Go Fashion (India) (NSE:GOCOLORS) Q2 2026 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Q2 NH1 FY 'twenty seven Earnings Conference Call of Go Fashion (India) Limited. This conference call may contain forward looking statement about the company, which are based on the beliefs, opinion, and expectation of the company as on date of this call. These statements are not the guarantee of future performance and involve risks 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 question after the presentation conclude. Please note that this conference is being recorded. I now hand the conference over to mister Gautam Saragi, promoter and CEO from Go Fashion (India) Thank you, and over to you, sir.

0:51 Yeah. Thank you. Good evening, a warm welcome to everyone present on the call. Along with me, I have mister R Mohan, our chief financial officer and SGA, our investor relation advisers. I hope you all have received the investor deck by now. For those who have not, you can view them on the stock exchange and the company website. Due to an h one FY '27, stores built further on the five strategic priorities we outlined at the start of the year. Even as the quarter was shaped by the late festive calendar and higher R and D costs, let me take you through where we stand on each of these priorities at the half half day mark of the year and then speak about the quarters and the way ahead. Priority one was turning SSG positive. Turning SSG positive remains our single most important commitment for the year.

1:39 After turning positive in Q1 at 0.6%, same store sales growth for our EVOs in Q2 was broadly flat. This needs to be seen in the context of the late festive calendar. With the festive season starting later this year, a part of the pre demand festive that falls in September last year has moved to October. As said last quarter, one quarter does not make a trend in either direction. Our focus remains on delivering positive SSG for FY 'twenty seven as a whole, and the festive quarter will be an important one of that journey. Priority two, mitigating to larger store formats. Our transition to larger format stores continued through the quarter. During quarter two, we have opened nine new stores and and closed 23 smaller format stores in catchment where we already have or are opening a larger store nearby.

2:35 For h one FY '27, this takes us us to 24 openings and 89 closures for the six months, and we ended September with us... A grand total of 737 EVOs across one ninety six cities. Importantly, even with the lower store count, our total retail space increased to approximately 4.4 lakh square feet as on 09/30/2026 compared to 4.34 as on 03/31/2020 This is an additional... There is an addition of roughly fourteen thousand two twenty square feet during half of the year as we open larger stores and enlarge existing ones wherever additional space were available. Our average EVO size stands at about 608 square feet.

3:21 Our larger format stores continue to do well and outperform the smaller stores in the network, which reinforces our conviction in this strategy. These stores hold our full range and give customers a significantly more premium shopping experience. Our store expansion strategy will continue to remain calibrated and selective with a clear focus on hiding adding high potential locations across tier one, tier two and tier three cities. Over the next five years, we aim to significantly expand our footprint with the potential to nearly double our square feet in terms of size. Priority three is to refreshing... Refresh the product portfolio and the brand. We continue to refresh our product portfolio with new styles aimed at younger, trend conscious consumer and remain on track to add new products through FY twenty seven. Our value added non leggings portfolio now contributes to 70% of the revenue, reflecting the steady premiumization of what GOCOLORS offers.

4:21 On the brand on the brand front, our first campaign featuring who came on board as a brand ambassador in July, went live during the quarter, and it it has been very well executed and seen some good results. It has given the brand a fresh, younger and connect heading into the festive season. And together with our influencer led initiative, we believe it will support stronger customer acquisition in the coming quarters. Priority four is to expand our delivery concept. We continue to scale our delivery concept and now have 21 operational stores compared with 15 in Q1. We remain committed to our target of 25 to 30 daily stores by the end of FY 'twenty seven. The unit economics continue to hold up well, and the festive quarter will give us a good read of how these stores will perform in the peak season.

5:11 Priority five is our LFS channel recovery. LFS revenue in Q2 was impacted because of festive timing. Dispatches to our LFS partners typically take place in September, end of the festive season and moved to October this year. This is a shift in timing rather than demand, and the supply chain with the key LFS partners remains normalized. We continue to work closely with our partners on assortment, placement and sell through, and LFS contributed about 23% of our sales in H1 FY 'twenty seven. So while the Q2 numbers were affected by the festive timing and raw material inflation, the underlying progress on our five priorities remain on track. Coming to the financial performance, revenue for Q2 FY 'twenty seven de grew by 3%, largely on account of the festive days that I just spoke about. Gross margins for the quarter stood at 60.8%.

6:05 As I mentioned on the first on the last call, subject prices have gone up due to geopolitical situation, and this higher cost inventory has started flowing in in quarter two. We intend to pass on the raw material inflation through calibrated pricing actions, which will help restore gross margin in the coming quarters. During the quarter, we recognized an exceptional expense of 3.4 crores, taking the total of our FY FY twenty seven to 9.9 crores. This exceptional expenditure is write off of capital expenditure on account of store closures, which has happened through the six months. This it is a direct consequence of our network consolidation strategy, and it is a one off item. Full price sales ratio for H1 FY 'twenty seven stood at a healthy 93%, and our average selling price in for EVOs is at INR $8.27.

6:53 On the balance sheet side, we continue to make good progress. Working capital days stood at hundred and thirty four days with inventory days improving to ninety four days from hundred days at the end of q one, now within now within the ninety to hundred day range, which we had guided earlier this year. Operating cash flow on a pre end days basis stood at a healthy of INR 52.6 crores. Looking ahead, the festive season has started on a decent note, and we will be better placed to assess the full impact once the period concludes. Our priorities for FY twenty seven remain unchanged, sustaining SSSE momentum, accelerating our transition to larger format stores, refreshing our product range and scaling our daily wear and international initiatives. We remain confident that these efforts will translate into stronger performance through the year.

7:43 The company continues to maintain a strong competitive strength as one of the most most recognized bottom wear brands with a clear emphasis on quality, comfort, and fit. Our deep category expertise and brand recall position us well within the women's bottom wear segment. Given the still low penetration of organized players, the bottom wear category offers a meaningful long term growth opportunity. With this, I would like to hand over the call to our CFO, Mr. R. Mohan, for the update on Q2 and H1 FY 'twenty seven results and financials. Thank you. Thank you, Gautam, and good evening, everyone. I'll now give you the financial highlights for Q2 FY 'twenty seven. Our revenue stood at $2.18 crores, a decline of 3% Y o Y. Gross profit stood at INR 132 crores with a gross margin of 60.8%.

8:34 EBITDA before the exceptional expenses stood at INR 56 crores. EBITDA margin before exceptional expense stood at 23.8%. That stood at INR 9 crores. Now I will give you the financial highlights of half yearly h one FY twenty seven. Revenues stood at $4.40 crores, a decline of 11.5% year on year. Gross profit at $2.72 crores with a gross margin of 61.8%. EBITDA before exceptional ex... Stood at $1.23.4 crores with EBITDA margin of 28.0%. Cash flow from operations, Pindia is $11.06 stood at 52.6 crores. Our ROCE and ROE excluding Indians impacts stood at 8.96.7% respectively for the half h one.

9:27 Cash and cash equivalents stood at 211.4 crores as on 09/30/2026. With this, we'll now open the floor for question and answers. Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are request to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question comes from the line of Abhash Badar with Oineas Alpha Investment Management. Please go ahead.

10:19 Yeah. Hi. Thanks for taking my question. Just wanted to understand a couple of things. One, if you could just talk a bit more about the other expenses on the cost side. I understand that you explained the one off, but I would have thought if I look at y o y numbers, we've had a net closure of 75 odd stores, and these are the smaller format stores which are giving us less of profitability. I would have thought we would still have lower costs, but I understand you would have made certain investments as well. So if you could just talk a bit about that in detail just to help us understand what's exactly going on in the last year. Because I would have thought the savings would have would have outgrown the expenses. That's question number one. And question two is just a smaller one. In the gross margin, are you planning to take a price hike or or have you already taken a price hike to offset the cost increases that you're seeing? Just these two questions here.

11:12 Yeah. Thank you, Bhash, for your question. So I'll answer your first question. On the cost side, a lot of our cost has got rationalized, but there are some expenditure, obviously, we spent more because of our advertising increase as well. If I take in our overall expenses, employee salaries and rent are the two major line items. So because we have shut down many smaller stores, open larger stores, we have seen our employee salaries stabilizing. Like, I'll give you an example in quarter two. Last year, quarter two, our employee salaries was about 45.75 crores. And in quarter two this year, it was 46.3 crores. So it has been, and this is after increment. Like, usually, they give increments to our staff every April. So even after increments, we have seen that the employee cost this year versus last year has been as much... Has been pretty much flat, and there's no growth in that cost.

12:05 Rents, we have seen a slight increase. This is on on account of opening larger stores and rent escalations. This is... And we've obviously closed many stores, we've had savings on the rent part. But at the same time, many stores continue to escalate every year. So the rent cost as an absolute amount has increased. The rent cost last year in q two was about 36 crores. This year, it is about 37 crores. So it's more or less stayed flat to what it was last year's number. So if I take the overall other expenses of the business, the major spike has come because of marketing and advertising. So if I take h one, last year, we spent about 7.85 crores on advertising. And this year, we have spent about 12.63 crores on advertising because we've got a brand ambassador on board. So the increase in other expenses is largely because of the marketing and advertising expense.

13:02 Now coming to... As a one... In the other expenses, there's one more line item. Obviously, there is an exceptional expenditure where we've done store write offs. Last year, for h one, it was 1.73 crores. And this year, because of the store closure, the one off expenditure write off is 9.87 crores. So the two line item which has pushed the bottom line expenses on the higher side, it is... One is advertising and the other is the exceptional expenditure. Now to your second question on gross margins, we have done price hikes for certain articles we've just recently done, and we are in the midst of doing price hikes for some other articles as well. So I think the offset against the gross margin will take a couple of quarters, but I think it will stabilize in the next two quarters. So we've done some increase now, and we are going to be doing the sum increase post festive.

13:55 Gautam, one more thing to add is that the other expenditure is not only store write off. It will also have store renovation. We have done a couple of stores renovation. So The renovation also. Yes. Yeah. So we've also... There... We've also taken some store renovations this year. We don't... I don't have the exact number handy for what is the value of the store renovation, but that could have also spiked the amount a little bit. Understood. Understood. If I see largely the other expenses, it's mostly on the store closures and the advertisements. Understood. Thank you. Thank you so much. All the best. Thank you. Thank you. Our next question comes from the line of Ankit Panodia with Zen Divisch Advisors Private Limited.

14:42 Please go ahead. Yeah. Thank you for taking my question. So we have $7.37 EBO and even though total revenue from EBO might be flat, but if I have to break it down into say three, four segments like there would be some large stores which would which would have opened in the last few months or maybe quarters, which are still too mature. And there would be some large stores which would have come last year, which would have shown good number. And then there would be some stores which are smaller and still doing well and we continue to keep them. And then the last one would be where stores which are getting shut down. So if you can give some color as to how each of these four...

15:37 I mean, I'm not looking for a definite number, but something more color into all these four buckets, how they are performing, how this 0% growth is coming. I think some would be doing really well and some would be doing really bad and net net, it would be zero. Right? See... Yeah. So thanks, Ankit, for your question. I think, look, the newer stores which have opened, the newer stores usually take time to settle down. And that is the... Usually, for any store to start performing well, it at least takes twelve, fifteen months for it to reach some sort of maturity level. So whatever newer stores we've opened, we've not built any new stores, but whatever we've opened over the last twelve months, they are growing steadily, and we are seeing decent SSLG also in those newer, larger stores.

16:22 As far as the smaller stores are concerned, rightly, you said many smaller stores continue to do well because it might not have any other larger store in that vicinity, and maybe that mall and high streets are doing well. So some high... Smaller stores still continue to do well unlike some other smaller stores. The third bucket of stores which are even our daily concept stores, which are about 21 of our stores. The 21 stores where we have kept top there and a little bit of men's wear have actually picked up speed and done well over a period of time. Like I mentioned in my previous calls, we continue to deliver about thousand rupees of sales per square feet per month, which is a good number for us, which we think to begin with. We've reached 21 stores using good traction. We're gonna be adding another eight, nine stores. So the sample set of 30 stores, it will tell us what should be our future strategy as far as expansion is concerned for this format.

17:16 Now the larger question on last store versus small store, if I look at my overall network of last store versus small store, my largest stores are SSD positive. So if I take stores which are greater than seven hundred ten fifty square feet, they are about two to 3% or higher SSD, whereas my smaller stores continue to be negative. So when I read the different different types of data, it's very clear that we need to pivot from a smaller to the larger concept. However, obviously, because we are on a very big big base of large... Big base of 730 sensors, The transition takes time. So we will continue the transition of smaller to larger stores in the quarters to come, but it's very difficult to give a definitive number on how many small stores I'll be shutting and how many larger stores I'll be opening. So that is on... That's purely on the basis of what we'll escape. Got it. That that was very helpful. So I'm not asking for, again, a definite number, but just looking at the pattern, as in we closed about around 40 stores in FY '25, and we closed around 54 stores in FY '26.

18:26 And in h one FY '27, we have closed 89 stores. Right? And is it fair to assume that in terms of closing down of stores, the heavy lifting has been done in H one. And from H two onwards, the direction should be lower, as in it should be lower certainly not in high Considerably lower, Ankit. Now, I mean, look, if you see q two versus q one, the number of stores have reduced, the closures have reduced. In q one, I think we had more than 58 or 59 closures. In q two, you can see it's 23. In q three, even... It will be even lower. So directionally, now the margins in the p and l will start going up by virtue of of lower closures.

19:11 And directionally, I think the the the ratio of closures will considerably come down. And the margins also should start start improving on that basis. Right. One last question, if I may. So if I look at... Yeah. Last year, second half. So I'm talking about FY '26, h two. Okay. So from there onwards, our revenues have dipped a little. Prior to that, we were doing really good. Now when we have this base effect here in terms of the festive season being shifted to q three rather than q two, and how we are positioned and also in terms of the price hike which we have taken. Is it fair to assume that, again, asking for a definite guidance, year on year numbers from h two should be much better than what you have seen in h one.

20:02 Certainly, year on year number. Certainly, yes, Ankit. Q three should deliver deliver us... Deliver or deliver a good number for us. So if if we get number for us. Yeah. But if in this tough time, if we had managed 0.2 triple SG, directionally, should be able to achieve our target of closing the year with a positive triple SG. Right? We are keeping our fingers crossed. Hopefully, we should be going in that direction. Yeah. Thank you so much. That was all from my side, and all the best for the future. Thank you, Ankit. Thank you. Thank you. Our next question comes from the line of Avinaj Kurumanchi with Motilal Motilal Financial Service Limited. Please go ahead.

20:51 Thank you, sir. And my question is regarding the gross margins. So if you look at it like this quarter, actually, LFS, which is a low margin channel that has declined and EVO was continuing to do well. Despite this, we are seeing the RM pressure, which is why the margins went down. So my question is like how much of the inventory with the new RM presence were reflected in this current quarter sales? Like it will be a general process like where the inventory will start over, you will be already sitting on a good amount of old inventory. I'm just trying to understand how much of this more impact would be coming in. Yeah. How much more... See, it's very difficult to judge that, and I'll tell you why. As the RM prices have increased, we've also done the increase in MRP in some of our articles. So it's very difficult to judge what is going to be a... The further impact on gross margins.

21:42 My estimate is, see, this this quarter, we had a 200 basis points impact on our GM. I think the next q three, we should be having a gross margin impact of anywhere between hundred and two hundred bps is my estimate. It's difficult to judge this, but roughly, I feel our GM impact should be about 100 to 200 bps in quarter three. Okay. Okay. And the... If I look at, like, the ASP, it is up by 6%. Is it a reflection of the price hikes that you already taken, or is this the channel of product mix that's happening? So it's a combination of many factors. Maybe little bit of price hike. The price hike wouldn't have shown now because we've just done the price hikes recently, so it wouldn't show up in the ASP that soon.

22:29 In bottom where we've come out with many value added products, which have... Which are of that $809,100 selling price. Also, because our daily wear concept also has picked up and it's become 21 stores, the top pair in these 21 stores are obviously of our much higher ASP. So there would be a small impact of that as well. So I think it's a combination of new bottom wear products and some of the topware also selling well in the twenty months course. Okay. Okay. It's mostly product mix led changes. Yeah. It's not a it's not a price hike led mix yet. Okay. And finally, on the last one, more of a qualitative printer. So you are partnered with a new brand ambassador. So I'm just trying to understand, like, not only that and also the scale up of the larger stores. How are the footfalls and conversions tracking? Because when you close to smaller stores and open up big store and then you're spending on a and p, so is the footfalls generally higher than what you used to see earlier when conversions also, or how are you looking at it qualitatively?

23:33 See, from a advertising perspective, because the campaign has just started post July, we'll be able to assess and gauge the campaign only after festive period gets over, I mean, as right now. But, see, right now, whatever little bit filler we are getting, the campaign is doing well. But on a concrete basis, we'll be able to gauge that campaign only post festive. As far as opening one last store and consolidating two stores, we've seen that a good part of the revenue of the two store get converted into the larger store within a few months. So I think that business moved immediately. See, like, I'll give you an example. We've shut so many stores, right, over the last six months, but we will not see a drop in turnover.

24:18 So it very clearly indicates that whenever we are shutting those smaller stores, the revenue by virtue is moving to the larger ones immediately. In fact, the entire revenue will take a little more time to move, but a good part of the revenue moves immediately. And that's why you don't see a degrowth in our turnover for H1 even after closing so many stores between last year H1 and this year one. Got it. Got it, sir. And one last question, if I may ask. Yep. So this is a follow-up to the earlier participant regarding the SSD only. So this quarter, despite the faster shift, you are still on a flattish kind of SSD, which is an encouraging thing compared to the last couple of quarters. So will you see an improvement, or what is driving this improvement going forward for the next few quarters?

25:06 A single cross,. The data looks good. We have been seeing forty nine days to festive. So we basically calculate forty nine days to the, forty nine days to Diwali, and the number is looking decent. So we would wait for the quarter to get over to do a full summary of how the quarter has gone by, but quarter three has been decent for us. Okay. Thank you, sir. That's it from my side. Thank you. Our next question comes from the line of Sameer Gupta with India Infoline. Please go ahead. Hi, hi everyone and thanks for taking my question. Firstly, Gautam, today system of seven thirty seven stores, can you just give a color on what would be the proportion of 700 plus square feet stores now in the system? And also, what is the sense on the store closure pipeline wherever you have visibility?

26:08 Say, let's say, for the next twelve months. Yeah. Just one minute, Sameer. I'm going to take that data out of what is the breakup. I don't have it handy with me. Just give me a second. Okay. I... I'm not having the updated number for seven thirty seven store break up, but I'll give you rough idea, Sunny. So just pardon me if I'm wrong, but, anyways, I will give the data through FDA, but I'll give you a rough idea. My understanding is the small stores are anywhere between 120 to 150 stores, which are less than 300 square feet. And the 700 plus square feet stores are about... If I'm not wrong, if it's closer to 90 or 100 stores. Again, these numbers are just off my fingertips. I will send the accurate data through SGA tomorrow itself.

26:58 Got it. And the number that you cited of SSG negative, that's for the less than 300 square feet stores, not for the less than 700 square feet stores. No. No. See. See. What happens is, know, when we look at SSG, right, sometimes even the last... Many stores and also... Even the last stores, some of the stores will be negative because that's a that's a result of how the market and the mall are doing. So I can't take those exceptions into account. If I have to look at a proper sample set, most of the negative stores are the ones which are the small So I would be wrong Which is less than 300. Yeah. Less than 300. Correct. I would say most of the negative stores would be less than 300. That would be the right way to put at it. Got I mean, that... That's helpful. So, basically, less than 20% of the stores now are where you would say that largely the problem is 80% of my network is now where I want it to be. Of course, it will get better with time. Well, not really. See, I'll tell you... I agree with what you're saying logically.

27:59 But, see, for us, the stores which are in the 400 to 500 range also, even the... Those stores we need to increase in size and make it 700,800 square feet. Though the 400,500 is not a very big issue for us, the larger issue are the very small ones. But even the 400,500 over a period of time, we need to slightly upgrade and open a larger one. Okay. Let me let me put frame a question in a different way. Whatever in your definition is a problem area, what would be the percentage of that pro... That that cohort? It should be 20 to 5030% of the stores. I mean, what I will do know, Sami, because because this is a very definitive answer, when we share the stores by bucket through SGA, I will answer this particular question of yours with that data.

28:52 Got it. I mean, I'm not looking particularly... A particular No. But because everything that you are asking is a specific... No. No. Know. But because this is a specific question on a particular number, I I don't... I've given you a rough ballpark. Exact numbers, I will give it to SGA. Sure. And what would be your estimate of the pipeline of store closures, let's say, in the near term, twelve months from now? See, again, start to... Because this number changes based on what real estate we find, the closure for q three from what visibility I'm getting will be anywhere between fifteen and twenty stores as of now. Got it. Fair. Second question is on the input cost inflation for your category that you're looking at in fabric cost.

29:39 And, yeah, I mean, the... I have a follow-up, but let me let me take that answer from you first. Yeah. See, I mean, look, obviously, the raw RM prices have gone up. We thought it will cool down in July, August. It cooled off a little, but still the prices were high. So, look, we had to take hike in some products of ours where we feel the impact has been larger. So like I had mentioned to even Ankit also, some products we have taken the hike, some we will take post festive. So I think over a period of time, this GM impact, what has happened of 200 basis points, what you can see in our p and l, this should get... You know, this should improve and go back to the older number. Got it. But I was actually asking about the quantum of inflation that you are facing.

30:27 So is it 15%? Is it 10%? It's around... It's between eight and ten percent is what I understand. Because, see, the yarn prices and fabric prices have changed every month. But if I have to just take a blended, I think it's about eight to 10% is what we are doing. Got it. Now follow-up to this. Basically, I look at your end year inventory, which is largely a finished goods inventory, it's around $2.67 crores. Right. And if I look at the first half COGS plus subcontracting, it's around $1.68 crores. So No. No. No. One second. Sorry. The $2.67 crores the $2.67 crores is which inventory you said? Can you just repeat it? March ending. March ending. Yeah. March ending was $2.68 crores. Correct. Right. $2.68. Sorry. And Yes, if I looked at the first half COGS, the the one that you report in the p and l plus even the subcontracting charges, that's around $1.68 crores.

31:21 So Okay. Logically then, most of the inventory gets used up in the first half unless the March ending inventory was itself sitting on a higher fabric cost. Why should there be any GM pressure right now in the P and L? I understand fabric cost have gone up, but that would be sitting in your inventory. Right? Because you will be still be using the older inventory to No. The current sales. No. But, see, that difference from product to product. Some fast moving products, the inventory days would be much lower. Some would be slower. So very difficult to bridge the gap, what you're saying. See, it would be... If all my products sold at the same rate of sale, maybe what you're saying would be true, but it's very difficult to bridge what you're saying from March's number to this number.

32:14 Okay. Got it. So so probably then you are actually sitting on a higher aged inventory as well, and you don't see that as a problem? Yes. We would have older inventory at the older price. What you're saying is right. But from an impact to GM perspective, my hunch is that the impact would be anywhere between 100 bps to 200 bps in quarter three. Got it. Got it. Great. That's all from me. Thanks, and all the best. Thank you, Sameer. Thank you for the wishes. Thank you so much. Our next question comes from the line of Madhu Rathi with Counter Cyclical Investments. Sir, firstly, wanted to understand regarding the receivable deal or receivable number, it has moved from INR106 crore to INR125 crore.

33:08 And our LFS revenue has declined. So I'm not able to understand why has this increased. It is Yeah. Yeah. See, it has also happened on the line of our online receivables have gone up a little bit. We've also started doing a little bit of quick commerce. So on that basis, some of our online receivables have gone up. Even our export receivables for the Dubai store, we have some receivables pertaining to that. So it's it's a... The spike is largely because of non LFS business. I think it's more relating to online. So we have started doing quick commerce, and we've also started doing online. We've also started doing on an SOR basis with Amazon.

33:56 So quick commerce and Amazon put together has caused some spike in our online receivables from March. So so, Gautam, I wanted to understand that our small stores seem to be doing alright till FY '25. So then suddenly what happened that the smaller stores basically... They they basically... The the SSG deteriorated? See, I think, look, the the deterioration in the SSG obviously happens over a a longer period of time. It is just that it was more visible maybe from f I twenty four or f I twenty five onwards. And that is when we also started noticing the trend. See, any... For any thing to show up, it gradually takes place.

34:46 It is just that it became more evident from that point of time. Understood. So now, Gautam, are we totally exiting the 300 square foot stores, or we'll keep some of them which are anyway doing good business? See, it's going to depend the availability of real estate. I'll give you one small example. Now there is there is in Orbit Mall in Hyderabad where we have a 200 square feet store. In that mall, that store does extremely well for us. It's an exceptional store. But that store there, we don't see ourselves getting a 600,700 square feet store over the next fifteen months because the renewals are yet to come in. So in such cases where there is no real estate in that particular area, we might have to continue a smaller store till that period.

35:41 Okay. So... But, ultimately, we'll exit all the 300 Eventually. Yes. Yes. Eventually. Yes. See, also, no. One more thing, when I've selected the 700 plus square feet, I don't want to be in a situation after three years where, again, I'm in a situation where 700 is turning out to be tight. In a 700 plus square feet store, I have enough room from a long term perspective to manage in that format. So, eventually, our bottom line is going to be in the range of 700 to 800 square feet or maybe a little more, maybe 700 to 900 square feet. And eventually, over a longer time horizon, we will exit all our smaller stores. That is the plan. Understood. Now, Gautam, is it that the only issue is the store size, or is it that the...

36:28 All the b two c brands and fast fashion brands like Zudio, etcetera, that have come up in the, let's say, last few years, have they basically eaten a pie and maybe that impact is also there? Or some... Is there some issue with the merchandise that maybe the... Ultimately, the merchandise has to be attractive enough? Or is it really confined to the 300 square foot stores? I mean, are we clear that what is the what is the ailment and whether the diagnosis is correct? See, I'll see, I'll tell you I'll tell you what is it. It's it's... In my management view, if you look at it, it is the only to do related only with the store. Now why that store makes such a big difference? See, for any business to continue growing, you need to have existing customers coming back to the store. You need to have new customer acquisitions, etcetera.

37:23 When your store is very small, it carries a inherent perception that the range of what you're carrying in terms of products will be less, will be confined. So what a larger store does, it increases the the frontage of the store. See, a smaller store frontage will be anywhere between ten and twelve feet. When you take a larger store of, say, 700 square feet, it will have a minimum frontage of at least 19, 20 feet. When you get a frontage of a 19, 20 feet of plus store, the visual merchandising of this number of products what you're having increases dramatically. See, the the customers first experiences the store, then experiences your product. So the store is... If you ask me, the store is the real reason for our slowness, and I think the larger store is what is going to fix it.

38:15 From a merchandise perspective, I can tell you... Sorry. Go ahead. Please go ahead. No. No. No. No. Please go ahead. Got them on merchandise. See, from the merchandise perspective... See, from a merchandise perspective, no brand can be perfect. Yes. There will be always gaps in every brand's product portfolio. Right? But from... I... When I look at our portfolio of products, we are well diversified in today's product of bottom there, what the younger consumer and the millennial consumer is asking for. So I think it's not a merchandise problem. As far as competition is concerned, like you mentioned, competition was always there. Right? I mean, website, studio, you just mentioned these big names. Right? They've always had bottom left. So I think even prior to COVID also, if you take all the larger formats, keeping top tier also came bottom. And so I don't think it is something which has dramatically increased only in the last two years. So I think our problem of growth, our headwinds of growth is because of our store format rather than anything else. It's mine and management view.

39:21 So, Gautam, why have we got into men's wear? Because anywhere, the small store has no room to keep... To display all all the merchandise of our core women wear. So... And then we have gone on into men wear. Basically clarify. Yeah. Yeah. I'll clarify. Right? So, see, the men's wear and the top wear, what we are keeping for women, and the format we are keeping in, that is different from our bottomware stores. See, this pilot, what we had planned, we had planned this... We are working on this pilot for last two years. Now what happens in this pilot, Namadul? We take a store sizes of anywhere between 1,500 to 2,000 square feet. And in that, we we accommodated bottom wear. We accommodated women's top wear, and we have given a very, very small safe... Small space of women for men's wear.

40:11 That pilot and that concept is completely independent of the bottom best story, what I'm talking about. Out of the 737 stores what we have today, 736 stores are in India. In that 736 store, 21 stores are stores which are greater than 1,500 square feet per store, closer to 2,000, where we are accommodating all the other merchandise, and that is merely a pilot, which I also mentioned in the earlier calls that we will fill another eight, nine stores and see how that business is doing. If that business does well and it clicks for us, the software becomes a new growth engine for us along with our bottom. I understand. So so... But still, Gautam, I mean, it sounds like a major career especially getting into men's wear. Okay. We can try to... Since women are our customer, so we can try to sell more things to women. But to get into men's wear, which is altogether a different segment, somehow it doesn't sound...

41:16 I mean, it just sounds kind of desperate. But in any case, since you mentioned it's a pilot, so I think we got to try many things and something will click and we'll push that. So that's totally understandable, Gautam. Now, Gautam, when we are deploying our Just just... Gautam, just one question. I'll I'll just clarify before we go to the next question. I understand that men's wear sounds very bizarre, but for the kind of daily wear concept we wanted to create, eating men's wear becomes important. We also understand that we are a women's wear brand. That is why in all these stores, wherever we have done the daily wear concept, the men's wear space allotted is only 10 to 12%. 80 to 85% space or maybe more has been allotted for women.

42:05 And right now, that men's wear, which is... Which I'm giving 10 to 12% space, is generating that kind of sale from that area. So the the men who are coming with the women, these stores, they are buying. So in the pilot, we've been very careful that we don't put put as far as men's wear is concerned because we know our strength is only women's wear. So I just want to add Understood. To that question. Yeah. Sure. So so now, Gautam, that we are planning to double our square footage over the next five years, so have we evaluated a FOCO strategy, and why do we want to, like, put the rent and everything on the company's balance sheet? Aren't we getting enough people who are interested in our franchisee?

42:52 See... So so, Madhu, I'll tell you. Your question is very right. See, franchising, non franchising, there's no one right way to go about it. What I've seen from my past experience for a format and supply chain business like us, we feel a company owned company operated model is a better model where we would like to have a full control of the inventory at a store level. So I wouldn't say POCO is better than POCO or POCO is better than POCO. It... The strategy works differently for different brands. For our kind of supply chain, for our of template, we feel GOCO is better. And because our payback periods have been attractive, even if we are going to be investing and doubling our square feet, from a cash flow perspective, our operating cash flow will be far higher than what we're gonna be investing on store openings.

43:47 So we feel that a POCO model kind of a system is a better suited model for us. Understood. Now lastly, Gautam, last year, we did around $1.82 crore LFS revenue, f r '26 I'm talking about. And on that, we gave a discount of 61 crores. So is this 61 crore discount... Is it only attributed to the LFS? Yeah. No. No. See, I'll tell you. So I'm not very sure of the 61 crores number. I have to see the p and l to exactly know. But any discount given in LFS LFS largely margin to the LFS. See, what happens is most large format store... Format stores, what they will do, they will take a big part of the margin when we build a product to the to the large format store.

44:38 About five to 6% of margin is something which is debited on us later through the year based on a mutual understanding on on promo participation, which is not really discount. It is the promos what large format stores run at a store level for their overall marketing. So any discounts which fits the top line for LFS is largely additional margin what we give through the year, which usually the reconciliation happens in quarter four. So if you notice from one of our larger large format store partners, we usually get the credit not only in the last quarter of the year as a reconciliation rate. So to answer your question, Faith, it's more margin than discount. So, Batam, if we compare...

45:26 So FY '26, LFS sales were $1.82 crore versus 202 crore in FY '25. So LFS revenues fell by around 20 crore last year, whereas the discounts increased from 44.5 crore to 61 crore. So there is a, like, significant And so, Madhu, I'll check up. I... What I... Me and Mohan, my CFO, will do is we'll check up where the 61 CR number came from, and we'll send a clarification note on that. But the one thing I definitely know that the reason why we had a fall in LFS revenue from FY '25 to FY '26 was because in q three, with one of our larger LFS partners, we had supply chain... Major supply chain disruptions in last year's q three. By virtue of that, we lost out on a lot of billing and sales in q three last year, which impacted the overall revenues of FY twenty six. Now as far as discounts is concerned, it cannot be a number of 60 crore.

46:24 Anyways, I will go back, check, and send a clarification note. The margins which will be where we will passing our credit note or to the LFS partner will be to the tune of five to 6% of LFS sales and not anymore. Mister Rati, are we done with the question? Yes, mister Rati. Can you hear us? Alright. It seems mister Adi has disconnected. Okay. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you, and over to your team. I'd like to thank everyone for being part of this call. We hope we've answered your questions. We are undertaking a comprehensive transformation in our store format strategy, our product portfolio, our brand investments, and our new business initiatives.

47:13 The transformation will take time to fully manifest into our financial numbers, but the early signals are very encouraging. If you need any more information, please feel free to contact Mr. Divan Dhruva from SGA, our investor relations adviser. Thank you. Thank you so much, sir. Ladies and gentlemen, on behalf of Go Fashion India Limited, that concludes today's call. Thank you for joining us, and you may now disconnect your lines.