right.
We as senior management are very, very motivated to bring back this SSLG to mid single digit. And I think you know, we should be able to achieve it in the, in the coming quarter. Just to follow up here, you know, even in July do you see this demand recovery sustaining? No, July has been weak so we’ll have to wait and watch. But anyways we don’t track month on month SSLC because it becomes misleading because sometimes the number of weekends also there are a mismatch. I think the best way to see SSSV is through three months.
So right now for me to comment on July’s performance will be very premature.
Gaurav Jogani
Sure.
Gautam Saraogi
And on the LFS part, you know, last time in Q4 you did alluded, you know, at an annualized basis you are looking to add only 100 odd LFS stores. Now in Q1 already alone we are seeing, you know, a sharp, I think around 350 or 2400 odd store editions itself. So see, well, we got the right opportunity from our existing channel partners and we are very thankful to them. So we got the right opportunity and it was also aligning with those cities that we wanted to also be part of. And you know, we, you know, luckily we got those outlets and we’ve added in Q1, in Q2 and Q3.
I don’t foresee too many NFS editions because we just added a good number of stores. So we are pretty decently penetrated with our existing partners. So I think over Q2 and Q3 the LFS additions would be more stable.
Gaurav Jogani
Okay. Okay. And Gautam, lastly on the gross margin, but you know we are, we have seen gross margin expansion. So how could we look at the margin gross margin levels on an annualized basis and going ahead, see, I think it will, it will be in that range of 62 to 63%.
Gautam Saraogi
Gaurav, I think 63% is what we have delivered in Q1 and I think we will be able, we will be in that range between 62 to 63 or 62 to 63 and half is in that range.
Gaurav Jogani
Okay. Okay. Okay. Thank you. Thank you for answering my question. Thank you. Thank you.
operator
Thank you. The next question is from the line of Vatsal Modi from Eddie Psych Partners. Please go ahead. Hi.
Vatsal Mody
Just wanted to understand on the LFS side of things, there are a few structural issues and some transient issues. Would it be possible for you to tell us from a June, July perspective have the numbers become positive or are they still in negative territory?
Gautam Saraogi
The context here is obviously for the quarter. Based on our numbers, it seems like double diploma.
Gautam Saraogi
Right. I think what’s also see from July, July, we haven’t got the final monthly numbers from LFS yet, but from a June perspective NFS is marginally negative.
Vatsal Mody
Got it, got it. So improvement but still not positive.
Gautam Saraogi
Not fully there yet. Not fully there yet.
Vatsal Mody
And in your mind this is primarily to do with the broader footfalls issue or is there anything else that.
Gautam Saraogi
No, it is broader. It is broader footfall. It is also some consolidation which has happened also among our LFS partners. So I Think it’s a combination of both. Understood. And the last question is in terms of the seasonality like for instance EID was, you know, in the previous quarter in the next couple of quarters is there any change like this that you expect Diwali or it might be anything significant that could affect the numbers? Not to my knowledge.
I don’t think so. But I’ll have to just look at the calendar and reconfirm. But from my knowledge I think it’s pretty much in line. What was last year? Got it. All right. No, that’s it. Thank you. Thank you.
operator
Thank you. The next question is from the line of Rajiv Bharti from Nuvama. Please go ahead.
Rajiv Bharati
Hi doctor, thanks for the opportunity. So just one question with regard to market share because volumes have been consistently going down by channel. Do you have any new information on are we losing market share? Because the data which is present on the slide is dated seems but any context in terms of shelf share, market share in various elements.
Gautam Saraogi
Well, we don’t have a channel wise see and also I know our data, what we present in the investor deck is outdated. In fact we are doing a new market study we’re doing with Technopack which should be ready in the next couple of weeks.
We’ll be probably presenting the data in the next investor day. But I think from a market share perspective, I don’t think we’ve lost market share. I don’t think we’ve gained market share. Yes, but I’ll be able to, we’ll be able to go a clearer picture when the study is over. So maybe next, next quarter in the investor deck also we’ll put it and I’ll be able to clarify this question next quarter. But from what as senior management we look at, I don’t think we’ve lost market share and in terms of let’s say articles per bill, has that number changed materially over.
That is actually, that is actually. That has actually stayed very steady. So our units per transaction it’s been 2.2, 2.3 and when I compare it on a yoy basis it’s been absolutely the same. I was saying, see basically the units for transaction has remained the same. So suppose it’s on an SSG level we have been at -5%. Right. So our number of bill cuts also would be down 5%. So it’s a clear result of number of footfalls. The customer who’s walking into a go Color store is probably buying the is actually buying the same quantity on an average what it was probably last year.
So I think the SSG volume SLC which is minus 5%, the bill cuts also would be minus 5%. Does it show that the newer stores actually the article per store is actually materially lower than let’s say older stores. I mean the difference between. See I’ll tell you one thing is sure, right, and this is probably for the entire industry. The new stores in a subdued environment tends to underperform. And that is something which we have seen across the industry because if a historical store starts struggling during subdued environment, a new store is fairly new, right? Without any issue.
A new store also tends to have the same subdued performance. So I think as the now since, you know, we’ve heard that retail has started picking up, maybe in the coming quarters we’ll see better performance from the newer stores as well.
Rajiv Bharati
So why I’m saying this is because if I do article sold in a new store versus old store. I mean there’s some crude math. It used to be close to 69, 70% earlier and now it is 50%. So new stores, articles sold first or no, no, the new store versus also contribution.
Gautam Saraogi
I’ll come come back with that exact data and you see what happens is you would have probably divided it by the closing number of stores.
Sometimes the store would have opened last minute and you would have divided as a denominator. So I’ll come back to you on that data. That’s how much is the new store contribution and also contribution this year versus historical years.
Rajiv Bharati
That’s all for. Thank you.
Gautam Saraogi
Thank you, Rajiv.
operator
Thank you. That was the last question for the day. I now hand the conference over to the management for closing comments.
Gautam Saraogi
Yeah, I’d like to thank everyone for being part of this call. We hope we’ve answered your question. If you need more information, please feel free to Contact us or Mrs. Devendra from SGA, our investor relations advisors. Thank you.
operator
On behalf of Go Fashionable India Limited that concludes Cisco. Thank you for joining us. And you may now disconnect your lines.