Vedant Fashions Ltd (NSE: MANYAVAR) Q1 2026 Earnings Call dated Jul. 31, 2025
Corporate Participants:
Unidentified Speaker
Vedant Modi — Chief Revenue Officer
Rahul Murarka — CHIEF FINANCIAL OFFICER
Analysts:
Unidentified Participant
Gaurav Jogani — Analyst
Tejas Shah — Analyst
Prerna Jhunjhunwala — Analyst
Archana Menon — Analyst
Rahul Agarwal — Analyst
Aliasgar Shakir — Analyst
Jignesh Kamani — Analyst
Devanshu Bansal — Analyst
Sameer Gupta — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Vedant Fashions Q1 and FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gaurav Jovani from JM Financial. Thank you. And over to you sir.
Gaurav Jogani — Analyst
Good afternoon everyone. On behalf of GM Financial, I would like to welcome you all to Vedant Fashion’s Q1 FY26 earnings conference call. From the management we have with us today, Mr. Vedant Modi, Chief Revenue Officer and Mr. Rahul Murarka, Chief Financial Officer. Thank you and over to you.
Vedant Modi — Chief Revenue Officer
Good afternoon and a warm welcome to all the participants. I am Vedant Modi, the Chief Revenue Officer of the company. Thank you for joining us today to discuss the Vedant Fashions Limited Quarter 1 financial year 2026 results. I hope everyone got an opportunity to go through our financial results and investor presentation which has been uploaded on the stock exchange as well as the company’s website. Vedant Fashions is India’s leading wedding and celebration wear company. The first quarter of financial year 26 saw a rebound in wedding calendar compared to the same quarter last year. Sales of our customers for the quarter ended 30 June 2025 was INR 4057 million which grew by around 23% over Q1 of FY25.
In Q1 FY26 we continued the momentum built over the past few quarters of our sustained focus on enhancing customer experience, retail training, data driven merchandising and replenishment, omnichannel integration and KPI monitoring which has further contributed to strong SSG growth of approximately 17.6% over the same quarter in the last financial year. We are pleased to report that our retail KPIs also grew in healthy and sustainable manner with respect to our rollout expansion strategy. In light of the current retail environment, we anticipated a measured pace of retail openings during the period to ensure that our openings are both strategic and business Sustainable.
As of June 2025, Vedant Fashion’s Evo retail area network stands at about 1.78 million square feet globally. During the quarter, we strategically scaled up our marketing efforts across multiple channels including social media and our various other brands which contributed to our performance. Our focus on digital marketing alongside traditional mediums further supported this growth. Notably our category specific initiative, the Rajwada Collection targeting grooms and the Groom Squad has helped establish a sustainable category growth strategy. Additionally, we successfully executed campaigns for Mohe leveraging influencers and in store activations aimed at brides and bridesmaids, reinforcing the brand’s position as a go to weddingwear choice for all women.
The launch of our tvamev Sunset Suare Collection supported by extensive digital and social media campaigns and select in store events further bolstered both brand and category. We also ran successful social media campaigns for Divas emphasizing celebration expanding our reach. Collectively, these marketing initiatives have played a key role in enhancing our brand positioning and appeal across platforms with the positive impact reflected in the performance looking ahead, we remain firm focused on our core trends supported by well prepared inventory and designs, comprehensive marketing initiatives, efficient auto replenishment systems and a robust store network. A strong backend infrastructure positioned us well for sustained long term growth ahead.
With this, I will now hand it over to Mr. Rahul Muradka to take you through the financial performance of the company.
Rahul Murarka — CHIEF FINANCIAL OFFICER
Thank you, thank you Vidant Namaskar and good afternoon everyone. I would like to highlight the key financial performance metrics for the quarter ended 30 June 2025. During Q1 of FY26 the company witnessed a rebound in wedding season as compared to Q1 of FY25. The company reported revenue from operation of around 281 crore delivering a healthy growth of 17.2% over Q1 of FY25. The Company also witnessed healthy growth in sale of our customers and SSD by 23% and 17.6% respectively as compared to Q1 of FY25. The company continued to report industry leading gross margin of 66.9% and healthy EBITDA margin of around 43.2%.
The company also reported a healthy pat margin of around 25% and the profit after tax stood at around 70 crore with a growth of 12.4% compared to Q1 of FY25. Thank you and Namaskar everyone. We can now move to the Q and A session.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tejas from Evander Spark Please go ahead.
Tejas Shah
Hi, thanks for the opportunity. First question pertains to Vedant, you partly answered that other expense saw sharp increase this quarter. So is this now from here on structural in the sense we need that much investment to keep the brand in and in business or the momentum going in our favor.
Vedant Modi
Sorry, this question in regards to marketing.
Tejas Shah
Yes, yes. So it’s part of other expenses. Right, so other expenses also.
Vedant Modi
So Tejas, you know, actually this quarter the marketing spend was in line of how much we’ve always spent historically. The reason why it looks higher than the same spends in the quarter first quarter of last year is because if you remember, the first quarter of last year and the second quarter of last year had negligible wedding dates. So last year we had taken a strategic call of spending close to no money on marketing in the first two quarters. Hence, even though the number looks larger compared to the last financial year, it’s actually in line with how much we’ve been spending at the quarter level usually.
So this is the kind of spend that we’ve typically done. And even though slightly more than last year at the financial year level, it should not change at a percentage level.
Tejas Shah
Very clear. Second question is on our store count and footprint and square footage. So even though sequentially we have increased the store count, but square footage has gone down. So any rethink on our store size?
Vedant Modi
So we are going to continue with our strategy of focusing more on the concept of flagship stores. The reason why this quarter’s data looks like this is majorly on account of a larger number of SIS stores opening. So because these counters are typically about 150 to 200 square feet, that’s why you see a higher number of store openings vis a vis. Still slight bit of de growth in terms of retail square feet.
Tejas Shah
Got it. And any guidance or numbers you would like to share for this year or coming period on store expansion.
Vedant Modi
So this year strategically, you know, the focus is to really ramp up. That is the core KPI for the company. That said, we will still be quite healthy in terms of the gross openings that we do this year. So we are still targeting to open a good number of stores. However, on the other side, we are also sort of consolidating a lot of the older stores and some of the different kind of concepts we tried in the past two to three years, which haven’t worked for us. So at the end of the year, while the net square feet expansion will not be a very large number, the quality of stores that we operate will have significantly improved.
So that’s the major focus for the year along with delivering good SSG numbers which is what we are focusing on.
Tejas Shah
Got it. And last one if I may squeeze in if you can share your observation on current competitive landscape and demand outlook in general.
Vedant Modi
So overall I think the consumer sentiments remain weak across the mid premium industry. This is something which we hope that bounces back in a couple of few quarters. However, we have not seen any positive shift yet. It continues to be how it was till let’s say about last quarter.
Tejas Shah
That’s all from my side and all the best for coming quarters.
Vedant Modi
Thank you.
operator
The next question is from the line of Prem Junwada from Ilara Securities. Please go ahead.
Prerna Jhunjhunwala
Thank you for the opportunity. Just wanted to understand demand more in detail in terms of footfalls, conversion percentages that you are witnessing, bride versus Guest purchases, how they are planning out that that would be my first question.
Vedant Modi
Thank you for the question. So I would say footfalls was in line with the kind of growth we delivered and conversions also were in an uptick having improved just slightly by a few basis points compared to the last financial year. At the same time, given that there were very few wedding dates in the last year same quarter we did see our groom business improve faster than the non groom business majorly on account of better wedding dates. So all in all that is where we stood. ASP also slightly increased and the remaining growth came. The majority of the growth came in terms of volume.
Prerna Jhunjhunwala
Okay. And if the mix was better, I’m just trying to understand why margins were under pressure in this quarter versus last year.
Vedant Modi
See again margins can slightly shift by about 80 basis points from one quarter to another. But at a financial year level there is no change at all.
Rahul Murarka
So the PAT margin when you compare we had 25% this quarter. Visa was 26.1% in Q1 FY25. The major reason is the marketing cost. This year the marketing cost was 5.6% of revenue and last year Q1 it was 2.3% of revenue. So that is a major reason. Very sleep. But overall if you see then we have a very filthy margin metrics.
Prerna Jhunjhunwala
Okay, last question. If I can squeeze in in terms of Andhra Pradesh and Telangana regions, have they started to bounce back for you or they still remain under constraint?
Gaurav Jogani
I would say one of the best positives of the first quarter was seeing a sharp rebound in AP Telangana which has led the growth momentum for the company in this quarter. So that was a big positive for us to see.
Prerna Jhunjhunwala
Okay, thank you and I will come back to the question queue for any further Questions. Thank you.
Vedant Modi
Thank you very much.
operator
Thank you. Before we take the next question, we would like to remind the participants to touch star and one to ask a question. The next question is from the line of Archana Menon from Morgan Stanley. Please go ahead.
Archana Menon
Hi. Thank you for the opportunity. So my first question was on the growth side. While there are nuances on, you know, the wedding date, calendar shifting and things like that, but if you look at, you know, the F25 numbers, even from a little longer term length, say from a three or four year catalog, that number is a little, still a little low. So how do you assess that? I mean what do you think are the major challenges that you face and is there any expectation that is any change in your expectations of steady state growth?
Vedant Modi
Thanks for the question. So like I was mentioning, even though the numbers from an absolute level compared to last year look decent, we would have liked to do better in all honesty. And one of the core reasons why we feel that the growth could have been better is because consumer sentiments remain to be subdued as we witness across mid premium discretionary companies. And that is something, once it rebounds, that is, which will allow us to sort of get to much higher growth levels. From a company’s perspective, there are three to four things which we can really work on.
One of the major elements being product. There has been a very large focus on having a lot more variety as I was mentioning in the last earnings call as well, almost 2.3 to 2.4x. The number of variety compared to last year is something we’ve worked on which has enhanced our conversion rates and lovability. The second lens being marketing. So there is again a large shift both in terms of the teams we have internally and the kind of campaigns we do. So instead of doing one big campaign for a brand, we are breaking it down into multiple mini campaigns run digitally, allowing us to be a little more viral and have a larger word of mouth spreading throughout the quarters and the year.
And finally coming to operations, we have spent a lot of money on investing in modern age technology. The big project being the Vfl Parivar app where we train our fashion advisors almost for two to three minutes on a daily basis instead of focusing on the two to three times training per year which was typically done in the retail industry. On top of that, we’re also investing more in terms of the omnichannel and Endless I technologies to improve conversion rates alongside better and enhanced training through the use of AI intelligence. So we are trying to do as much as we can from a company’s perspective.
By focusing on these initiatives alongside building the newer brands that we focus on Mohey, Tuamev and devas. But given the weaker consumer sentiments overall, things have been relatively slower than we would have liked them to be.
Archana Menon
Thank you for the detailed response, but just in continuation to this so do you think that the benefit of some of these initiatives that you’ve taken has already been reflected in your growth? Or do you think that even if we assume that the consumer demand environment remains as is, we should see a growth pick up in the quarters ahead as these initiatives start helping you?
Archana Menon
This is a very tricky question to answer because one thing which I have learned over the last couple of years of working is no initiative is sort of a Cetera’s paribus. So an initiative which we as a company take can take three years to show us results, whereas something can show us results in the first month itself. So it’s a very difficult question to answer. But that said, the goal is to do as much as we can in terms of investing in our people, in our technology, investing in great customer experiences to satisfy the needs of all.
And if we are supported by the macro, then no doubt the growth should be tremendous.
Archana Menon
Understood the second part of the question was on the margin side, for the last four quarters we’ve seen your other expenses growing quite sharply. So one aspect of it is marketing, but is there any other element which is taking that number up?
Vedant Modi
We talked about the last financial year, then I would say it was majorly on account of operating deleverage because of the lease costs, because these costs are fixed. So if the SSG number is not what we anticipate then that kind of hurts the margins. But from the first quarter perspective I would say it was a very positive quarter in terms of margins because all the operating leverage kicked in. Marketing, which is a variable cost, which is something we actually plan at an annual level, not at a quarter level, is the major reason why almost 300 basis points extra was spent on marketing.
So I would request you to not look at that at a quarter level, but to look at something like marketing at an annual level.
Archana Menon
Got it. Actually what I was trying to check was has there been any impact of you opening more stores under the model wherein you guys pay the lease over the franchise or any strategic change that getting reflected in these numbers.
Rahul Murarka
So there are two things which are important as far as our PL margins are concerned. One is the gross margin which has been pretty stable across and another is the lease cost which comes under lease cost as well as under rou depreciation now as you’re aware that we have been opening stores in last couple of years but the revenue has not grown to the extent it should have. So that is the reason there is a negative operating leverage which is there on account of the lease cost. So once we are back with our normal revenue levels then of course the margins would improve.
And of course the lease cost is another element apart from the gross margin which is important.
Vedant Modi
And lastly to your question, yes there has been a slight shift, not large enough where the percentage would have moved slightly towards stores where we wear the least cost versus where the partners better lease cost.
Archana Menon
Got it. Thank you so much for this last question from my end. Strategically, do you think that there’s an opportunity for you to your margins? EBITDA margins are still very, very healthy. I would say. Is there, is there a strategic decision between growth and margin that you can make in terms of spending more and if you think that could drive up more growth, how do you think of growth versus margins?
Vedant Modi
Well, it’s again a very interesting question. So I think we are a highly growth focused company. Now there are two, three kinds of things when it comes to margins. So there are things which are more long term in nature, let’s say lease cost for example. So these are areas where we would not want to sacrifice our operating leverage. But on the other hand there can be a dynamic need where a marketing campaign really works for us and we would like to spend a lot more money than we had anticipated. We will absolutely push the pedal and make that investment.
So depending on if the action long term margin destructive or accretive, those decisions and cause will be made. And if anything makes sense from a long term perspective, we will absolutely take those calls for growth.
Archana Menon
Thank you so much.
Vedant Modi
Thank you.
operator
Thank you. Participants who wish to ask a question may press star and one at this time. The next question is on the line of Gaurav Jogani from JM Financial. Please go ahead.
Gaurav Jogani
Hi, my question is with regards to the competitive intensity and it is more so not from the organized players but from the unorganized player lines. If you can highlight how the competitive intensity has been over the past quarter and has it seen any change versus the previous periods?
Vedant Modi
So like we’ve been mentioning over the last eight 10 quarters we definitely see a large number of store openings. However, given how closely we track them and monitor them majority of these Me too brands, the performance is something which makes us question if the intensity of openings can keep up. So we’ve already seen it slow down and our common sense would Tell us that this slowness in terms of the opening should be there from now on.
Gaurav Jogani
Sure. So do you expect the competitive intensity to moderate going ahead? If that is the right understanding.
Vedant Modi
So again, while I can’t give you an objective answer, qualitatively we feel the intensity of the store openings would definitely slow down.
Gaurav Jogani
Sure. And Veeran would like to have your comments on the other brands performance like Mohi and even the freshly launched Divas. How have they been trending? How are their KPIs trending with some color you can throw on them?
Vedant Modi
So with Mohe we have had a strategic shift in terms of how we look at the brand. So we’ve invested a lot in terms of moving from it being a bridal wear brand to it being a weddingwear brand. That has really worked in our favor. We have continuously being beaten the company average when it comes to Mohey’s SSG and overall growth has also been positive. So with this strategy in mind and the evolved digital marketing strategy, we feel we are poised to continue growing Mohi and I think the way the stores are now looking. We’ve just come back from a store visit in Hyderabad.
We seem very confident about the brand overall and how it’s going to perform in the next couple of quarters as well. In terms of Divas, the last festive was when the brand was launched. It did decently well, although at a very small base. We saw very positive response in terms of the trade shows we’ve recently done in the last two months. So that was a great thing to see for Divas. But the real test for Divas is going to be in the upcoming festive season when we will actually be prepped from an inventory perspective and we will see the power of the brand on the multiple marketplace channels where we operate and our own D2C website.
Finally coming to tvames again from an SSG perspective, it’s been doing very well. We will also have one very strategically important EBO opening in this financial year for tvamev in the heart of Bombay. So with all of these things running, I think with tvamev as well, we are very confident about the product mix and portfolio and continued growth momentum.
Gaurav Jogani
Sure, thanks.
Vedant Modi
Thank you very much.
operator
Thank you. The next question is on the line of Rahul Agarwal from Ikigai Asset. Please go ahead.
Rahul Agarwal
Hi, very good evening. Two questions. Firstly to start with and I Sorry, I joined the call a bit late so if they’re repetitive I’ll read up the transcripts. On AP Telangana, what is your assessment in terms of the growth bounce back? I mean should we assume right now is this the time to assume that this growth obviously not 17% but in terms of direction this growth should be sustainable going forward? Or was there some seasonal impact or maybe some state behavior which caused this?
Vedant Modi
So there are two, three aspects here. We’ve actually just come back from a visit to Telangana and the kind of numbers we saw in Telangana in first quarter were actually much better than the company average itself. So there is definitely the impact of having weddings in this quarter versus not having weddings in the first quarter of the last financial year. But given the intensity of growth we would feel there are other macroeconomic elements as well which have led to the growth in book ins. So this is something we would like to see for one or two more quarters before commenting on this.
But the first quarter numbers and I would even go on to say the current quarter two numbers which we see in July have also been decent for ethical Amana.
Rahul Agarwal
Got it. So it needs like couple of more quarters for the right assessment in terms of the direction to call out. Is that correct?
Vedant Modi
Absolutely.
Rahul Agarwal
Got it. Second question was on these emerging brands, I think Gaurav already asked that. But just in terms of the thought process like scale and size, let’s say five years out, Mohe obviously is going to be the largest one out of Mohit, Divas and pwame. But just on Divas and pomev, what is the vision here? You know, let’s say if we talk about three to five years, could you just help in terms of the thought process what you have? Where do you see these brands in terms of scale and size?
Vedant Modi
Great question. So in terms of tvamev, I would say the real goal from a three to five year perspective for us to have a large market share in the bridge to luxury category. This is the market where typically boutiques and small designers operate today. And given the unorganized nature of working the kind of product being delivered at the kind of price point, we feel we can do a much better task at having better products at better price points because of the supply chain we have. And so the goal is to open the best store in the top 30 to 40 markets of India and have a large market share of those markets.
So this is something we are focused on in terms of DHWAMEV and to carry a big brand legacy of a premium brand as we sort of move on with this journey. In terms of Divas, we want to be the flag bearer of Indian wear when it comes to anything and everything festive. If you look at India. There are 50 plus festivals that India celebrates at an individual level. Each individual in India celebrates four to five festivals. Yet when you look at the men’s Indianwear industry, it is still very small. So majority of Indians are not even buying a single piece of Indian wear annually.
Today with Divas we want to change that. We want to ensure that every Indian has the ability to afford and celebrate the festival of their choice wearing the right product for that festival. So given the channels that we’ve chosen, very focused on the E commerce route through marketplaces through divaj.com along with the multi brand outlets and SIS route which we are taking, we feel we can really change the aspect of the festive game in India when it comes to a three to five year perspective. So currently for the next one to two years, the goal is to have a much higher market share of marketplaces.
But as we grow the brand, we want to improve the industry’s market share of festival. That will be the larger focus for the bus.
Rahul Agarwal
Got it? Two follow up questions on the same question. So essentially how do you achieve this? So let’s say if we have to achieve a higher industry market share for every celebration through diverse, how do we change that behavior as in terms of go to market? Right. If you could share a couple of examples that would help. And the second is both for promise and bigger in terms of obviously the TAM is know we’re talking about very large numbers but from a Vant fashion perspective, would you have or could you share something on, you know, let’s say you foresee Tame or divas as a 500 crore brand five years out, you know, three years out, something like that.
If you could quantify that will help give direction to us.
Vedant Modi
Very interesting question. So when it comes to the overall go to market strategy, this is something we’ve delivered in the past with Manavar. So two decades ago organized Indianwear did not exist as an industry. So if you go to our YouTube page of Manevar and I love to do this sometimes and I go. You. Know, sort of looking at the videos, from the oldest videos to the newest, there is a sort of journey to organize that industry and to make Indianwear aspirational along with making it value for money, which democratize the aristocracy of India, making sherwanis affordable for a lot of Indians. So that is one journey we’ve done with Manavar which has to be done with the Kurta wear industry for festive wear, which is what we are attempting with Divas. Now there will be a big marketing strategy behind that. But if I give you one example of Calcutta which is where we live, if you walk around the city in Poila Bauisha, you will see majority of the people here wearing a yellow kurta.
The city being cultural, we’ve kept up with those values. And if the same values were to replicate in each city of India for their respective festive occasions that they celebrate, that is all we have to do. And this is one thing which we truly believe from our hearts adds so much cultural value to the country. The kind of happiness that can be felt across the city when something like this happens is also truly beyond words. So this is something which we will truly work hard towards as we build the category and build the supply chain to cater to the amount of people we want to.
Again to your second part which was to give numbers, this is something which we don’t do. We would not like to give any guidance as such, but the goal is to be much larger in terms of both Pumave and Divas where we stand today. And also while we build those brands, increase the tam of those brands also significantly.
Rahul Agarwal
Got it. And just last thing on the same store sales group, the retail area additions. Where are we on the store consolidation journey and how should we think about new store editions? Coupled with that the question was also on these rentals because you mentioned that overall these rentals still in metro markets are higher and even Tamwev will need top 30, 40 cities will have that kind of impact. So both things together in terms of how do you think about new store additions and how are the new rental trends and what should we expect for Vedant fashion overall?
Vedant Modi
So to your second part, retail inflation continues to remain high. So while we see some pockets, the inflation slowing down, these are the pockets where we are again going strong on expansion but where the inflation continues to be very high. Where we don’t see that the sort of rental yield for us overall rental, lease cost makes sense. Those are the markets we are sort of still slow on in terms of expansion. Secondly to your question of the overall growth numbers, I feel again at the end of this year we will have decent growth in terms of gross numbers which is opening newer stores.
However, when it comes to closure there is definitely consolidation of older stores. But on top of that we are also rectifying some of the strategic sort of new things we tried in the past to to three years which did not work for us. I’ll give you one small example. Rajori Garden as a market is strategically very important for us. But inside the market the stores are very old and there are no large stores. So we had a small store doing very good business for us. So we took a call when we opened a 15, 16,000 sq ft store right outside the market.
However, that is something which did not work for us. So now we are moving back into the market with a store which is half the size of this flagship we had opened so about 7,000 to 8,000 square feet which is still the largest store inside the market. So while we have cut down in terms of square feet inside Rajori market, we will still do much better in terms of revenue. So these are some of the mistakes we want to clear out where square feet number might reduce but the quality of business will actually improve by a lot of.
Rahul Agarwal
Got it. So from a gross addition perspective, is there a count here or how should we think about that?
Vedant Modi
So again I don’t want to give a particular guidance as such but ballpark, from a gross number it should be between 8 to 10% of where we stand at the end of the last financial year.
Rahul Agarwal
Perfect. And which much more higher throughputs which will help the overall sales to be higher than despite net ads being lower. Got it.
Vedant Modi
Absolutely. So the goal is to improve the quality of retail significantly.
Rahul Agarwal
Perfect. Thank you so much for the patient answers and wish you all the best for the rest of the year. Thanks.
Vedant Modi
Thank you very much.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. The next question is from the line of alias Shakir from Motilal Oswal Mutual Fund. Please go ahead.
Aliasgar Shakir
Yeah, thanks for the opportunity. Just a question on growth. Just follow up on from the last question. So now that you are indicating that you know why gross number would be decent at 10% but lot of closures so net numbers may not be there. So I think growth will be more led by as you mentioned, sssg. So just if you can share some more color on how the SSSG trend. Is this quarter because there will be. Multiple levers in play. Right. One is the restructuring of the non performing stores. Second is that we have seen now two years of negative SSLG and they were you know, very weak wedding season also. So that benefit should also be there. But when I see from a very short term point of view, I think last year, you know, your probably, you know September and December quarters were very good. So maybe you know the impact from there. So if you could just share some color in terms of how we are looking at the, you know this is a Deeper bombing.
Because that I think will be the.
Vedant Modi
Thank you for the question. So again, we don’t give any guidance as such, but from a qualitative perspective, the goal every year is to do decently well in SSG. So firstly there is the lever of ASP where we want to grow by about 3 to 4% within each of the categories we operate in, alongside the category improvement because the share of Mohe and TVAMEV is increasing in the company, there is again a 80 to 90 basis point jump in ASP at a company level every single quarter because of this. So that is one big lever which we have.
Aliasgar Shakir
Sorry, how much did you say?
Vedant Modi
So 3% within the categories and I would say 70 to 80 basis points because of a larger share of Mohi and Pramev of the company. So all in all, 3.6, 3.7% is something which we sort of target as ASP growth, which is one lever. The second big lever for us is improving our average basket size which again, in terms of, you know, the kind of training which we deliver, the kind of layouting which we do in our stores, we’ve been able to improve it, you know, quite decently well over the last couple of financial years.
The third aspect is to continuously improve on footfall. This is the one major area where we’ve lagged in the last many quarters and the last two financial years overall, which is something with both very good marketing and rebounds in the macroeconomic environment can really help us step up the overall sort of footfall numbers driving a lot more bill counts. And finally, there is a large play in terms of our retention strategy in terms of ensuring we are able to recall a lot of the 80 to 90 lakh customers that have already purchased from us the data with which we carry in our systems.
So these are the overall growth levers in terms of having good SSG growth. That said, there are a lot of micro KPIs that we work on which I mentioned for an earlier question, which is in terms of product, in terms of marketing, in terms of the operation standards. And the real goal is to ensure that we do the best justice to every single guest walking into our store, making them feel extremely happy with what they’ve purchased.
Aliasgar Shakir
Got it. This is very elaborate and detailed. Thank you so much. Just one quick follow up. Last few years we were, you know, indicating that we will have a double digit, you know, footprint led revenue growth. Now that this year we are not having a, you know, net level strong footprint growth. Do you think that double digit growth will be difficult? Or you think that SHG should be able to compensate for whatever, you know, impact we will have from lower net store addition.
Vedant Modi
So again see the goal of the company is to always deliver on the best financial performance. This year we believe improving the quality of retail is more important than improving the number of square feet we operate in which at a net level will be much more beneficial to us. So for any retail company, having a tail is the worst thing possible because that means great inventory gets stuck at the back of the non performing stores along with the overall operating deleverage that comes with it. So the goal is to ensure great SSG along with improving retail quality, making us poised for good growth at the end of the financial year.
So if there is any market where we don’t operate in, we will absolutely open a store. There is no reason to slow down in terms of store openings. It’s just we want to do it in a manner which is sustainable and has great financial outcomes in both mid to long term as well.
Aliasgar Shakir
Okay, got it. Thank you so much. It’s very helpful.
operator
Thank you. The next question is from the line of Jignesh Kamani from Nippon Mutual Fund. Please go ahead.
Jignesh Kamani
Yeah, hi Vedantee, I just want to know. Consumer scale grew around 23% overseas repaired sales growth of around 17 percentage. So since last seven or eight quarter consumer sales growth has been much higher than the repaired sales. Generally it move hand in hand and if there is any deviation probably one or two quarter it will reverse. So just want to know reason behind that Are the stores having a very high inventory two year ago and that’s why second reported sales looks weak because they’re clearing the event.
Rahul Murarka
So on a full financial year basis, if you look at the growth in primary and customer revenue will move in a similar direction on a quarterly basis. It can vary depending upon what is the upcoming quarter which is coming up.
Jignesh Kamani
It is happening.
Rahul Murarka
Sorry,
Jignesh Kamani
if youlook at last eight quarter except fourth quarter, every quarter consumer sales growth was higher than the reported sales growth.
Rahul Murarka
No. So that to some extent it can be because of in general if you look at full financial year like FY25, if you look at it was in the similar direction, it was moving in the similar direction in FY25. So what is important is to look at the full financial level. Like if I tell you last year our primary revenue growth was 1.2% okay. And our customer revenue growth was 2%. So it was similar. And so that is what we are saying, that if you look at financial year level it will move in the similar direction.
But in any particular quarter there can be variations because our model is auto replenishment. Every replenishment happens automatically. There is no manual interest and the replenishment happens based on the demand and supply. What is, how is the season in the upcoming quarter? So these factors play a role and it is fully automated. There is no manual intervention at all. So that is why we are saying it is important to look at a full financial year level rather than a quarter to quarter.
Jignesh Kamani
Let me ask this differently. Over last two or three years have you seen increase in the inventory per store either in number of SKU or the absolute amount? And how is the current year?
Vedant Modi
It again depends from a store to store perspective. At an overall level, our receivables have not changed dramatically. They might have improved for some stores where we’ve taken a strategic call to add Mohey or Swamev or both. So in those stores you would find that inventory levels in terms of MRP have increased because each store can only carry a certain number of pieces. But the moment we decide that, we will change, let’s say 10% of the inventory from Mannevar to Tamev. The overall stores MRP value actually moves from 100 to about 130 because Tomev carries a much larger revenue.
So that is one reason why receivables increase from a store to store perspective. But as a company, we love to be a company that has very high inventory turns over. So the goal is never to fill up stock. We look at our stores to be beautiful retail environments. We don’t want them to look like warehouses. And the goal always is to have only the optimum inventory on the floor level. But yes, when we move from Manava to having a little bit of Tome or Mohe, both the receivables and the inventory line at the store increases because of the change in ASP of the products.
Rahul Murarka
But on an overall level, if you look at in KTM June 25, our receivable data 71 days, whereas in FY25 it was 77 days. So it has actually come down compared to FY25.
Jignesh Kamani
Yes, sure. And second question on the SSG, like last almost two year SSG has been very soft. So are we seeing the franchisee partner? You can say there’s a fatigue created there. And because since their public period has elongated and ROI has been much deteriorated because of the overall condition. And in account of that, are we seeing higher number of closure or when you want to open a new store, interest from the new existing franchisee owner for the second or third store has been slightly weak now.
Vedant Modi
So then I’ll take this question in multiple levels. So workflow perspective, the way we function is our business development team signs a store and after signing a property we look for a partner from the existing network or from outside as needed. And that has never been a challenge for us, including even now that’s rather one of the easiest parts of the operations we done coming to the ROI of our partners. Majority of our partners are well established retailers. Having worked with us for many, many years. They understand what the MID premium discretionary spend is going through.
They are wary of the facts. And the best thing is that even two years ago we operated at rois which were extremely high. So while that number would have come down slightly for the partners, it is still very healthy and positive. That is the reason why there is a lot of hard work that needs to be put in by our franchisees and the company. However, there is no sort of story of negative ROI as such. Hence all partners remain to be committed towards the overall growth of the brand. And finally, when I talk about closure, majority of the closures that we take up are actually led by the company itself which is more strategic in nature due to the reasons I mentioned, very rarely do we have closures coming from the partners.
Jignesh Kamani
End understood in my last question.
operator
Sorry to interrupt sir, but I may request you to rejoin the question queue for follow up questions. Okay, thank you. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Hi. Most of my questions are answered. You can move to the next participant. Thank you.
Vedant Modi
Thank you.
operator
Thank you. The next question is on the line of Sameer Gupta from IIFL Capital. Please go ahead.
Sameer Gupta
Hi, good afternoon. Thanks for taking my question. I’m sorry if somebody has asked us. I joined a call little late hours of the impression. It starts at 4. First thing on the EBITDA margin. Now historically if I look at Shibita margin in first quarter and full year normally in the same range, this quarter has started on a very, you know, unexpectedly lower note at 42, 43%. Now how should we look at it? Is it that ad spend this quarter have been disproportionately higher and you expect some phasing or this is the normal level which you think will sustain going forward.
So just if you can elaborate on that please.
Rahul Murarka
Sameer. So this time the marketing cost is the main reason why we see a decline in EBITDA margin. Because Last year in Q1FY25 we had a very negligible marketing Cost because of there were negligible weddings last year in Q1FY25. So that year in Q1, FY25 the marketing cost was only 2.3% of revenue. Wherein in this quarter we have spent 5.6% of revenue and marketing cost. So around 3.3% is impact of marketing cost. So that is a major event where we see that the EBITDA margins are looking lower compared to last year’s Q1.
Sameer Gupta
Understood. But if 5.6% is going to be a consistent number for the full year, that would mean that all things equal, 43% is also going to sustain for the full year, right?
Rahul Murarka
No, no, no, no, no. That’s point. Point here is, look, there are multiple things which play a role. Another thing, one is the marketing cost, another is there is operating leverage as well. Because you know, when we look at the full financial year, Q3 is the highest revenue generating quarter for us. So by the time we reach a nine month period, of course the revenue levels are very different compared to the cost. Right. So of course the margins at EBITDA level also look different because of positive operating leverage.
Vedant Modi
So just for reference, quarter one advertisement cost was 5.6% and last year’s entire year’s financial year advertisement cost was also similar to that level, if not slightly higher. So at a financial year level, advertisement costs are always at that level. It’s just we have strategically decided to save money last year first quarter to spend more in the second half, which we decided not to do this year. If we remove that, then we also had operating leverage improving the overall margins. And that 80bps that came down from a gross margin level is more of a quarterly thing.
Something which will fix itself in the remaining financial year.
Sameer Gupta
Got it. A little bit of follow up over there. So I am noticing the GM contraction, it’s still not high, but it’s happening for the last three quarters. And the reasons we still are not sure, I mean it’s something similar that we have mentioned last two quarters also. So what exactly is happening over there?
Rahul Murarka
So Sameer, on the gross margin, if you look at in Q4FY25 we had 66.2% of gross margin and this current quarter we are 66.9% of ROSA margin. Now our point here is that it is always better to look at gross margin at an annual level. Right. On your point of quarter. In quarter we have actually improved on gross margin, but our recommendation would be to look at annual level. And as a management, we are very comfortable with a gross Margin of anything above 65%.
Sameer Gupta
Okay, so let me ask this in a different way. I was actually looking at YoY contraction. So 80bps is the contraction this quarter. Last quarter was 90bps. Prior to that was 50bps. This is what I was referring to.
Rahul Murarka
So that is what Sameer. I mean look at the full financial level. If you look at last year we had 67.2% of gross margin in FY25, right. And now we are at 66.9% of gross margin in Q1, right? So there is only a 0.3% of difference which we are talking that also can be of different reason on a quarterly basis. So firstly it is important to look at a financial real level. That is what we are trying to say. Because quarterly it can always vary.
Vedant Modi
I would also just like to add one thing. FY24 gross margins was 67.2%. FY25 gross margins was 67.2%. Absolutely the same. And quarter one FY26 is just 30bps lower than that, 66.9%. So all we are trying to say is if you look at it from a full financial year level, you will hardly find things moving here and there. That said, as a company the goal is to improve our gross margin within each category of a brand. With Mohit Vamev and Divas growing its share of the pie at company’s revenue level, managing the same gross margin we operate is becoming more and more difficult.
But somehow we are able to manage to stick to the same level. And that is something which I would say is a great achievement by our merchandising team. And the goal is, if we are able to maintain these numbers, that means significant improvement in the departments that are operating Mohit Homehev in the bas.
Sameer Gupta
Got it. Sorry, just to blabber on this point again. So logically, if a Mohit Vame Divas is to giving higher growth versus Manevar, there should be a natural contraction in gm. Is this an correct understanding?
Vedant Modi
See, that is a correct understanding. But that is what I’m trying to say. Even though they’ve grown much better than the company average, still the FY24 gross margin and the FY25 gross margin was absolutely the same. Even the current quarter gross margin is almost the same at 66 for 9%. So we are actually improving a lot on our gross margins when it comes to within the brand level. So there is a lot happening. So the goal is to actually maintain the company level average for which we will actually have to do A lot of hard work within the brands.
Sameer Gupta
This is very helpful Vedant. Thanks for sticking around and answering this in detail. Second question if I may.
operator
Sorry to interrupt sir, but I may request you to rejoin the question queue for follow up questions.
Sameer Gupta
Sure, I’ll do that. Thanks.
operator
Thank you. The next question is from the line of Vishal Dudwala from Prenetra Asset Managers. Please go ahead. The next question is from the line of Jignesh Kamani from Nippon Mutual Fund. Please go ahead.
Jignesh Kamani
Hi, just want to know more on the. You can say Mohan Tamil there I believe since Maneuver is more established brand versus await, Mohan Tamil is more on the seeding stage right now. So your revenue per square feet will be slightly weak there and as you said their ASP is 30% higher. So your inventory ton also higher and inventory amount will be higher and inventory done might be weak. So from the franchise point of point of view, ROI on the Moheit while being slightly inferior versus the money. So are we compensating them enough to for them to make it motivated? Because when I interact with some of the franchise partners there was not keen to promote more or more because from their purpose it is dilutive on the roi.
Vedant Modi
Well, I would like to take this answer up in two parts. So when I talk about Thwamev, when we talk about having Thwamev within Mandevar Mohey stores, then it will always add ROI value to any partner that operates with us because Thamev is added in the same space where Mandevar is kept. In basically nutshell, it increases the ASP of the store and also improves the average ticket value of the customers because of having better ASP products and satisfying to the already existing demand. So it will always be roi sort of improving the ROI for our partners.
Now when I talk about Mohey, what we have seen is in the larger stores, Mohe actually has tremendous value in terms of the growth it gives to that particular store. And on the second part, when you are building a store, let’s say 5,000 square feet store versus 7,000 square feet store, the amount of capex you spend for that incremental 2,000 square feet is much lower than the average of the 5,000 square feet you are spending because there is economies of scale when you are building that store. The second part is in the store operations as well.
So there are some larger cost components. Let’s say the store manager, now the same store manager is able to handle both Maneuver and Mohe and you don’t need to have another person doing that job so even from operations economies of scale, having Mohe makes so much more sense than not having it when we have a larger space. So from an ROI perspective, when I look at Mohi as an incremental perspective to the Mandavar store that was already going to open, it will be at a very similar ROI level. So that is what our understanding is and majority of the partners we interact with across India, everyone is now pretty happy with Mohey and very happy to have Mohe in all the new stores that are open.
Hence you will find 40%.
Jignesh Kamani
What about the existing store? I understood about the new store, but existing stores which are already doing the Manehwar where you are replacing part of the area of Manehwar which Mohe, their ROI will get compromised, right?
Vedant Modi
No, because I would say two years ago that exercise was completed. So in the last years we’ve never really transferred the Maneuver store to being Mandevar Mohi because any store where there was enough space and we could have done that, we’ve already done that. So that opportunity does not exist anymore.
Jignesh Kamani
Thanks a lot.
operator
Thank you, ladies and gentlemen. We will take that as our last question for today. I would now like to hand the conference over to the management for closing comments.
Vedant Modi
It is always a pleasure interacting with all the analysts. Thank you very much for joining. Looking forward to interacting again the next quarter. Namaskar and thank you very much.
operator
Thank you. On behalf of Vedant Fashions. That concludes this conference. Thank you for joining us and you may now disconnect your lines.