Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Go Fashion (India) Ltd (NSE: GOCOLORS) Q4 2026 Earnings Call dated Apr. 30, 2026
Corporate Participants:
Gautam Saraogi — Chief Executive Officer
R. Mohan — Chief Financial Officer
Analysts:
Sameer Gupta — Analyst
Devanshu Bansal — Analyst
Avinash Karumanchi — Analyst
Unidentified Participant
Unidentified Participant
Unidentified Participant
Unidentified Participant
Presentation:
Operator
Ladies and Gentlemen, good day and welcome to co Passion India Limited Q4 and FY26 earnings conference call. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not guarantee of future performance and involve risks and and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the 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. Gautam Saraughi, CEO of CO Fashion India Limited. Thank you and over to you Mrs.
Gautam Saraogi — Chief Executive Officer
Thank you. Good evening and warm welcome to everyone present on the call. Along with me I have Mr. R. Mohan, a chief financial officer and SGA Investor Relations 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. FY26 has been a year that has tested our resilience, challenged us in numerous ways and ultimately reinforce our conviction in the long term opportunity that lies ahead for Go callers.
The bottomware industry has undergone a transformation and Go Colors has consistently evolved alongside these changes. When Go Colors began its journey in 2009, it started off with leggings. Turidas were the cornerstones of the offering. This is no longer the case. Today our portfolio mix has changed dramatically. Approximately 70% of our revenues now come from the value added bottom of the portfolio which are the non leggings range. This includes trousers, palazzos, joggers, jeggings, athleisure wear, fusion styles and many more.
This shift is not incidental. It is a result of a deliberate design investment, consumer insight and the courage to expand in our defined category. We continue to strengthen and diversify our product portfolio to stay aligned with emerging market trend and consumer preferences. Over FY27 we plan to add 10 to 12 new refreshing products bottom web products for our customers. Not just line extensions but genuinely new format that opens up new purchase occasions and customer cohorts. Our aspiration is clear to be the definitive one stop destination for women’s bottomware in India.
Now coming to our Store Network Strategy Our store net expansion strategy has undergone a significant evolution this year and I want to walk you through the thinking behind in some detail because it is central to how we unlock the next phase of growth on the store network. We have added 43,000 square feet of retail space over the last year, a growth of 11% primarily driven by our aspect on shift to larger EDOs as the bottom wear category broadens. With more and more products coming in and more SKUs coming, our smaller stores have actually increasingly become inadequate from a consumer experience standpoint.
A customer walking into a small store today cannot see the entire full breadth of what Bokeh offers. The store is limiting the conversion between the brand and the consumer. In line with our new strategy, we now firmly focus on increasing consumer experience through larger evo stores of 700 square feet and above. These stores allow us to display our entire full range of inventory and create dedicated sections for different product categories and deliver a meaningful better in store experience. We have reviewed our portfolio of stores comprehensively.
In FY26 we have shut down 50 plus stores in our overlapping catchment areas and over the next three months in quarter one we plan to shut another 50 such small stores. These are deliberate consolidations, two or more small nearby stores being merged into a single larger for a better equipped store with a larger and more display of inventory. Our store expansion strategy will continue to remain calibrated and selective with a clear focus on entering high potential locations, predominantly tier 2 and tier 3 cities where penetration of our organized bottom bear market is low.
Over the next five years we significantly aim to expand our footprint with the potential to nearly double our scale in terms of square feet. The new business strategy will lead to revenue maximization and cost optimization. Now coming to brand building and customer engagement. FY26 has seen us invest meaningfully in brand visibility and customer engagement, particularly among the younger consumer cohorts which represent our future growth opportunity. To drive improved store performance, we have undertaken through initiatives centered on product freshness and customer engagement, we are accelerating the launch of new designs and expanding our product range to cater to a wider customer base.
In January 2026 we had collaborated with a leading influencer to launch a new collection specifically aimed at enhancing brand visibility and relevance among younger audience. This was a deliberate effort to see Gokala’s brand in a cultural and digital context that resonates with the Millennials and the Gen Z consumers. Looking ahead, in June 2026 we will have a brand ambassador for our products this is a significant step for Go Colors, one that we believe will meaningfully amplify our brand salience, support and stronger top of the mind awareness and generate improved traction at the store level.
A brand ambassador will help us create more consistent and more emotional storytelling around vocalize identity, particularly as we expand into newer markets and formats. Coming to our new business initiative first is our Daily Wear concept. This initiative designed to capture everyday casual wear and utility driven segment of men’s and women’s wear market is is demonstrating healthy unit economics in the early stages. We believe that this concept complement our core portfolio as well. By the end of FY27 we plan to expand the Dailyware concept to 25 to 30 stores which as on 31st March 2026 is 10 stores.
It will give us strong read on scalability, consumer adoption across different markets. On our international foray, Vocaluts opened its first international store in the Middle east during FY26, making a significant milestone in our brand’s journey. This early response has been encouraging and we are studying the unit economics and consumer responses carefully. Our approach will remain measured and data driven as we scale this channel Coming to the LFS Business the LFS business has been volatile in FY26.
As noticed earlier, Q3 was significantly impacted by a key LFS partner pausing fresh inventory intake for approximately 45 days. This was an operational disruption, not reflection of any consumer demand for vocalist products, but it materially affected our revenue and channel efficiency for the quarter. We have since resumed supply to this partner and have put in place a strong engagement protocol to ensure that we do not face this recurrence again. More broadly, the LFS channel has faced structural challenges around footfall recovery and secondary sales velocity over the past several quarters.
Our focus going to FY27 is on improving product assortment and placement with partner stores, ensuring consistent secondary sell through and deepening our engagement with all LFS partners to maximize our visibility and consumer access. At each touch point, we expect the LFS channel to stabilize and show meaningful recovery in FY27. Looking ahead to FY27, our priorities are very clearly defined. First and the foremost, we are committed to turning SSG positive and ending FY27 with a positive full year same store sales growth.
This is not just a financial metric, it is a proxy for brand health, consumer traction and store productivity. Every initiative we are taking larger stores, fresher products, brand ambassador, influencer partnership, the Daily web concept improved store aesthetics is ultimately aimed to driving the SSG positive outcome. We have a clear internal roadmap for moving from negative SSSG of FY26 to a positive number by the end of FY27. Second, we will successfully migrate to a new store format strategy, continuing to close smaller stores in overlapping catchments and replacing them with larger 700 plus square feet stores.
We will simultaneously invest in improving the look and feel of our existing stores, bring in more premium and aspirational products that matches the evolving expectation of the consumers. We want every customer to walk into a Go Color store to feel that they are engaging with a brand that truly understands them. Third, we will refresh our product portfolio with new additions targeting new purchase occasions and consumer sentiments and ensuring Gopalas remains the most innovative and comprehensive women’s bottom wear brand in the country.
Fourth, which will be our daily wear concept of open 2530 stores to be 2530 stores by the end of FY20. Building on the healthy unit economic, we have already seen in the 10 stores what we’ve opened before the 31st of March. We will continue to focus on the LFS channel recovery, working closely with our partners on assortment placement sell through to ensure that the channel continues meaningfully to our overall growth. Through all this we remain committed to maintaining a healthy working capital position and generating sufficient internal cash flows for further expansion, keeping our balance sheet strong as we invest in the future.
Before I close this, I want to speak in the longer opportunity longer term opportunity because I feel it is easy to lose sight of in a difficult year like what happened we just experienced. Now the company continues to maintain a strong competitive position in one of the most recognized women. As one of the most recognized women bottom brands in India with a clear emphasis on quality, comfort and fit our category expertise, long standing relationships and brand recall position us exceptionally well within the women’s bottomware segment which itself remains significantly under penetrated by organized players.
Given the still low penetration of organized retail in the country, the bottom wear market offers a meaningful and long term opportunity for a brand with our depth of presence and heritage. With this I would like to hand over the call to our CFO Mr. R. Mohan for the update on Q4 and the full year’s results and financials. Thank you
R. Mohan — Chief Financial Officer
Thank you Gautam and good evening everyone. First I will give you the Financial highlights for Q4FY26. Our revenues for the quarter stood at 196 crores. Gross profit stood at 123 crores with the GP margin at 62.9%. Our EBITDA for the quarter stood at rupees 50 crores. EBITDA margin stood at 23.3%. Profit after tax for the quarter stood at 8 crores. Coming to FY26. Performance revenues stood at Rs. 838 crores. Gross profit stood at 529 crores with a GP margin of 63.2%. EBITDA is at 237 crores and EBITDA margin is at 28.3%.
PAT is at 59 crores. ROCE and ROE excluding India’s impact as on FY26 is at 11.5% and 8.9% respectively. Cash and cash equivalent stood at 181 crores as on 31st March 2026. With this we will now open the floor for questions and answers.
Questions and Answers:
Operator
Thank you very much sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask questions may please press and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only 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 Sameer Gupta from India Infoline. Please go ahead.
Sameer Gupta
Hi. Hi team and thanks for taking my question. Gautam, firstly, if we were to exclude the stores that have been closed during the year or during the quarter and there is a sizable number of closures is what we see, could you help us with what kind of SSS growth the rest of the stores have clogged in the system and. Yeah, go ahead.
Gautam Saraogi
Yeah, thanks. Thanks. In fact, I was just having a look at this data also see in Q4 if I exclude those stores and if I see how many stores have delivered positive ssd out of our total network of stores there have been about 275 stores which have delivered positive SSSG in Q4 with an average SSG of about 10 to 11%. So there are some. There are many stores which are actually doing well and many other the largest stores which are more than 300 square feet and about 275 stores have been actually positive.
So I think it’s a mixed bag of stores. I think if you exclude the closed store, I’ll have to just see the reported SSGs before closed stores after closed. My hunch is that it is excluding the closed stones of the year. This is SSSD based on live stores through the year. So the pure stores have actually not been considered.
Sameer Gupta
Okay, so basically even if you exclude the closed stores, it’s still a 33 and a half percent decline
Gautam Saraogi
Minus which is the number the reported number is after excluding closed stores.
Sameer Gupta
So close to the stores which are closed is not the problem in terms of ssg. We would still need something else to fix the problem. No, because.
Gautam Saraogi
No, because there are there many smaller stores in the network and we have still 100 plus stores which are smaller stores in the network which have to be eventually migrated into larger stores. See, I’ll tell you the main problem of the negative SSG is because we’ve been going from store to store meeting customers. Many of the smaller stores don’t have that kind of shelf space and size to accommodate all the newer products. What we are launching and because of that product discovery in the smaller stores become a problem.
And that is been one of the reasons why our overall EBO SSD has been negative. So as we transition in FY27 we see this recovery happening.
Sameer Gupta
Got it, Got it. Fair. And these 275 stores, is there any analysis on, you know, their store size or their vintage is. Yeah, having
Gautam Saraogi
A. Yeah. No, these, these 275 are across vintage. It’s not that all of these stores are new stores. They’re across winter. Out of these 275 stores, approximately close to 200 plus 200. 210 stores are stores which are more than 300 square feet or more than 400 square feet. So even our data is suggesting very clearly that positive SSG is more common in these stores.
Sameer Gupta
And when you say 100 plus smaller stores, what would be their average store size?
Gautam Saraogi
No, these are all store size below 300.
Sameer Gupta
Got it. And by any chance would you be able to share the net store edition that you expect for FY27?
Gautam Saraogi
Right now it’s very difficult to give a guidance on the number of stores we are going to be adding on a net basis because we are going to be looking to close many small stores and open larger stores. So it’s difficult to give a net number as far as store editions are concerned. But on a square feet basis, I can tell you what how much square feet we’ll be deploying. We would be adding at least more than 10% more square feet in the coming year.
Sameer Gupta
And this is net.
Gautam Saraogi
Net. Correct.
Sameer Gupta
Okay. And 100 plus. In.
Gautam Saraogi
In, in. In FY26 we delivered about 11%. So I’m hopeful that even in FY27 we’ll be at least minimum giving 10 to 11% of square feet increase.
Sameer Gupta
Okay. And this 100 plus smaller stores you’re mentioning is after the cleanup in 4Q. So there’s still 100 plus more smaller stores,
Gautam Saraogi
But that will happen over a slightly longer period of time. See, what we have done is we are consolidating some of the smaller stores in Q1 as well, which I just mentioned in my speech. Right.
Sameer Gupta
Those
Gautam Saraogi
Already have larger stores nearby so the business is likely to move to the largest stores. Having said that, there’ll be still a tale of small size store that will happen over a period of time. As and when we are opening larger stores in those market, we’ll be shutting those very small stores.
Sameer Gupta
Got it? Got it. Fair. But it’s very difficult to
Gautam Saraogi
Give a. It’s very difficult to give a time frame for when we and how we’ll be closing those stores.
Sameer Gupta
No worries. Secondly, also one
Gautam Saraogi
More thing, what we are doing. Sorry, this one. See one more thing what we have done is when we are signing 700 plus square feet stores, right. We don’t want to be in a situation where after three years we feel 700 is also less. So from a 700 plus square feet store size we are able to say that in the long term future as well, we will not have a situation where the store has started to be turning out to be small for us. So we are calculatively called signing stores which will last from a longer term perspective.
Sameer Gupta
Fair. Great. This is good. Secondly, I’m sorry taking you some more time. No, no please. So see positive SSS growth expectation or ambition for FY27 versus 3% decline. Now you have stated the broad plans but what I notice is that the key strengths that we associated with GO colors which was lower store sizes, less fashion quotient, ability to stack up products rather than, you know, having it on racks which resulted in higher throughput and superior store economics. Now when we are moving to larger stores and having a higher fashion quotient, more influencer marketing, I believe the risks also increase if SSS growth doesn’t come through.
So we have write off higher operating leverage.
Gautam Saraogi
I’ll clarify on that. I’ll clarify on that. That’s a good point. See I’ll tell you from a unit economics and return on capital employed perspective and payback period perspective, 700 sq ft store and a 300 sq ft store does not behave differently. See, even when we were, even when we having positive SSLG in our unit economics we had larger stores also and smaller stores also and both had similar unit economics. It’s not that We’ve never had 700 plus square feet stores in our, in our ecosystem and network of stores right.
So stores 2,000 square feet where it’s a single box, thousand square feet follow the same unit economics. So from a payback period and return on capital employed, it’s not going to change much. Now as far as packing and display is concerned, it is not that we are entering into the fashion category. The bottom wear category is always going to be a core and basic category. The only problem what I’m facing today is that my smaller stores cannot accommodate the new size. See, once I start opening a larger store, there is a display space to stack them and hang them.
So from that perspective, the inventory risk does not increase because I’m not entering the fashion space. It is just because my line of products have increased which are again very basic and core in nature. I just need shelf space to display. So my fundamentals of our business, of our EBO giving certain throughput, giving certain EBITDA without inventory risk, it will continue the same way even in a 700 square feet store. Because we’ve hired 700 square feet store in the past in our current ecosystem as well.
Sameer Gupta
Got it. Fair. This answers the question. Lastly, if I may squeeze in inventory increase, is it just a function of changing mix or is there something else? And if it is a function of
Gautam Saraogi
Combination of two reasons. One is because we’ve not we’ve had a revenue softness inventory days are showing higher. Second, because our pilot also has gone live with 10 stores, there’s slightly increased inventory over our bottom wear inventory. Because of the pilot of dailyware concept. We’ve started seeing the sales but the sales have not picked up velocity for the inventory to be efficient towards the sale for the daily wear concept. So the slight elevation of inventory is largely on the basis of softness and bottom wear sales and the dailyware concepts products which have entered this year in our inventory where the sales have just started picking up now.
So this inventory level what we have currently at four months in the in FY 2027, it will stabilize again back to three months. What was our previous number?
Sameer Gupta
But both the factors are going to be there, right? I mean you’re targeting to. I mean the same store sales growth if at all will be low single digits and dailyware as a pilot. No, no, no. See no, no. See
Gautam Saraogi
No. As far as inventory is concerned, no. Our inventory sourcing is dynamic sameer. Now since there has been softness in sale, our inventory will auto correct and bottomless. So there will not be a situation where my inventory levels are continuing to rise dramatically. So this year, yes, we will grow. We will have positive SSFG but even the inventory levels as far as daily wear is concerned and bottom wear is concerned, it will autocorrect.
Sameer Gupta
Got it. Fair. This is all from me. Thanks for taking all these questions and all the best for the future. I’ll come back in the.
Gautam Saraogi
Thank you.
Operator
Thank you. The next question is from the line of Deep Shah from Equirus Securities. Please go.
Devanshu Bansal
Hi sir. Thanks for the opportunity. So basically two questions from my side over the last couple of quarters. If we see we have been taking initiatives in terms of improving customer experience. We have been closing down smaller stores, we have been launching new products. However, when I see number nothing has been flowing to that side. So first of all if you can comment upon how has been the demand trends, what’s happening in the industry, if you can throw some color over here, then I will ask for the second issue.
Gautam Saraogi
Thank you. So Deep C, very clearly it’s very reflective in our numbers. We are also going through an internal transition. When we are going through an internal transition, we have identified where the pain points are. So now we know what actions have to be taken and when we are taking those actions, the results always takes a little bit of time. So I know it’s not reflected in our quarterly number what efforts we are putting in. But I’m very hopeful that in the coming quarters all repair actions, what we are taking, it will finally show good results for us.
So I think if we wait a little more, be patient little more, we will start seeing the green shoots. As far as demand scenario is concerned, I think overall demand is not as weak maybe as how it was maybe maybe six months a year back quarter. Four when I speak to my peers, many retail companies, apparel companies have given positive commentary around demand and demand scenario. So I think from a demand perspective, probably it’s not as weak as it was earlier. And we have seen improvement in demand in the industry.
Devanshu Bansal
Okay, got it sir. And so secondly on the margin side, we have somewhere in the PPT mentioned that there was 5 crores of impact due to the Reliance Credit note. So if I adjust that to my gross margins, we have seen some 114 basis points of gross margin expansion on a yoy basis. So first of all can you comment upon the nature of this expansion? And secondly, see considering over last two months cotton prices have seen a very sharp rally. So any outlook for the Gross margin on FY27 gross margins?
Gautam Saraogi
Yeah, I think, I think we’ll maintain similar gross margins. I think we’ll maintain between that 62 and a half and 63 and a half percent gross margin what we’ve been delivering. See the one good thing in our P and L, right. Even in a very tough year, we have not moved and pivoted to discounting. We have kept our no discounting policy intact. Our gross margins have been rock solid intact. So even in the coming year we see similar gross margins to what we’ve been delivering. I don’t see an expansion, but we’ll be similar gross margins.
Devanshu Bansal
Okay, done, sir. Thank you so much.
Gautam Saraogi
Thank you. Thank you so much.
Operator
Thank you. The next question is from the line of Avinash Karumanchi from Motilal Oswal. Please go ahead.
Avinash Karumanchi
Hi sir. Good evening. So my question is regarding the ASP. So if we look at like there’s a 3 increase in the ASP and also the number of products that are priced below thousand rupees, their share has gone down from 80 to 70% in the last four quarters. So is that one of the steps that you’re looking to drive the FSP growth which will help you going forward?
Gautam Saraogi
See, from an ASP perspective, we are careful on premiumization. Yes, we want to, you know, introduce products of our higher asp. But we don’t want to become so premium that we start becoming a very expensive product. Right, Expensive product line. Currently our ASP is around that 800 rupees. I think in the short term it will be between 800 and 900. So we are very cognizant of that. We don’t want to minimize so much that our ASP starts crossing thousand rupees or beyond thousand. We always want to keep our ASP.
We will try keeping our bottom where ASV sub 1000 rupees.
Avinash Karumanchi
So this reduction in the percentage share of products below 1000 rupees, is it because you voluntarily mowing some low value products or.
Gautam Saraogi
I don’t think the number that percentage should be given too much importance. I think we should always see a blended average of our ASP. Yes, 70% of the products are less than thousand. But we are also introducing products which are more than 1300 as well. So the way as management we are looking at is that what is our blended ASP which comes into into our business. So the blended ASP right now is between 800 rupees and 811 rupees. So I think that’s a very decent, healthy ESP. And we would like to maintain our AFP from a long term perspective.
We would like to maintain it under 1000.
Avinash Karumanchi
Okay. Okay, got it. And the other question is regarding the LFS. So when we said last time that this 45 days of issue that happened with one of the partners that are supposed to be ending in third quarter. Right. Even in this quarter we are seeing a decline here in case of
Gautam Saraogi
See what has happened. You know what has happened Avinash. We’ve had a 1516 decline in LFS revenue in Q4. If I adjust that 5 crores which I mentioned in my investor presentation because even we do a reversal or we get a credit note, it adds on to the LFS revenue. Right. Because of India’s 115 standards. So if I adjust the 5 crores, the 15 decline will come down to 7%. Now from a trajectory perspective where we were at minus 50% in quarter 3, the minus 30 has become minus 7. So the recovery is already started seeing in Q4 from an LFS perspective.
So minus 15 is the incorrect number to look at. If we adjust the 5 crores of shortfall of credit note and we look at it from that perspective, then the, then the fall is only minus 7 or minus 8.
Unidentified Participant
Okay, okay. Okay. So
Gautam Saraogi
From minus 13 Q3, from minus 13 Q3 it’s come to minus 7 in Q4. So in Q1 you will see further improvement where it will. I’m hopeful that it will start. There will be no degrowth and there’ll be growth as well.
Avinash Karumanchi
And you said in the earlier point that out of the 800 so somewhere around 275 stores are delivering a positive SSD and rest 500 stores, 100 stores would be a smaller stores which are over the near future you’ll be closing down. And what’s commonality between the other 400 stores which are still seeing the negative SSD.
Gautam Saraogi
See the other 300, 200, 300 stores are seeing negative SSG and we are studying it’s a. Even those stores, some of those stores have actually degrown and there are many stores which are grown. So we are looking at the reasoning of all the other stores. We have studied all the buckets of sizes. We have seen that the majority leak growth has happened in the very small stores. Of course from a. I can’t say that all larger stores have grown but the whichever stores have been positive, a major chunk of them have been the largest.
So we’ve been able to, when we are studying that data, we’ve been able to come to the conclusion that the largest stores work better than the smallest.
Avinash Karumanchi
And one last question regarding this 10% area exam that you would be doing. So these pilot stores, they are of a larger stuff, right? 2020Kind of stores Correct.
Gautam Saraogi
So how
Avinash Karumanchi
Many of that are you building into this 10% area groups,
Gautam Saraogi
I think including that, I think see the number of stores, as far as we are adding, we are going to be adding another 10, 15 stores in FY27. Right. We are already currently at 10 stores. So the 1050 stores will add maybe 2% or 3% on the overall square feet.
Avinash Karumanchi
Okay, got it. So maybe, so
Gautam Saraogi
Where maybe from a bottom perspective we were adding 10% including the, the dailyware concept pilot, maybe it will become 12%.
Avinash Karumanchi
Honestly. Thank you, sir.
Gautam Saraogi
Thank you.
Operator
Thank you. The next question is from the line of Shyam Sundar from Franklin Templeton. Please go ahead.
Unidentified Participant
Yeah, hi Gautam. Good evening.
Gautam Saraogi
Yeah, hi Sean.
Unidentified Participant
Yeah, hi Gautam. So this SSG coming back to low single digit next year, the key insight you are mentioning is once we do away with some of the smaller stores and with larger stores, our customers should have a better discovery potential and therefore that should lead to better ssg. Is that the key insight there? Did I get it? That is one
Gautam Saraogi
Of the, that is, that is one of the main reasons.
Unidentified Participant
Okay, okay. Is there, are there any other.
Gautam Saraogi
See what we are doing? No, Tom, we are doing two, three things. One is obviously the largest role, which is one of the key main reasons why our business also has been slowed down because of the display of styles. We’ve also launching many new products in the coming year which are in today’s time. The consumer is demanding which like we’re launching all day pans, they’re launching cloud brands, they’re launching a few new products in the pants category which is likely to do very well in the, in the coming years.
So some new product additions, better store experience, larger store with a brand ambassador coming on board and our marketing also gets strengthened. I think the overall all these two, three levers will have a very positive impact on the sales and performance of the business.
Unidentified Participant
Understood? Okay. Understood. Got it. Okay, Gautam, the next question. If you look at our clean EBITDA margin as in the pre in days EBITDA margin based on our disclosure and if you look at over a 12 quarter period, that margin has steadily dropped from say 60 to 6.8% this quarter. What is your diagnosis here and how do we intend to arrest this margin? You can. Is there some tough margins that we can defend given our store, the quantum of stores and the cost base that we have now built into the system?
Gautam Saraogi
Sushyam, I don’t see the best way to look at the margins will be from a full year basis because the quarter Four EBITDA is also impacted because of the LFS credit notes. So the best way to look at it is from a full year basis. So from a full year basis if you see our EBITDA for the full year pre index EBITDA is 11 and a half percent and last year was 16.8%. So there is a, there is a 40 crore fall in EBITDA. Last year our full year EBITDA was 143 crores. This year it’s 196 crores. So there is a fall of more 40 crores.
Now the stores, what we have shut and shutting these stores. Revenue more likely to move to the largest store which is nearby for a period of time. But the cost which was incurring for these stores was more than 25 crores. So a good chunk of cost comes down when we are shutting these small stores. So eventually once the business also moves to the larger stores, the EBITDA margins will start improving and start going up. So I’m not really very concerned about the EBITDA margin because it’s, it’s, it’s a function of rent and salary which will get corrected once the smaller stores start shutting in Q1.
So the margin recovery is more likely to happen from Q2. So from Q2 reports Q2 financials you’ll be able to see a significant increase in our EBITDA margins which is currently at about 11.5% for the full year Vis a vis we were close to 16.8% in the previous year.
Unidentified Participant
Correct. And, and in F23 I think that was the peak at close to 90 odd percent. So
Gautam Saraogi
We were at about 18. Yeah, 18. 18. 18 and a half percent. But this EBITDA which is right now is at its lowest, it cannot go below than that. So from Q2 onwards 1 Q1 we are going to be like I just mentioned my speech in Q1 also we are going to be shutting about 50 small stores from July onwards from Q2 onward. Once those small stores are out of the EcoSystem, that entire 25 crore plus cost reduces in the P and L And the revenue is also eventually moved to the largest store. So we will get a full benefit of that flowing to the ebitda.
Unidentified Participant
Thanks. Thanks Gautam. Thank you very much.
Gautam Saraogi
Yeah,
Operator
Thank you. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Hi Gautam. Thanks for the opportunity sir. We are most likely optimizing our network by 10, 15%. Right. And SSD expectation is turnaround only by end of FY27. Right. So revenue for FY27, can we assume it should be like a 10% kind of a dip? 10, 15% kind of a dip. Is this the right way to look at it?
Gautam Saraogi
No, we will not, we will Not DeGrow in FY27. The idea is to grow and you know, a lot of things, a lot of effort have been happening in correcting the small stores, doing good marketing. We’ve signed a brand ambassador also. I think all these things are going to bring a positive result for us in FY27. So there will definitely not be a degrowth. I’m expecting that we will grow difficult to give a growth guidance, but we will definitely grow in FY27.
Devanshu Bansal
So Gautam, what I understand. So your SSD target that you’re giving is a tad conservative, right? So why I’m saying so. So suppose you have given two examples, right? Rajasthan and Maharashtra. So if you are combining these two stores into one store, right? So your SSD should jump up, right in that particular cluster. So why are you saying that your SSD will only become positive by year end?
Gautam Saraogi
So no, I’ll tell you what happens. When we are closing the store, it takes time for the revenue to move. So we are also not able to estimate key within which time frame will that revenue move. So right now from ideology, from a guidance perspective, we feel that okay, we should turn positive by the middle of next financial year or maybe end the entire year on a positive slsd. But for us to define the time frame of how long it will take to for that revenue to move from the smaller to the larger store is very difficult.
Devanshu Bansal
Okay. Okay. And Gautam, so going back to the example, you’re saying that those stores combined were having about 500 to 600 square feet which is now getting converted into one large store of 900 to 1,000 square feet. So combined, how should we see the revenue and margin profile of that cluster? Right? The unit. Yeah, the
Gautam Saraogi
Unit economics don’t change. In fact, Sameer had asked the same question.
Devanshu Bansal
The
Gautam Saraogi
Unit economics don’t change. I’ll tell you the reason why. Now even if I take my current network of stores, we have stores of all sizes. I have seen the larger store sizes also give the same unit economics. So from a unit economics perspective, if the business is likely to move to the nearby larger store, the unit economics will be the same. In fact, the question is when we are opening another large store in a fresh market or 700 square feet, it will carry the same unit economics as a 300 one. See the existing store which is there and the business is going to move to the largest or the existing largest or the there will be improvement in revenue.
But for a brand new 700 sq ft store, when I open, the unit economic is going to be very similar to my 300 square feet.
Devanshu Bansal
No, I get it, but the example that you provided is actually a 902,000 square feet store. Right? So basically, ideally. What
Gautam Saraogi
Ideally, the idea is, suppose I got your question. Suppose the two 300 square feet stores, we’re doing 4 lakh rupees each
Devanshu Bansal
And
Gautam Saraogi
I’ve opened a new larger store nearby.
Devanshu Bansal
So
Gautam Saraogi
That 8 lakhs of business with some incremental business should move to the largest.
Devanshu Bansal
Yeah, okay, but still you’re saying only 4 lakh, but your annual revenue per store. No, no, no. I’m giving you
Gautam Saraogi
An example. No, no, no, I’m just giving you a hypothetical example. If two stores are there, they’re doing say 5 lakhs each and we are opening one last store nearby in that cluster. It’s a brand new store of sale, 700, 800 square feet.
Devanshu Bansal
Okay?
Gautam Saraogi
Those stores revenue should move to that larger store. And in addition to that, because it’s a larger store with better experience, it should do a much higher number than what those two stores are combined with also.
Devanshu Bansal
Okay, so the unit metrics of larger store should actually be better than. It must
Gautam Saraogi
Be actually much better than two smaller stores because, and I’ll tell you why your employees also what you’re going to be keeping in the 700 sq ft store is going to be less compared to the total employees what you would keep in two small stores.
Devanshu Bansal
So
Gautam Saraogi
From a unit economics perspective, the viability and it will be on par with the 300, it’s not better.
Devanshu Bansal
Fair enough. But have you seen this precedent in some of the areas already or this is just an expectation?
Gautam Saraogi
No, no. We have. See I’ll tell you many places where we’ve opened larger stores, we have seen deep cannibalization in the very small stores nearby. So it’s very evident that the customer has a better shopping experience in a larger store. So you practically see when you’re walking into a 250 sq ft store in Adivanshu, the new size, it becomes very difficult to display the new size. The ideally, as a company we should have pivoted to larger stores and seen this pivot a lot earlier today. That’s why we are not repeating the same mistake by doing 700 plus square feet store.
We will not be in this position again after three years or four years.
Devanshu Bansal
Okay, so I know taking
Gautam Saraogi
A 700 plus square feet store to also keep in mind and accommodate the newer bottom web products what I launch in the future.
Devanshu Bansal
Understood, understood. I also wanted to understand. So my understanding suggests that the core consumer which we had was 25 to 35 years age women. Right. And our intent was to bring in that 20 to 25 years age young women also. Right?
Gautam Saraogi
Correct.
Devanshu Bansal
So now with the product launches that we are doing, right. What are we trying to do with these products? Are we sort of trying to attract what we’re trying to.
Gautam Saraogi
What we’re trying to do now? The one. So we want to launch products which are relevant for all age groups. See I. Even when we are launching the new. When we launched the Prajata Kohli associated collection, that collection was well purchased across a 20 year old girl and a 45 year old woman also. So I think the products is our product strategy is very clear that it should appeal to all age groups. So whatever new products we are developing, it will be not only for the Gen Z but even for the millennials as well, if not older.
Devanshu Bansal
No,
Gautam Saraogi
Sorry. Good.
Devanshu Bansal
So but if we see your numbers bottom right. So if we see this quarter’s performance also then actually your ASP has increased by about 9 odd percent and your volume per store has dipped by about 1112 1%. Right. So that is the broad estimate I have come up to. So your volumes are actually dipping, right? So that means your core consumer is actually not finding what. Yeah,
Gautam Saraogi
No, no, I understand but see I understand that we are in a volume LED business, right? I mean, see look, there’s no doubt about it that in a volume business. But I’ll give you another aspect. When a consumer is shopping apparel, say bottomware, the average they buy of a particular average transaction value. See today our average transaction value say is around 170018 rupees. I’m just giving an example. So as the AFC increases, the consumer will end up buying of a particular transaction value. So sometimes I’m not saying that we should not be looking at volume.
Volume is a very very important metric in our business. But as ASC increases it will not also completely mean that the volume growth is keeping up in pace and the consumer bill will keep increasing. Are you understanding? Suppose Pele is a lady used to buy say two bottoms of 500 each today when she’s coming and she’s probably buying 1300 rupees for eight bottom. So she’s actually from an average transaction value perspective, she’s actually spent more than what she was spending earlier. So see, what I mean to say is we should keep an eye on volume because ours is the volume that business.
But it’s because there’s a volume degree does not mean that there’s a fundamental misalignment in the business. Does not necessarily mean like that.
Devanshu Bansal
So you’re saying that your bill counts are actually not dipped to the extent your units per transaction? Yeah, yeah.
Gautam Saraogi
My buildups have actually not fallen. Yeah, exactly. Not to the, it’s not to the volume degrowth what you’re calculating. Absolutely.
Devanshu Bansal
Okay, so your consumer, you’re not losing consumers. It’s only that they’re purchasing less from you. Yeah,
Gautam Saraogi
Purchasing like because your ASP also is increasing today. See, when you’re offering a 1400 rupee product, sometimes the customer says, okay, I’ll take a. Take a 1400 rupee product and maybe not to 500. I’ll just give you an example. So look, it still does not mean that we should not look at volume at the end of the day. Apparel, the entire apparel category volume data is a very, very important data to track. But in this case I don’t think we should give much emphasis on it. It does not really mean that there’s a misalignment in the business.
It’s not that you’re losing customers.
Devanshu Bansal
Got it, sir, thanks for taking my question.
Gautam Saraogi
Yeah,
Operator
Thank you. The next question is from the line of Tejas Shah from Evanders Park Institutional Equities. Please go ahead.
Unidentified Participant
Hi. Hi Gautam. Thanks for the opportunity. I just wanted to understand this conceptually, this whole point that if we move to larger store then SSGs will improve because I’m understanding it will be combination of our existing offerings and on that there’ll be a layer of new offering that we’ll give now the productivity wise, the old inventory, which in any case we are seeing that it is not driving ssd. Its efficiency both in inventory terms and per square footage term should not lead to SSD or higher ssg.
And the balance is actually whatever the incremental inventory will bring that is supposed to drive.
Gautam Saraogi
I’ll explain to you. See, when I move from a 300 square feet to a 700 square feet, my inventory is necessarily not increasing at the source. I’ll tell you what happens. If I want to launch new products, I can very well keep it in the 300 square feet. Put it, kept it in a folded way, one behind the other. Accommodation is not the problem. The problem is the display is the problem. So when I’m, when I’m moving from 300 to 700, I’m going to keep the same number of units what I was keeping in a 300.
It is just that they are displayed a lot more. The product discovery happens very easily when the consumer is walking around the store vis a vis the new product lying in a shelf behind another stack. My inventory does not increase. I understand your question. Your value is a valid point. But my inventory does not increase when I’m moving from a 300 to a 700.
Unidentified Participant
Got it. But then one should assume that at least so inventory done does not get compromised. But square footage efficiency, how should we think about it?
Gautam Saraogi
Square footage efficiency? See in our business, no, though we are reporting square footage now for us you should see whether the absolute average per EBO is increasing. And what is the SSG sales per square feet. Of course is a very important metric for any brand to track. But because we are a sub thousand square feet brand, the right way of looking at our kind of model would be okay, how is the average store of a go color store output and throughput in a year and what is the same store sales growth?
I think these are the two metrics to track for us.
Unidentified Participant
Perfect. And the last one, what process led us to narrow down that this is the problem statement and sorry I logged in late, but have we kind of seen early success stories that this is actually the solution which can be now scaled and. And it can be,
Gautam Saraogi
I’ll tell you. See, we’ve been visiting many stores and retail. You have to be on the shop floor visiting many stores. When we visited many of our stores and because in the last few quarters and years we have launched so many products when we visited our stores, we saw the display. When we spoke to the sales executive, we spoke to many customers. We just got a very good sense of what was happening. And second example what we had that when we opened a slightly larger store, that’s the many stores which did really well and the new products also did very well.
So when we connected the dots, we understood where the problem is and that’s how we arrived at this conclusion that this is a big factor. See, the entire bottom market is moving more and more towards value added products. Right. As you keep introducing more value added products and the shelf space is not enough to display, growth will get hampered. Now.
Unidentified Participant
Perfect. And was this not the option or not considered as an option to let’s say buy a next door store and expand the store? I’m just, you know,
Gautam Saraogi
We have done that in many cases, but sometimes it’s not available. I mean look, it’s sometimes you’re lucky to get it, sometimes it’s very difficult. So we’re keeping an eye on situations like that. If you’re able to either get space behind the store on the side of the store.
Unidentified Participant
No, I was just thinking from consumer journey and muscle memory perspective that there is some muscle memory has been built on your geolocation and then suddenly if the store is not there, how quickly a customer can kind of
Gautam Saraogi
It transition very fast because you’re not see we are also at the end of the day opening stores in prime location. So it’s not that the customer will miss it. See, if we were opening in locations which are big, then I completely buy a point. So in seeing retail any which ways, even if you’re not having the square feet transition, what we are having brands keep moving from location to location. The important for discovery is that it should be a prime location.
Unidentified Participant
Thanks and all the best.
Gautam Saraogi
Thank you Tejas.
Operator
Thank you. The next question is from the line of DHANANJA Jain from GM Financials. Please go ahead.
Unidentified Participant
Hi sir, thanks for taking my question. I just wanted to understand how has been throughput of these larger stores compared to others smaller size stores and how has been customer experience? You are hearing, that’s all.
Gautam Saraogi
No, I mean look, once these larger stores have opened, we’ve also visited, we’ve also seen that the customer is reacting to it very differently. We’ve introduced a methodology where there is more self stopping. See, typically in our smallest store, what used to happen was when a customer used to enter, she used to get assisted by a salesperson. It’s very difficult to shop in a small go color store by yourself because browsing is very difficult. The Facebook has to take out the folded garments and then show the product to the consumer.
In the 700 plus square feet there is an element of self browsing. So when there’s an element of self browsing, the self discovery takes place. So from what we have spoken to consumers, the feedback has been very positive. In fact we’ve also visited the stores, we’ve also seen that it’s made a very big difference.
Operator
So the participant has left the queue. We’ll move on to the next question which is from the line of Achal Jalan from Lotus Wealth. Please go ahead.
Unidentified Participant
Hello, thank you for taking my question. So sir, the company has built around a nation’s bottom wear, right? But competitors like Nika that are multi brand platforms are growing very strong with wider offerings and customer reach. So how does the management plan to defend and grow their market share? In the coming years. What is your take on this? Can you please give some roadmap around it?
Gautam Saraogi
See, I think the main objective of the company in the midterm and long term is to keep going deeper in bottom wear. Because I still feel, I know we had a tough year, but I still feel the bottom wear category is huge and there is a very, very big growth for us left for in bottom wear. Having said that, to your question about other categories, we did a pilot with topware and little bit of menswear as a all day wear category pilot. We did. We’ve opened 10 stores and we’ve seen that the unit economics are very, very, very positive and encouraging.
So as the bottom web business keeps growing, if the pilot also does well and on the merit of the pilot, we’ll decide the future course of that group as well. So I think as a company we are trying out different things. Like you mentioned the NICA example.
Unidentified Participant
Okay. So basically the company is ready to cater to other projects also. Right. If there’s good opportunities,
Gautam Saraogi
Which we are doing right now through doing this pilot. But
Unidentified Participant
It’s
Gautam Saraogi
Not because we are any less bullish on bottom there. We still feel that there’s a lot of growth left here in this niche itself.
Unidentified Participant
Okay, sir, thank you.
Gautam Saraogi
Thank
Operator
You. The next question is from the line of Rusmik Oza from Nine Rays Equire Research. Please.
Unidentified Participant
Yeah, Am I audible? Yeah, yeah. Please go ahead. Thanks for the question. Sir. A small observation on numbers. FY25, 26 and last two quarters. Also our gross margins has been steady at 63% but the EBITDA margin in FY25 which was 32 has come down to 28% in FY26 and especially in the last two quarter it’s averaging 25%. Similarly if I observe your net margin which was 11% in FY25 goes down to 7% in FY26 and especially it’s just been 4% in last two quarters. I just want to understand based on whatever you have, you’ve spoken in the last, you know, in this call, changing the strategy and you know, the store format and so and so by when you feel you could go back to that 7 to 11% net margin range going forward.
That’s my first question.
Gautam Saraogi
Definitely we will see margin recovery from quarter two. I’m quite in quarter one margins will continue to be little weak because we are closing above 50 odd small stores. Small stores in quarter one. But quarter two onwards we should see a good recovery in margins. Difficult to give a guidance on how much percentage we will end up with. But there will be a good decent recovery from quarter two.
Unidentified Participant
Okay. Okay. Okay. Because an absolute figure also if I’m seeing 2/4 back previous 4/4 you had at least average net profit of around 20 crores per quarter which is now the run rate has come down to 78 crores in the last two quarters. So you know, barring Q1 if you expecting Q2 onwards recovery, do you envisage it to going back to around that 15, 20 crores in the second half of FY27?
Gautam Saraogi
Difficult to give a. Such a. Such a narrow guidance. Very difficult to give a guidance. But from where we are today our margins are right now currently quite weak. Right from what we have delivered from here it’s going to significantly improve. But from a guidance perspective it will be hard to guide on how much it will become.
Unidentified Participant
But I can. I can
Gautam Saraogi
Tell you this that it will be from quarter two and not from quarter one.
Unidentified Participant
Okay. Okay. Thanks. Thanks for the answer. Appreciate.
Operator
Thank you. Ladies and gentlemen. That was the last question. I now hand the conference over to the management for closing comments. Thank you. And over to you sir.
Gautam Saraogi
I would like to thank everyone for taking part in this call. I hope we’ve answered all your questions. We are undertaking a comprehensive transformation in our store format strategy, our product portfolio, our brand investment and our new business initiatives. This transformation will take time to fully manifest into our financial numbers. But the early signs are encouraging. If you need more information, please feel free. Connect to. Feel free to connect to Mr. Devendrava from SGA, our investor relations advisors.
Thank you.
Operator
Thank you members of the management. Ladies and gentlemen, on behalf of Go Fashion India limited that concludes this conference. We thank you for joining us. And you may now disconnect your lines. Thank you.