Go Fashion (India) Ltd (NSE: GOCOLORS) Q3 2026 Earnings Call dated Jan. 29, 2026
Corporate Participants:
Gautam Saraogi — Chief Executive Officer
R. Mohan — Chief Financial Officer
Analysts:
Devanshu Bansal — Analyst
Gaurav Jogani — Analyst
Ankit Kedia — Analyst
Vaishnavi Mandhaniya — Analyst
Prerna Jhunjhunwala — Analyst
Resha Mehta — Analyst
Sameer Gupta — Analyst
Akhil Parekh — Analyst
Balaji Vaidyanath — Analyst
Manjeet Buaria — Analyst
Presentation:
operator
Sa. Sa. Sa. Sa. Sa. Foreign. Ladies and Gentlemen, Good day and welcome to Go Fashion India Limited Q3 and 9 months FY26 earnings conference call. Before we begin, I would like to remind participants that this conference call may contain forward looking statements which are based on the beliefs, opinions and expectations of the company as of today. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants line will be in 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gautab Saraogi, promoter and CEO of Go Fashion India Ltd. Thank you and over to you sir.
Gautam Saraogi — Chief Executive Officer
Good evening and a warm welcome to everyone present on the call. I have along with me Mr. R. Mohan, our Chief Financial Officer and SGA, our Investor Relations Advisor. I hope you have all received our investor deck by now. For those who have not, you can view it on the stock exchange and the company website. Q3 has been a challenging quarter for the apparel industry mainly due to lower footfalls. During Q3 FY26 revenue stood at 194 crores with gross margins of 40.64.3%. EBITDA stood at rupees 52 crores and PAD stood at rupees 7 crores. However, the company has demonstrated resilience in its core operational fundamentals such as full price sales ratio, items for transaction and customer conversion rates which have remained stable reflecting continued consumer relevance and disciplined execution.
The overall retail environment remains subdued with discretionary consumption witnessing moderation across categories. Factors such as uneven festive demand, selective consumer spending and lower footfalls resulted in a slower same store sales growth during the quarter. The softness was largely industrial wide in nature. The company continued to prioritize full price sales ratio by maintaining our sales ratio more full price sales ratio more than 95%. This disciplined approach helped us maintain healthy gross margins at a stable 64.3% in Q3 FY26 which further highlights the strength of our pricing of our brand. Q3 FY26 was deeply impacted by a slowdown in our LFS channel, but one of our key LFS partners had a pause of fresh inventory intake across brands which affected our LFS sale by 30%.
We continue to engage closely with our LFS partners and expect this channel to normalize as we continue to supply inventory to them. We continue to engage with our LFS partners to ensure that these kind of interim issues what we have faced we don’t face again. To drive improved same source sales growth, the company has undertaken focused initiatives around customer engagement and new product launches. In parallel, we had recently collaborated with a leading influencer to showcase our bottom wear collection and enhancing the brand visibility and relevance among younger audience. Such initiatives are expected to support stronger customer traction and improve store level performance over the coming quarters.
Over the time we have strengthened our position in the non leggings category and it has further strengthened today. A non leggings bottom wear category gives us a 65% contribution in our sales which in earlier times used to be less than 50%. Moving over to the operational metrics of Q3FY26, our store expansion strategy continues to remain calibrated and selective with a clear focus on entering high potential markets. As of nine months of FY26, the company has added 49 stores and we expect to close FY26 with a net additions of 60 to 70 stores. Our approach to network expansion remains very disciplined with emphasis on store level profitability and strengthening band salience.
We continue to keep a close watch on inventory levels with inventory levels being at 114 days as of December 31, 2025. Our inventory on the Inventory fund we have seen an increase in our inventory because for our new concept Deliver concept which had increased our inventory marginally from the earlier times. For the full year FY26 we anticipate inventory levels to stabilize at the range of 100 days, ensuring operational efficiency and healthy working capital management. Our strong focus on inventory and working capital efficiency will help us achieve the target of converting more than 50% of our EBITDA into pre India’s operating cash flows.
On our new initiatives including our International store in Dubai and our deliver concept are demonstrating healthy unit economics in early stages and we remain excited about their performance in the coming quarters. As of now we have opened six stores for our delivery concept and we look to scale make it about 10 stores by March 2026. In line of our commitment to shareholders, we’ve announced a buyback this quarter of fourteen thousand shares at a price of 460 rupees share with a total size of rupees 65 crores. Way forward smaller format stores the small size stores has been witnessing a sharp decline in performance because the today’s consumer is looking to shop within a larger store experience.
So in line with that we had consolidated some of our smaller stores last year and we will look to continue some of our remaining smaller stores in the quarters to come. The company is taking a cautious approach on new store expansion with a clear focus on strengthening sales Store Sales Growth Our priority is to improve performance across the existing store network through better execution, enhanced customer experience and operational efficiencies. Our immediate objective is to move from negative same store sales growth to flattish and then eventually taking it to low single digit supported by improvements in store level productivity and throughput.
This will be. This will not only be driven by external factors but even better by sharper execution at a store level, introducing new products and better engagement with our new audience. Second, our footprint expansion will be driven by careful selection of high quality locations through picking and choosing the right location with strong unit economics. Lastly, recognizing retail is fundamentally a balance sheet business, we remain sharply focused on cash conversion, higher inventory turnover and disciplined capital allocation ensuring business remains profitable and is a very rosi eccentric business. With this I would like to hand over the call to Mr.
R. Mohan for an update for Q3 and 9 months FY26 results and financials. Thank you.
R. Mohan — Chief Financial Officer
Thank you Gautam and Good evening everyone. First I’ll give the Q3 financial numbers. Our revenue for the quarter stood at Rupees 195 crores. Gross profit stood at Rupees 125 crores with a gross GP margins of 64.3%. Our EBITDA for the quarter stood at Rupees 52 crores. EBITDA margins is at 26.7%. PAT for the quarter stood at 7 crores. PAT margin is at 3.7%. Coming to the nine months FY26 performance revenue is at 642 crores. Gross profit stood at 406 crores. GP margin at 63.2. EBITDA is at 187 crores with EBITDA margin at 29.2%. PAT stood at 51 crores with a PAT margin of 8%.
ROCE and ROE excluding India’s impact as on nine months FY26 stood at 13.1% and 10.3% respectively. Cash and cash equivalents stood at 256 crores as on 31st December 2025. With this now we’ll open the floor for the question and answers.
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 their touch tone 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. The first question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Yes. Hi Gautam. Thanks for taking my questions. Firstly sir wanted to understand how should. We read your SSD performance. We were flat for a fairly long period of time but now reporting in the negative trajectory for last three quarters. Though you mentioned that from a retail parameter perspective footfall is the only challenge. But my concern was that even footfall we are attributing it to weak consumption. But is there a certain level of deterioration of brand strength so that it is not attracting the relevant or amount of footfall? So your color on this will be very helpful.
Gautam Saraogi
Yeah, thanks. No, I think see from a brand perspective I don’t see that yes we want to as a brand increase our younger audience as a customer base. But from a brand strength and relevance perspective I think we are very much there. See even from a product perspective, if you see today 65% of our sales are coming from the other value added products. And that’s how the market, the bottom where market is heading in direction. So I think from a brand relevance and product relevance perspective I don’t think is an issue. I think the overall footfalls in Q3 has been very weak.
We’ve done many channel checks also and we’ve seen similar kind of trajectory in other places as well. So the overall macro scenario obviously has had to do a lot. The football issue has had to do a lot with our ssg. Another thing which I mentioned in my speech, our SSSG in our. In a very small society today, what has happened? Because the bottomware market has become a wider market with so many products, the very small stores from an experienced perspective becomes a little bit of an issue. And we have seen softer and larger degrowth in SSG in those very small stores.
So I think the larger attribute to our negative SSG is obviously the market, the overall macro scenario and footfall. And these small stores which have degrown a lot more than normal because of the size.
Devanshu Bansal
Fair enough Gautam. But this footfall issue, is it also related to consumers sort of preferring to show up more online or via quick commerce channels where our presence is very limited.
Gautam Saraogi
Right.
Devanshu Bansal
So are you also thinking on ramping up our presence in these channels because footfalls etc may remain weak?
Gautam Saraogi
Right.
Devanshu Bansal
So if the consumer preference is shifting towards other channels or maybe through formats where they are getting the entire wardrobe rather than preferring to go for A standalone bottomware store. So how are we sort of focusing on capturing such consumption of agents?
Gautam Saraogi
Yeah, see in fact, yeah, I mean rightly Sir Diwanshu, I think look, online and quick commerce has always done well and for us because we are having a very small contribution. So that’s a channel for us to build. So our online channel has seen decent traction. Our quick commerce also we have been live on Blinkit and Zebu and we’ve seen very good traction there. So I think as that channel picks up speed for the apparel category, our share also in the ecommerce space will organically grow. So from an E Comm and quick commerce perspective, we are there present with our styles and inventory across all channels.
I think it’s just a matter of time. Once it picks up speed it will also start reflecting in our revenue numbers.
Devanshu Bansal
Fair enough, fair enough. And lastly Gautam, a few clarifications on the MFS side. Our revenue mix has improved towards EBO, right? So it is 80% this time around versus 74% last year. The gross margin for this channel is about in my understanding 35, 40% better versus the NFS channel.
Gautam Saraogi
Right.
Devanshu Bansal
But if we see from a company wide perspective this should have reflected in 250 300bps better gross margin on a BIOI basis. But this is flat right in this quarter. So is this largely due to deterioration in gross margin profile of LFS channel as well? So what explains that?
Gautam Saraogi
So yeah, yeah see we are also studying that and I will come back to you on that. But at the outset when we are looking at it right now last year we had started us is a little late at the EDO level. This time we had started a little earlier. Usually with the start last year our USS start date itself was late. So because the quarter three had a week 10 days of more USS beat that could have had an impact on the EBO gross margins which is not reflecting in the upside of the overall company gross margins because of low LSS there.
Anyway studying this we’ll come back to you with more clarity around it. But at the outset it looks because of the start of early USS which is by a week 10 days.
Devanshu Bansal
Okay. And from a model perspective is your LFS SOR based or the partners can return the inventory in case they are closing the store.
Gautam Saraogi
Yeah, so. So usually it is like this. It is based on sor. So what we do as per India standards is on because it’s on sor. We show it as debtors in our books. We show it as sale when we dispatch the Goods. So it gets us in our books. But because it is SOR, as per India’s 115, we have to put a provision for sales return based on historical trends. So whatever is the last three years of historical trends of return be provided on a quarterly basis. So the provision of sales return is inbuilt for any stock which is coming back through the year.
No, that’s fair.
Devanshu Bansal
But what happens in terms of store closures? Right, so we have had.
Gautam Saraogi
Yeah, yeah. So if. Yeah, yeah. For example, yes, your question is right. Suppose today an LFS decides to shut 20 stores. Those 20 stores stock will come return and it will be booked as a sale return. But what happens such increase in return will reflect in the next year’s provisioning. Because you tend to usually take a three year average of for a provision of sales return perspective. But to your question, If NFS shuts 30, 40 stores or whatever stores, the stock coming back will be shown as a sales return. Fair enough.
Devanshu Bansal
Thanks for taking my question. Thank you.
operator
Thank you. Participants who wish to ask a question, you may press star and one at this time. The next question is from the line of Gaurav Jogani from JM Financial. Please go ahead.
Gaurav Jogani
Hi. Thank you for taking my question. My first question is again with regards to the LFS channel only this quarter we have seen 137hotel getting shut. QQ so one what is, you know what? Was there anything specific this quarter that we saw such large closures and how do we look for expansion in LFS going ahead?
Gautam Saraogi
Yeah, so see Gaurav, this store are largely one of our key LFS partners. They change the format of that store and they changed it. They rebranded and changed the format of the store. So when that happened, all the external brands had to move out of that of those particular stores, including us. So the reason we have exited the stores because that key partner had decided to change the format and rebrand it. Now moving forward LFS expansion from a store edition perspective, whenever we do get an opportunity for adding new stores, we will selectively choose which location makes sense and then we will select like in pantaloons, we have been expanding and adding stores over the last few quarters.
Even in reliance, we are getting new stores. So selectively on the basis of what is being proposed to us, we will select those locations and move forward. As far as quarter 3 is concerned, our quarter 3 revenues were deeply impacted because for one of our key landfills partners, we were not able to dispatch stock for about close to 45 days. They were not taking inventory across brands for a period of 45 days. And because of that we were not able to dispatch stock. And that is why we’ve lost 45 days of dispatches which has resulted in 30% drop in sales.
And that’s why our Q3 numbers overall numbers have got deeply impacted because of this dispatch issue which happened in November and little bit of December as well.
Gaurav Jogani
Can you expect this to, you know, come back in Q4 in some sense? Because.
Gautam Saraogi
You see. Not really because see what happened that one and a half months which we have lost your actually what happens? How do we recognize stock at an LSS store? Right. We keep base talk. We decide a maximum stock level. Now based on the maximum stock level and the closing stock at an LFS store, you’re basically only sending the difference at the at. So in January or February, it’s not that you’re going to be sending additional stock, you’re going to be sending stock only to the extent of the maximum stock level. So the 45 days what we have missed out, that increase in number will not see in January and February.
Gaurav Jogani
But if that 45 days we have missed out, they would have, you know, again, sold.
Gautam Saraogi
Yeah, I understand but see ours is a. You see Gauravars is a replenishment business. The sales will happen, you keep replenishing. The sales will happen, you keep replenishing that store. Right. But your maximum base stock is only to a certain level. So if you have not replenished 45 days, you have your large extent lossed out on a lot of secondary sales. Now we will not be able to recover those secondary sales in the coming months. So technically you’re sending only that much talk. It is there in the base stock.
Gaurav Jogani
And gotten just completing on that NFS part. So how many LFS now we can model into, you know, open at least for Q4 and the rest of the couple of years going ahead?
Gautam Saraogi
It’s difficult to say. It’s difficult to give a guidance on how many LFS stores we will be opening next year. It all depends on how our partners expand and in that proposal of expansion what we think would be relevant. So it’s going to be very subjective to what is being proposed to us. See, sometimes a partner can decide to add 70 stores, 80 stores, but certain key markets, you wouldn’t want to be part of that market. So it’s very subjective to what is being proposed to us. So I think that we will be able to only know next year as we are proposed with the list of.
Stores and coming back to the ebos.
Gaurav Jogani
Are you seeing any recovery in the momentum of any sorts in the month passed by in January to indicate, you know that from a negative 4 1/2% SSSG that you’re probably, you will go flattish, all that sorts or it continues to remain.
Gautam Saraogi
Gaurav, I think, I think see we are seeing two trends. Gaurav, I think what is happening is our mid sized stores are stores which are slightly higher than 500 square feet, 600 square feet. See because your product range has increased, right? 65% of our sales are coming from the non leggings category, the value added categories. So today the consumer wants display and experience of shopping when you’re seeing so many products. So we are seeing trends, right? The smaller stores, the very small stores are obviously seeing a decline because we are not able to display all the new products.
The slightly larger stores which are the 600, 700 square feet stores, they are seeing good increase. Some of the stores are actually showing very good positive SSD as well. So I think for a period of time as our small stores phase out of the system and the newer stores, what we cautiously add becomes of a relevant size, you will also see improvement in SSD from that perspective. But largely the improvement of SSD is going to be obviously relating footfalls. So I think both these things hand in hand will play a very important role in the recovery of the SSG from being negative to a mid single digit of positive.
Gaurav Jogani
But Gautam, in this scenario that you know, the expectation then there could be a possible drag on the margins because the cost will keep on escalating at a certain pace. So would it be fair to assume that, you know, at least over the next three four quarters you might see a decline in the EBITDA margin just because of the negative leverage?
Gautam Saraogi
See, I’ll tell you what we are planning to do as a company, right? Right now we are being very careful with expansion. So right now we have prioritized and thinking how do we get the SSD back to positive. Today we are at minus 5%. Our aim is to get to mid single digits to 5%, right? So from minus 5 we have to take it to plus 5. So all our efforts right now as a company is to see how we can fix this and get this into positive. The overall football is going to make a very big contribution to this.
But we are also going to be putting in smaller efforts that are at new products, better looking stores to fuel that. So our first priority over the next one year is to definitely put entire focus on improving SSS and maintaining margins. So on the expansion front, we are going to be very selective in our expansion in the coming quarters so that because of expansion there should not be a EBITDA hit in the P and L. What happens a lot of when we are seeing new stores, immature stores which are not matured, they are a load on the PL because you’re paying the full rent and salaries without the store being matured.
So we are taking one step back and thinking, look, hey, we will be very careful in our expansion, not go overboard with the expansion so that margins don’t get compromised during this recovery period.
Gaurav Jogani
So then can we expect the store opening to even come down next year in the EBO format versus the 6070 that we’re expecting this year?
Gautam Saraogi
Honestly, Gaurav, we are not guiding, we are not giving. Unlike earlier times. Like earlier times, we used to be very familiar with our guidance on how many store openings. This time we have seen that our margins, because of flattish, because of negative SMC margins have taken a hit. So under the management we have taken a conscious call to slow down the store expansion and do it selectively. See, that does not mean that we will not expand. See, wherever we are getting a very good opportunity and then we should feel that we should be there, we will also expand.
But we are not setting ourselves a target. We, during this recovery period of taking SSD from minus 5% to plus 5% we don’t want to compromise on the health of the pni.
Gaurav Jogani
Got it. Thank you. And that’s okay.
operator
Thank you. The next question is from the line of Ankit Kedia from Philip Capital. Please go ahead.
Ankit Kedia
Gautam, just continuing from the previous question, is it fair to assume next year’s store opening could be around, you know, sub 50 stores or even lower than that? Because this year with 6070 stores also your margins have been hit and next year also the recovery is question mark. So definitely the stores opening would be below 50.
Gautam Saraogi
So Ankit, I know where you’re coming from and honestly it’s very difficult for me to give a guidance right now. It all depends. When does the SSG pick up speed? Right? And suppose if things go well and next year by. I’m just giving you a hypothetical example. By next year middle or maybe the second quarter, we come back to positive sslc, then maybe we also start increasing our footprint as well. So it all depends on the recovery of the ssg. So it’s very difficult to give a number for next year. Whether it will be below 50 or above 50 is very difficult to predict.
But as management, we feel that we will not go to an extreme of not opening also like for example, if we get a good mall which is coming up in Mumbai or a Bangalore or any other city where it’s a prospective mall or very prospective high street, we will definitely go and open there. We will not go overboard and try to open everywhere also at the same time. So we keep a good blend.
Ankit Kedia
So given that it takes three months to six months to open a store and today with you at minus 5, 6%, like for like growth, next six months, store opening will be muted, at least that we can assume.
Gautam Saraogi
Yes, it will be muted. So it’s difficult to give a number. But I can tell you it will be muted for sure because we are going to be very cautious in our approach.
Ankit Kedia
Sure.
Gautam Saraogi
Second is on that also. Sorry, sorry, just extending policy. We’ll also be doing a lot of relocation. So what will happen? Sometimes, like I’d explain to you, we have some, sometimes very small stores which are not doing well today. The consumer wants a slightly better experience. So in the same market we might start the older store and open a new store. So there might be some relocations which will have a positive impact on the revenue number as well.
Ankit Kedia
Gautam, we would appreciate if you can share the area of the stores today. You know, at a 800-900-store network, we don’t know what is the area given that bulk of the store closures of smaller stores are behind us. And now you’re opening six stores.
Gautam Saraogi
Yeah, so what I. What I don’t know. In the next, probably after this earnings call, once we have calibrated the entire data, we will share the data with everyone. How many stores are there, which are the smaller stores? So everyone has clarity on that.
Ankit Kedia
And how many more store closures are remaining for the smaller stores? And can you just share the decline you are seen in the smaller stores?
Gautam Saraogi
Yeah, we will share or first we are calibrating the data. So once we have calibrated the data, we will be happy to share.
Ankit Kedia
Okay. No, because on the previous question you said that the smaller stores are significantly negative. SSH are declining. So at least some data. You would have to pass that comment, right?
Gautam Saraogi
We’ve seen. See, we’ve seen. No, I’ll tell you like for example, where our company average level is minus 5%, the smaller stores, we have seen a slightly higher degrowth of more than 9, 10% SSLT. And sometimes numbers are not fully respected even when we are visiting stores. And then we are interacting with the consumers. The consumer feels that okay. In a slightly larger store of a 600, 500, 600 square feet, the newer bottom, the newer style are better on display. So it becomes easier to shop in a very compact store of 400 square feet. It becomes very, it becomes very difficult to display all the items to the consumer.
So from an experienced person perspective also it hampers. I agree.
Ankit Kedia
Because your core mode was a smaller store, high throughput, high margin business. Now that is getting disrupted because your average store size is becoming 600 actually incremental stores.
Gautam Saraogi
No, no. See the unit economics of a 600 sq ft store and a 300 sq ft store is not different. Even a 600 sq ft store from a unit economic perspective comes under the same category as well. So it’s not that my unit economics will go down because I’m opening a 500, 600 square feet store. See, if today I would have gone and opened say 23,000 square feet. That’s a completely different unit economics. But stores which are sub thousand square feet have similar unit product economics for a 200 square feet also and for a 550, 600 also.
Ankit Kedia
At least last three years since we started opening bigger stores, sales per square feet has declined. If you see now that could be due to market environment or it could be due to loss of market share or could be due to loss of footfalls. It could be either of it. But at least on the face of it, we have seen a decline in sales per square feet.
Gautam Saraogi
So. Yeah, so your question is right. So the sales per square feet would be more because of the footfalls in the overall macro scenario. It is not because we have gone into a larger store and the unit economics are not as good as a smaller store. It’s not because of that.
Ankit Kedia
Sure. My second question is on lfs. You made a comment that the one of the large retailers is switching the stores which had third party brands to private label brand. Now do we have visibility that next year that won’t happen from the retailer or it’s going to continue? And we have been said that few hundred more stores could be closed in the medium term.
Gautam Saraogi
We are also trying to get that clarity on. But honestly, if you ask me the truth, I don’t know, can it happen next year? Maybe. Yes. So we are also speaking to our partner and trying to get that clarity so that we are also prepared on if there are going to be such, you know, format changes at their end, we will know about it. So we are trying to find out. The minute, you know, you know, I have some clarity on that. Maybe in the next earnings call or maybe in between that. I’ll definitely guide everyone on that.
Sure.
Ankit Kedia
And you know, on the inventory part, right, our gross margins have expanded but you know, with the change in format and other things, how are the commodity prices placed today? And with the gsp, you know, rising, being more favorable at least for higher price points, about 1000 rupee products going forward, do you feel the need to reduce the discounting which you are giving to the consumer or the new labels have come up, how will that rising change? And how are the commodity prices?
Gautam Saraogi
Honestly, Ankit further, you’re talking about the GSE reduction, right? Those products you’re talking about, right?
Ankit Kedia
Yes.
Gautam Saraogi
Yeah. So we were giving the benefit to the consumer. We have not changed our MRP for such products. So we are continuing to give the benefit to the consumer. There might be a time where we feel instead of taking a price hike for those products, we just remove the discount what we were giving for the GST benefit. So in short, we have not taken the price hike but we’ll get the benefit of that eventually. But when we are going to start doing it, we are deciding it internally once. So we are, to answer your question, we are not changing the MRP of those products where the GST was reduced.
Wherever the GST was reduced, we were passing on to the consumer. Eventually, instead of taking a price hike of those products which were new, we would just remove that benefit without taking a price hike.
Ankit Kedia
And in the other products, sub thousand rupees where the discount was not available, 5% remains 5% there. Are you considering taking a price increase?
Gautam Saraogi
No, not right. See Ankit, we are in a volume led business, right? So our entire company focuses to drive volumes. I have reviewed the products under 1000. We have made very small correction in certain products where we have increased the pricing because it was underpriced to begin with. But those are very, very few products. Largely we have not touched anything under 1000 because we feel we are well priced.
Ankit Kedia
Last question is on the A and P spend. Do you think at this point of time you need to be aggressive in A and P? Because previously you always said when demand is not there, you don’t want to spend because it is. Demand is not. The consumers are going to walk in. But has that, you know, mind shifted that you have to go aggressive?
Gautam Saraogi
See, I think actually I think no, I don’t think we have to sell more, honestly. So I think that logic of percent of revenue still holds good. This time it sold a little more because our revenue this year has stayed flat. But we had marketing budgets allocated for a growth revenue. Right. So that’s why as a percentage of revenue, so slightly higher but from how much we want to spend, I don’t think that number will increase. We are just transitioning our digital marketing to a very different methodology where we are reaching out to the younger audience and the millennial audience by different, different type of personalized marketing.
See, our marketing team to begin with was a very old school orthodox type of marketing. It’s now changed over a period of when started pivoting towards more and more digital. So I think the way of marketing is going to evolve. But from a spend perspective, I don’t see our spend increasing. We used to spend two, two and a half percent or two to 2.2%. We are going to be around that number. So as a, as a quantum of spend, it’s not going to increase. Sure.
Ankit Kedia
And can I ask another question since I’ve taken a lot of time, it’s not top wear. Given that bottom where is under pressure, which is a Coke, bread and butter, do you think it’s prudent now for you to continue to expand topware, you know, aggressively or concentrate more on bottom wear?
Gautam Saraogi
No, no. See, see I’ll tell you the top pair project. What we have done, the everyday concept, that’s just a pilot and I cannot see the pilot needs its time. Right. So now we’ve opened six stores. So that will take its own journey and that is that decision making in that pilot is independent of bottom there. So we are not going to speed up that in any way to show growth so that that pilot will go in its full field. It’s going to take some time and it’s for the future. As far as bottom web is concerned, we are very, very bullish on the, on the, on the category.
Yes, this has been a time, this has been a very tough time for the category and the brand where we’re seeing headwinds and it’s not reflecting in numbers, but our conviction in bottom wear is very much there. Even our recent Technopad study also emphasizes that how large the category is. So even from a short term, midterm and long term perspective, our entire energy and strategy for bottom wear is very much intact. Thank you. Over the next couple of so. So over the next couple of years, Ankit, if you have to show growth and the numbers have to to come from bottom there, we cannot expect the pilot to take care of the gap of growth. The pilot is there and it will take the pilot in its own sweet time. We cannot we cannot rush the pilot. Otherwise we’ll make. We won’t do justice to that project as well. Bottom There is our main business and we’ll fix it and we’ll bring it to growth. We are very bullish.
Ankit Kedia
Noted. Noted. Thank you.
operator
Yeah, thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your question to two per participant. The next question is from the line of Vaishnavi Mandanya from Anandrati. Please go ahead.
Vaishnavi Mandhaniya
Hi. Thank you for taking my question. I just wanted to understand that how much of this SSSG decline can be attributed to the entire store size issue that we faced. Because you said that the smaller stores saw a relatively negative sssg or rather the larger stores saw better SSH performance versus the footfall in general being weaker.
Gautam Saraogi
See, I would basically, it’s very difficult to quantify it. I would say this largely this SSG is negative because of the slowness and footfall and the overall weak environment. It’s very difficult to quantify. But I would put it more towards the overall macro scenario.
Vaishnavi Mandhaniya
What I’m trying to get to is, is that let’s say in H2, right where we I think almost shot almost 40 to H2, FY25, we shot I think almost 40 to 50 of the smaller store form we gave us. We said that the store closures are almost done. But again now in this quarter we’re coming up and we’re seeing that we’re still seeing the performance of the store, smaller stores not being up to the mark, which is why we’re shutting them again. So I’m just trying to understand where are we coming in this entire small store, large store, medium store, and how should we look at this in terms of our performance as well?
Gautam Saraogi
The stores what we shut last year, yes, we did shut those stores and we have seen that when we shut those smaller stores, the revenue moved to the nearby larger stores. So we saw that it didn’t have a very big impact on SSD because 40 stores as a base on such a large number of stores will not move the SSD needle so much. Now as far as how many stores we are going to be shutting, we are calibrating the data of the smaller stores because we can’t just shut those stores just like that. We love to also see when are the res coming up.
So as we get more clarity on that, we’ll definitely guide the market on how many such stores in the smaller bucket is there and how many of the smaller Stores will be starting in the short term. We will also guide that once we have calibrated the entire data. So from your end you will also have clarity on what’s happening. All right.
Vaishnavi Mandhaniya
And one more thing. If we can also get some more inputs in terms of how does the unit economics etc move for the slightly larger stores like what the earlier participant was also suggesting.
Gautam Saraogi
Because when very similar, very similar. And I’ll tell you why. See you understand in you know, I’ll tell you why a 500, 600 is very similar to a 200300 and I’ll tell you why. When we sign a store, we sign on a rent to revenue ratio. So if the rent to revenue ratio is in our budget, whether it’s a 600 square feet store or whether it’s a 200 square feet. So your EBITDA prior to staff expenses will be the same. Now coming to staff expenses because that is the real difference between a 600 sq ft store and a 200 sq ft store.
In a 600 and a 200 the number of people you employ for managing the store are the same. Your operating expenses also are pretty much the same. So a 600 square feet store from a unit economics delivers the Same unit Economic Water 200 will deliver the difference. Always what happens is when you go past thousand square feet, suppose you open a 1500 square feet, the unit economic dramatically changes because the electricity cost dramatically goes up. The number number of people you’re going to be keeping in the store dramatically goes up. Then you have to keep separate housekeeping stuff.
The the entire mathematics on employee for dramatically changes when it crosses to 1200 square feet, 300 square feet sub thousand square feet. You’re keeping the same number of people what you’re keeping in a 200300 square feet. So the difference is really those other operating expenses in with the staff cost is the highest.
Vaishnavi Mandhaniya
Okay, understood. Also one last question. In terms of the newer stores that were opening which are slightly larger in the site, are they in the again in the nearby vicinity of the smaller stores or are we targeting different clusters or in the same cluster?
Gautam Saraogi
No, no. See one more thing is see definitely These times for SSD SOc we are ensuring that we are not giving any room for cannibalization. So now when we are opening stores, we are very careful that it’s in the we are trying to open in different clusters where even the smallest remote chance of cannibalization should not happen. And that is why we are extremely selective and cautious in our approach of sodo.
Vaishnavi Mandhaniya
Okay. All Right. Thank you.
operator
Thank you. Ladies and gentlemen, you are requested to restrict your question to two per participant. The next question is from the line of Prerna Junjunwala from Elara Securities. Please go ahead.
Prerna Jhunjhunwala
Thank you for the opportunity. I just wanted to understand your revenue mix. Also this quarter you have given bifurcation. Wherein from non legging sales is around. 65%. As a category. That category is not seen that kind of difficult times in our opinion. So I wanted to understand what is which. Which category is seeing slowdown or is it an overall all categories are seeing decline at the same time or what is.
Gautam Saraogi
Yeah, I’ll tell you so Preena, I’ll tell you. See, the product mix change has very little to do with the negative sslc. And I’ll tell you why it when pre Covid when we had SSG of more than 15% or we were double digit SSSG even that time the product mix was evolving and changing. See, product mix is something which evolves even when your SSG is positive or negative. So that has nothing to do with that. The real reflection of SSG being negative is more to do with the footfalls. The main reason is that it is not because this product has gone down and this product has slightly improved that it is reflecting a negative efficiency.
The main reason of SSSG decline is because of the decline in football. Suppose if you’re having minus 5% SSSG today, our footfalls are down by minus 5%. So what directly correlates with negative SSFG is the footfalls and not the product mix. Because what we’ve seen in the past, even in the good times when we had double digit SSSG during pre Covid, our leggings contribution was falling at that point of time and our other product sales was improving. That was something which we had envisioned that was anyways going to happen that living as a category is going to continue to decline even in the future.
Prerna Jhunjhunwala
Okay, understood. And. But then I’m just trying to understand the other apparel players are not have not been declining every quarter the way you have been declining. So. And footfall in this quarter, especially given that you know the season has been decent and you know the football, the footballs have not been accomplished by many other categories in the fishery segment as well. So okay, why would football will be a problem for you for more than 3/4 now?
Gautam Saraogi
See difficult to answer this question. But see in quarter three, of course our numbers are weak, right? So the first thing what we do is we do some channel checks. So we have seen a decline everywhere. But the women’s category, we’ve seen a bigger decline and this I’m thinking about in general overall women’s apparel irrespective of top wear, irrespective of bottom wear, irrespective whether ethnic, western or fusion, whatever little bit channel checks as a company we’ve done, we have seen slowness everywhere.
Prerna Jhunjhunwala
Also is there any strategy change with respect to ownership of because you all your stores are on your book and any franchisee options that you are evaluating so that.
Gautam Saraogi
See the Popo model works very well for us and it gives us better control from a hygiene perspective. Also we’ve realized that Popo stores deliver a much better customer experience because we have SOPs in place. So for us we are largely going to go to the Cocoa route, franchisee route. We are not against but we will do franchisees very selectively in markets where we are not having operational control. Very similar to what I have narrated earlier from a ROCE perspective. See as the business improves, once growth comes back onto the tables, the margins improve automatically.
The ROCE will start showing a better figure than what it is currently. But from a strategy of Coco versus Fofo, I feel we are going to continue with the Cocoa because that’s a model that works for us because sometimes we feel from a Coco perspective the store experience, the store look, everything look and feel everything can be well maintained in a COCO model.
Prerna Jhunjhunwala
Understood. Thank you and all the best.
operator
Thank you ladies and gentlemen. In order to ensure that the management is able to answer all the questions from the participants, please limit your question to two per participant. The next question is from the line of Resham Mehta from Green Edge Wealth. Please go ahead.
Resha Mehta
Yeah, thank you for the opportunity. So the first question is basically on the market share data. As for the latest Technopack report, can you call out what’s your market share?
Gautam Saraogi
So the report says that we are having the same 8% market share in FY24 what we had earlier. And it shows that the branded market for bottleware is about it’s a 10,000 crore branded bottleware market as on 2024 in which we have a 8% market share.
Resha Mehta
Okay, and can you just call out the initiatives taken, you know, to drive footfalls as far as customer engagement goes.
Gautam Saraogi
See, I think driving footfalls to a very large extent is determined on the consumer sentiment. So that’s not very much in our hands. So what best we can do from our end is to ensure that our product mix is good, our stores are well located and our marketing, our digital marketing is strong. These type of levers are in our control. But the overall consumer sentiment which is there in the market is something which you’ll have to wait and watch how that improves these initiatives on just ensuring that we have the right product mix and we’re doing right.
Digital marketing is what we can do at our end to ensure that we deliver best SSGs.
Resha Mehta
So when you say customer engagement, what you are essentially referring to is the digital marketing.
Gautam Saraogi
Yeah, we started a lot of personalized digital marketing works very well. See today a lot of our digital marketing has moved to personalized customer web. Today a consumer who’s shopping in Go colors, who buy certain categories, we promote the other categories to WhatsApp, to Instagram. So we are entire digital marketing has become more personalized around the products with our existing customers and new customers. So we are leading our digital marketing is more transitioning into product led communication than just brand communication. Like for example, if you’re a user, you’re a customer of Go Colors, you can buying X number of product but you know, you don’t know that this product is available at a Go Colors.
Through our data we will know that X person is buying this. So what we’ve seen in recent past when we are personalizing advertising communication for that person, that person is able to see, okay, this product is also available. So you are able to get that customer back to the store. So we are just creating our digital is moving more personalized product link which works for us very well. So we do it direct and we also do it through insurance.
Resha Mehta
Understood. And you know you’ve made these product changes, right?
Gautam Saraogi
No, no, madam, no, no madam, please let her continue. Okay, madam, please let her continue. No problem. Yeah, please go ahead.
Resha Mehta
Yeah, so and you know, with all these new product launches, you know, which we can see out there in the stores, right. Would you say like, you know, you spoken that okay, brand dilution is not an issue, you know, other issues are not there. But do you see that somewhere, you know, the value proposition for the customer has, you know, become a little bit weaker? Because if I see, you know, as we have westernized our portfolio, right. Westernware is, you know, somewhere where there is a lot of competition. So if I just compare, you know, the merchandise for the new product launches that we have done with, let’s say, you know, an offline store like a West side or even if we go lower, you know, on the value side, you know, Zudio, etc.
It is, you know, west side probably, you know, would have similar merchandise but at a much lower price point. Right. So then you Know, your customer is probably, you know, we’re not seeing footfalls not because of other reasons, but just because, you know, the value proposition has weakened, you know.
Gautam Saraogi
Yeah, yeah, I understood the question. In fact, I’ll tell you, this is something which we covered in the tech club actually. In fact we added this in our presentation recently. So if you. So we put a triangle chart in our, in that updated slide on market size and our share in that, what the study says is that more than 500, 500 to 1000 and 1000 and above contributes to more than 2/3 or maybe more than 70% of the bottom bear market. The less than 500 category is a very small category compared to the mid premium and the premium category, see the bottom wear category, when you take the value added products like trousers, palazzo, it’s very difficult to price it sub 500.
The sub 500 to what I have studied is a very leggings market. Leggings oriented market.
Resha Mehta
Sorry to interrupt. I’m not referring to the sub 500 market. Okay, so now let me be very specific. You know, for example, the wider bottom denims, right, which have been launched, right? So now for example, you know, we are MRT, let’s say are 1300, but if you know, I consider merchandise and let’s say a website, it’s priced at thousand, right. Then you know, clearly, you know, I mean this is just one example that I’m giving you, right? So then clearly, you know, the value proposition for the customer, customer becomes far superior. You know, with our.
Gautam Saraogi
Oh, you’re saying from our competitive pricing, you’re saying.
Resha Mehta
Yes, yes. And this is just, I’m talking about, you know, let’s say offline competition, right? And if we move to online, you know, it’s a different, it’s just a much wider world out there, right. With plethora of options there, right. So then with that, do you think, you know, let me put this differently, that if, let’s say if you were to drop your prices, okay, on some of your specific merchandise, right, like by X percent, do you think that is going to boost footfalls or do you think that that is not the case?
Gautam Saraogi
Okay, so I understand your question and I’ll clarify this. See what we try doing is when we launch a product, we try benchmarking it at what prices will a like to like product or a similar product be selling in the market? So maybe there’s one product which you’re mentioning, maybe we have overpriced it by 200 rupees, maybe that’s a one product. Phenomenon. I’m not going into the specifics of that product. In general, when we are releasing products, we benchmark to see that we are not very expensive compared to competition. We should be either on par or maybe lesser.
And that’s how our pricing strategy is. So we don’t want to put ourselves in a situation where we’ve launched a product at a premium, realize that it is very expensive to competitors like other competitors, what you mentioned and then we drop the prices. So to begin with, we are ensuring that we are not pricing ourselves so much higher than what is available in the market. So I’ll give you another example. What happened in our new concept, what we opened the new dailywear concept. So certain products on menswear, what we launched in the making room store and the other five stores as well, we had priced it a little higher.
Bendy realized that we had priced it a little higher than what is available in the market. We immediately change the pricing because that’s a new category and segment for us. So we are also learning in bottom where because we have done it over so many years, we start when we are releasing a product. We keep studying what our pricing is and versus what is there available in the outside. Maybe an exact product is not available. At least I like to like a similar product what price it is selling. So we try keeping that price parity to begin with.
Sometimes we make mistakes like that one product maybe you mentioned we did go wrong. I don’t want to be specific about that product. But in general it’s a conscious effort that we get our pricing right from day one.
Resha Mehta
Right. So you don’t believe that, you know, if we bring our prices down, you know we are going to be seeing more footfalls, right?
Gautam Saraogi
Not at all. Not at all. We have begin with. We are pricing our product very sharply and it’s in line with. If that product is available outside, it’s in line with that.
Resha Mehta
Right? Yes.
Gautam Saraogi
I’ll give you a basic example. Right. Let’s take our legging products. So you love. You’ll have leggings of different price ranges for a product of hard spec. And I’m taking legging because like that contributes to 35 of the business. I’m taking that product as an example. If you take a product of similar specific, you will see brands selling between 549 and 649. So we are somewhere in between there are 599. So we are very mindful of that. How we price assets we want always ensure that, okay, we are giving good comfort and quality. But the pricing should be sharp.
Resha Mehta
And you know, I do acknowledge, you know, the, you know, the fresh merchandise and you know, the new product launches, they’re very much visible in your store in Mumbai at least. Right. So I do acknowledge that. Right. And, and I have one more question if I can squeeze in.
Gautam Saraogi
Sure, keep going. Please go ahead, Rachel. Please go ahead.
Resha Mehta
Thank you. That’s the last one. So you know a lot was spoken about the store sizes, right. So typically we’ve been in that 300 to 600 square feet kind of store size. So now the new stores that whatever calibrated muted store count that you know, we would be opening, we are all at thousand plus. And also related question that when you say small stores, I mean do we have definitions of small, medium large stores internally.
Gautam Saraogi
See, so the new stores, what we are doing for the bottom best tools. I’m not, I’m not talking about the pilot. So for the new stores, what we are opening for the bottom web will be sub. Will be below thousand largely. So it will be in the drain between 500 and thousand. It will be mostly in that range. But we are unlikely to cross thousand unless it’s a, it’s a very good rental deal they’re getting. But we are largely going to be in that bracket of less than thousand. When I talk about a small store, yes, any store which is effectively lower than a 300 or 350 sq ft store comes down to being of a small store.
So it also depends on the depth and the width of the store. But being without being too technical, anything below 350 and 300 is regarded as a small store. But today we are not able to display those products in a very small store.
Resha Mehta
Sure, we look forward to, you know, more granular data on the store sizes in your next presentation. Thank you so much and all the best.
Gautam Saraogi
Thank you. Thank you.
operator
Thank you. The next question is from the line of Sameer Gupta from IIFL Capital. Please go ahead.
Sameer Gupta
Hi, good evening everyone. Thanks for taking my question, Gautam. Firstly on the LFS channel. Now even if we exclude the anomaly of this quarter, the growth or the performance in this channel has always been volatile. Some quarters it is up more than 20, 30%, some quarters it is a decline. So if this is a replenishment model which you alluded to earlier participants question, technically growth should be smoother. Like you know, the, the way we witness in our EBOs because that will be the capturing the end level consumer. And just a follow up on this again, the LSS key partner that you’re talking about changes, formats, not buys for 45 days and they don’t really inform us beforehand so that you can plan better.
Gautam Saraogi
Well, I’ll answer your second question. Yes, we were obviously not informed. Once festive got over POS were on hold, we couldn’t sell stock. It was a very. It was something which came up very, you know, we didn’t know about it. We obviously couldn’t foresee it. As far as format change is also concerned, I think look, format changes is very not for this one. NFS parte, it happens anywhere. Brands are always informed only at a particular point of time. They will never be well informed in advance but that’s how retail works. But on the PO part definitely we should have been informed that this was coming but we weren’t.
Luckily we were able to solve Those things post December 15th and as of now things are running smoothly and we are also trying to work with the Delefis partner to ensure that such operation issues don’t happen in the future. On the volatility part, Sameer, See I think look, there are two things, right? Where can we have volatility in elephants? One, A if there is a fall in secondary sales because of footballs or B we have not replaced the store properly. I think the volatility in Q3 what we have seen was a point that we were not able to get the purchase order and we were not able to replace.
I think the volatility depends on which aspect whether it is secondary related or whether it is primary related. So this quarter we have seen that it was more around the perspective of that we were not able to dispatch and that’s why we saw a fall in revenue in lfs. In previous quarters there were some quarters where the secondary sales itself were low and we could only replace based on what is sold. So I think that was a very different reason altogether. This is this issue. What has happened in Q3 is more of a very direct operational issue rather than I would say a consumer sentiment or market issue.
Sameer Gupta
Got it. But the previous quarters are more reflective.
Gautam Saraogi
Of the consumer demand. Yeah, that’s what I’m saying. It’s not an Apple service comparison, but yeah, I mean at the outset it looks LFS has degrown. I think the underlying reasons in what was maybe in the earlier quarters and what is today are different.
Sameer Gupta
Fair point, fair point. Second question again it’s a follow up on an earlier participants question. So brand relevance and strength. Now it’s been 11/4 of flattish same store sales and you’re confident that this is brand strength is still very, very relevant and strong. And you alluded to the brand market share is intact at 8%. So the last three years then only two of these things can happen. One is that people have stopped buying branded bottomware or they are basically shifting to unorganized. Is there a third thing that I’m missing?
Gautam Saraogi
I feel I see. I’ll tell you from a brand relevance perspective, Sameer, we are very closely in touch with the consumers who are walking into bow colors and buying. Right. So we are very clear whether we are meeting the needs of the consumer who’s buying. The consumer who’s coming in is definitely buying and we are very, very relevant. Yes. In the last few years when the overall portfolios have been low, our new customer acquisitions have been slightly as a low, slightly on the lower side. But the actual quantum of new customer acquisitions have increased. But because the base has increased, the percentage has fallen slightly.
So what we are also trying to do as an audience is just to push up how we can push newer customer, newer audience acquisition especially in the younger age group. That is what we are focusing on.
Sameer Gupta
Got it. Wish you all the best for the future. Thank you.
operator
Thank you. Participants, you are requested to restrict your question to two per participant. The next question is from the line of Akhil Parek from BNK Securities. Please go ahead.
Akhil Parekh
Yeah, thanks for the opportunity. And again my questions are around the competition and the gross margin part. Interesting comment made by one of the largest consumer PE funds yesterday on a television that there’s a silent shift happening in the consumer categories from organized listed traditional players to say understate agile smaller players basically. And this is happening even in the apparel category where he cited an example of a few unlisted players like Snatch, Soul Store, Bombay Shirting, Rare Rabbit. These four brands combined have added 2000 crore of revenue in last year basically while some of the listed players are still struggling.
So my first question is how are we measuring the shift basically because I think there’s something missing. Right. Because as earlier participant also highlighted last 1112 quarters SSD has been. So there’s definitely some sales is happening but that is being taken away by some of this unlisted player. That is my first question. Second a corollary to it whether high gross margin is an issue for us basically being a listed layer. Gross margins are very much visible in public domain and have been on planning trend for last five years now. And we are seeing the similar trend happening in other listed apparel retailer who has a very high gross margin basically and they are kind of struggling with the sales growth. Yeah, those are the two questions from my side.
Gautam Saraogi
See, I think you’re definitely right. I mean see if you compare pre covered and post Covid, right, the number of brands in the retail industry, whether unlisted, whether listed, whether digital, whether offline, has significantly increased.
Right now, and I’m speaking this from a generic perspective, I’m not talking about bottom wear, women’s menswear. There is a lot more supply of different, different brands across different categories of apparel. And the number of players today are far higher than what it was pre Covid. So that definitely makes an impact on this individual categories as far as gross margin is concerned. See we are in a high gross margin categories because of the kind of category we are in. We are in a very full pens category. So because we are able to achieve and keep the 95% of the sales ratio going, that is very clear indicative in our gross margins.
So the gross margin, what we are having is a very clear indication of full price sales ratio and lesser of discounting. Now the question is whether we should reduce the selling price and push for volume. Even if we had to reduce the selling price, how much would we reduce? If we would have reduced probably by 100 rupees or 200 rupees, that does not really change the customer’s decision to buy that product. But then you’ll end up taking a gross margin case. So from a product pricing perspective, like I also mentioned to Rishal, we are keeping the price of the product very sharply priced.
It reflects in high gross margins because of lower or I would say negligible discounting. Okay, but there’s no way to kind of do the pilot project where we can kind of cut pricing around certain products and see if that increases the footfall. Because as I said, there is a similar problem with one of the another listed layer in apparel segment. See, from a price reduction perspective I’m very clear. Look, we don’t have to really rework on our pricing. Our pricing is very sharp and maybe in a few products, you know, maybe, maybe a price overpriced by 100 rupees or 200 rupees and maybe those exceptions.
But largely, I would say more than 90% of our products are very, very sharply priced. So I don’t really think that we need to take a price cut to boost volumes. I don’t think that is required. So that’s all from my side and.
Akhil Parekh
Best luck performing quarters. Thank you so much.
Akhil Parekh
Thank you. Thank you so much.
operator
Thank you. The next question is from the Line of Balaji Vaidyanath from Nafa Asset Managers Private Limited. Please go ahead.
Balaji Vaidyanath
Good evening. You know you mentioned that it’s a little difficult to guide on store openings which is fine, but I’m still unable to figure out why. Unable to guide on closures in the sense that, you know, if there are stores which are like double digit SSSD growth for say a couple of quarters or three quarters, aren’t they like a no brainer call to shut them down and if so how many such stores are there which are on the double digit SSSD growth category?
Gautam Saraogi
If you see, I think we are happy to guide. We are just calibrating the data and the minute the data is ready on the smaller stores or maybe negative stores, we will definitely pass on the data to everyone. It is not that we don’t want to disclose the data, we are just calibrating the data and seeing different cuts of it and we are also seeing what is the least period of it before we take a call. So once we have full clarity on that data we will definitely communicate it.
Balaji Vaidyanath
Secondly, on the gross margin side, you know, with the mix towards the value added compared to the traditional. So of course with the. Given the previous caller’s question as well, we have seen the best of gross margins. Right. So we can’t expect any expansion or anything of that sort from here on.
Gautam Saraogi
Yeah, no, see I think currently at a company we are between us around 62 to 64% of gross margin we are delivering right now. See from a gross margin delivery perspective we are very happy and I don’t see any expansion there.
Prerna Jhunjhunwala
Right.
Gautam Saraogi
What will really create an uptick in the EBITDA margins is that our sales improve, our SSGs improve and our operating cost as a percentage of revenue falls. So I think that is where the work has to be done. From a GM perspective we are very happy with what kind of gross margins we are currently delivering.
Balaji Vaidyanath
Okay. And in terms of your you know, capex per store on the incremental, the large format stores, you know, I mean suppose if you’re present in a very nice area, you already have a couple of say small format stores which for some reason or for negative SSD you decide to close that. So to find an equivalent, you know, larger store in a similar area, wouldn’t that be like a challenge in the sense that the rent per square feet etc would be slightly higher than the, you know, the smaller format store. Is that right? Understanding?
Gautam Saraogi
No, no, no. In such locations. Right. We for us rent to revenue ratio is what we look at rather than rent per square feet. So even if we are taking a slightly larger store, you make a projected revenue for that particular and see what will be a delivered EBITDA on a steady state basis. So it will not be. Relocating a store from a smaller store to a mid sized store will not really result in the drop in EBITDA markets. So that we are very careful. That’s. That’s one thing which I also had explained earlier in the call that 600700 square feet floor.
If I’m opening from a unit economics, it will not really change much from the. From a smaller store perspective.
Balaji Vaidyanath
And are we changing anything on the agreement side in terms of the locking period etc. Compared to what it was earlier?
Gautam Saraogi
No, our agreements. Our agreements are very. Agreements are very standardized. We do the lease from anywhere from nine years to nine years to 12 years and our lock in periods are very standardized what the industry follows. So I think those are going to be very similar to what we used to do earlier. Thank you.
Balaji Vaidyanath
All the best. Thank you.
operator
Thank you ladies and gentlemen. Due to time constraint. That was the last question. No, no madam, if there are more questions, please proceed from my side. It’s not a problem if there are more questions. Happy to answer. Okay. If please you can let the call continue if there are more questions, no problem. Okay, so the next question is from the line of Manjit Bhauria from Samya Advisors. Please go ahead.
Manjeet Buaria
Hi. Thank you for taking my questions. First, I wanted to understand from the online channel perspective is that product structurally not suited for that channel from a unit economics perspective? And is that why it’s been like such a small share over the years?
Gautam Saraogi
I think we have kept that. See, I think our category is a very offline category because of the colors, the touch and feel, the fitting. I think women in general prefer and find the product out in a physical store. Like I remember even during the first wave or second wave of COVID when our offline stores were shut but our e Comm was up.
It’s not that we saw sudden boost in our E commerce. In fact, when the stores started again post the lockdown, we saw a sudden shift in and surge in the store sales as well. So why I’m giving you such an old example is because we feel this product category is a very touch and feel category and what we’ve also seen, right? I mean, I’ll be honest with you. We did this customer feedback where we asked the consumer why are you not shopping at a go colors? So that few customers said, you know, your Store is very close by.
It’s faster for the consumer to go to the store, try it rather than wait for the, for the online order to get delivered. So sometimes what happens is your. When you have a very large network of stores, the consumer can very easily take look, hey, I go to the store nearby and get it. It’s much faster than me ordering it online. Okay, got it. My second question was, you know, as the mix has shifted from about let’s say 60% on Choudidar leggings about five years back to, you know, much lower level now, I would presume the fashion element of our portfolio has gone up.
Right. And typically when I think about it, a higher fashion element brings more supply chain complexity and the higher risk of dead stock in the, you know, apparel retail business. So am I thinking on it in the right direction or am I missing something over there? No, no, your question is, your question is very, very valid. Yes. When you move from Turida to legging to other value added bottom products, it will not be as cool as leggings and tudidaras. What you’re saying is right. Having said that, even then the product, the category is still largely code.
It is not as fast as fast fashion where every season you are procuring and then you might end up with dead inventory. If a legging turita stayed in season for three years, four years, maybe other value added products will be for more than a year and closer to two years. So I think the time period of its relevance reduces. But it’s not fast fashion. It’s not as risky as fashion where you can end up with unsold inventory. That’s not really the case. But yes, your, your question is right, the relevance, the fashion portion slightly increases when we are talking about non leggings and shoddy girls.
For sure, that goes without the saying. Okay. And my last question was on the inventory days, you know, we have seen over the years and I think I’ve read your comments on it over the last last few, you know, years since you are listed. But you know, I see some apparel brands who can work with a significantly lower, you know, inventory day number. Right. So what is different in our category? Because that’s one thing which sort of keeps a return on capital quite suppressed overall despite having reasonably good margins. Right. Even in the best. So that’s what the question is.
Yeah, yeah, I think, look, you know, we’ve studied our sourcing model and our product portfolio. We feel on a steady state basis 85 to 90 days of inventory is what is from A product perspective, because we have so many sizes, size and colors, it will be very difficult to operate below 85 or 90 days. Yes, there is room of efficiency. We will keep improving, but that is that number. So currently we are at about 114 days. And reasons why inventory is slightly gone up is because of muted sales. Your inventory as inventory days has increased because of muted sales which I think in the coming quarters it is stabilized.
We’ve been very sharp with inventory. So this is a very. This is a very temporary increase in the inventory days. What we are seeing in this quarter, it is stabilized in the coming quarters. To come from an efficiency perspective, I think we can bring it down to about 85, 90 days which we have done it in the past. And I think we’ll be able to bring it down to that level now. Whether going below 85, 90 days for our kind of category and our kind of fuel, little tough to go below 85 days. Got it.
And lastly related to working capital, is there any levers here on payable days or is that, you know, we get a better pricing and that’s where the table will stay in the longer run? Yeah, we get a better pricing. That’s why we keep our payable days low. And that is reflects in the gross margin. Okay. Thank you for taking my questions. Yeah, thank you.
operator
Thank you. Ladies and gentlemen. As there are no further questions, I would now like to hand the conference over to the management for the closing remarks.
Gautam Saraogi
I’d like to thank everyone for being part of the call. We hope that you we’ve answered all your questions. If you need more information or any other questions, please feel free to contact Mr. Devendra from SGA, our investor relation advisors.
Gautam Saraogi
Thank you so much on behalf of. Go Fashion India limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. It.