MANYAVAR - Vedant Fashions Limited Share Price

In the Q4 FY26 earnings conference call, management at Vedant Fashions outlined their optimistic outlook for the upcoming year while addressing key forward-looking points. They reported retail sales of approximately INR 561 crores for Q4, reflecting a growth of 7.8% over Q4 FY25, with same-store sales growth (SSG) at around 4.6%. For the full financial year, customer retail sales totaled INR 2,008 crores, an increase of 6.1%. The company emphasized its strategic focus on enhancing customer experience and maintaining disciplined KPI management, aiming for a same-store sales growth of about 2.7% over FY26.

Management anticipates stable gross store openings moving forward, prioritizing the quality of new stores over quantity. They reported a net addition of approximately 4,200 square feet to their retail area, with plans for selective store openings in high-potential markets despite challenges posed by high rent prices. The existing EBO network covers 1.79 million square feet across 669 stores in 252 cities and towns globally.

Looking ahead, Vedant Fashions aims to strengthen brand equity through strategic marketing initiatives. They highlighted the success of their campaigns, including the "Made for Each Other" campaign, which received over 1 billion views and significantly enhanced brand visibility. Management is particularly keen on improving average basket sizes and the quality of their merchandise offerings, targeting an improvement of 3%-3.5% in average selling prices (ASP) without additional price hikes on existing products.

In terms of operational efficiency, management expressed intent to absorb projected input cost inflation, estimating a potential increase in costs of 50 to 150 basis points due to fabric price adjustments. They remain focused on optimizing inventory levels and enhancing internal efficiencies to support sustainable growth. Overall, management is confident in their capabilities to navigate market challenges and create long-term value for stakeholders.

Q&A from the Earnings Call Transcript (May 14, 2026)

1. Question by Rahul Agarwal:
"Firstly, on your outlook, Vedant, on how do you see the SSG continuing the momentum going into next year, fiscal '27 and the new store openings, if you could just comment on that?"

Answer:
I am optimistic about SSG, aiming to boost footfalls and conversion rates through tech initiatives and campaigns like "Made for Each Other." We'll focus on improving average selling prices (ASPs) as they haven't risen as expected. Our priority remains on enhancing same-store sales. While we'll stabilize new store openings, the focus is on quality rather than quantity to ensure better performance.

2. Question by Rahul Agarwal:
"Second question was on input inflation. Just wanted to know your thoughts in terms of how are we booked on fabric and other input materials for the festival season going forward?"

Answer:
Fabric costs comprise only about 8-10% of our products, so while we may see a 50 to 150 basis point increase in cost, it shouldn't heavily impact margins. The inflationary pressures from global events are palpable, but we believe we can manage these through our pricing strategies and operational efficiencies over time.

3. Question by Rahul Agarwal:
"Third was on the gap between the retail sales and net sales..."

Answer:
The increased gap is largely due to GST-related adjustments. Following the revised GST rates in September '25, the differences between primary and secondary sales have widened. We expect normalization in these figures as GST effects stabilize in the upcoming financial year.

4. Question by Rishi Mody:
"Should we expect the net addition growth to be similar as this year?"

Answer:
While we'll see net openings, our growth focus is primarily on improving SSG. We plan to open more stores in strategic areas. Quality will be prioritized to enhance revenue per square foot, ensuring that each new store contributes positively to the company's growth trajectory.

5. Question by Rishi Mody:
"Is the inventory quality or the inventory ASP in the new stores higher than the company average today?"

Answer:
Yes, on average, our new stores achieve better ASPs due to our larger inventory mix. This allows us to carry more premium lines such as Mohey, effectively elevating the sales performance compared to existing stores.

6. Question by Gaurav Jogani:
"So just wanted to know what led to this, how progressively the growth has come by?"

Answer:
The quarter's growth was predominantly driven by a significant improvement in March. While January was weaker, March saw footfalls increase, which bolstered performance. Positive consumer sentiments suggest a solid potential for upcoming months, despite possible effects from cyclical wedding dates.

7. Question by Sameer Gupta:
"Are you seeing any big delta in the SSS growth versus those that you intend to replace?"

Answer:
Yes, stores classified under our new quality metrics generally perform about 85% better in revenue per square foot compared to underperforming stores slated for closure. Currently, we estimate about 5-6% of our retail area falls into the latter category.

8. Question by Shravan Vohra:
"Could you just talk a little bit more about how was March and what actually changed?"

Answer:
March was exceptional owing to favorable wedding dates aligning, which led to overall improved sales across regions. Consumer demand surged, particularly in those regions with higher wedding activity, which greatly contributed to our performance for the month.

9. Question by Harsh Shah:
"What kind of marker for you as to when to start pursuing store expansion?"

Answer:
Sustained mid-single-digit SSG over several quarters would certainly be a significant indicator for us to start expanding into new markets. However, current market rents are a caveat; we're aiming for opportunities that ensure long-term sustainability for store placements.

10. Question by Rishi Mody:
"Any inorganic opportunities, Vedant, that you see in the market?"

Answer:
We keep tabs on potential acquisitions but currently have nothing in the pipeline. While we are well-positioned financially to explore acquisitions, the market doesn't present viable scaled opportunities right now. Most potential acquisitions aren't large enough for cost-effective integration into our business model.