Thomas Scott India's Q2 & H1 FY26: A Data-Driven Leap in Fashion Retail

Thomas Scott India Limited, a company that has deftly transitioned from a traditional apparel manufacturer to a vertically integrated, tech-enabled online fashion retailer, has reported a stellar performance for the second quarter and first half of the financial year 2026. The company's strategic pivot, driven by a digital-first and data-driven approach, has clearly paid dividends, reflecting robust growth across key financial metrics. For Q2 FY26, Thomas Scott recorded its best quarterly sales, with revenue from operations soaring to 57 crore, marking a significant 40% year-on-year increase. This impressive top-line growth was accompanied by a remarkable 93% surge in EBITDA, reaching 8.5 crore, with EBITDA margins expanding to 14.94%. Profit after tax (PAT) also saw a substantial rise of 68% year-on-year, closing the quarter at 5 crore, with PAT margins at 8.26%. The first half of FY26 continued this strong momentum, with revenue from operations increasing by 63% to 111 crore, EBITDA by 101% to 15 crore, and PAT by 95% to 8 crore. This strong financial performance underscores the company's disciplined execution, improved price realization, and the operating leverage gained from its scalable digital model.

The company's performance was particularly noteworthy given a temporary slowdown in customer uptake observed during the quarter, which management attributed to deferred purchases following a GST rate-cut announcement. However, a strong recovery in demand towards the end of the quarter, fueled by festive buying and improved consumer sentiment, helped mitigate these effects. Thomas Scott's ability to adapt swiftly to market dynamics, coupled with its robust operational framework, allowed it to exit the quarter with positive demand indicators, setting a strong foundation for the second half of FY26.

The Data-Driven Edge: AI and Agile Manufacturing

At the heart of Thomas Scott's transformation is its unique, data-driven business process. The company continuously collects vast amounts of data from major e-commerce marketplaces, including high-volume keywords, high-traffic browsing pages, and competitive information. This data is then fed into proprietary algorithms to identify high-demand trends and pinpoint online micro-markets with supply-demand gaps. This intelligence guides product development, allowing the company to launch multiple products across various brands with minimal initial inventory, typically around 100-120 units per design. Customer demand and satisfaction are closely monitored, and inventory bets are scaled up for best-performing products.

This tech-enabled approach is further bolstered by the company's in-house manufacturing facilities and a robust pan-India fulfillment network. This vertical integration ensures a 'direct-to-customer' experience, lowering costs, improving competitiveness, and significantly reducing markdown losses. The pan-India fulfillment centers enable quick deliveries, often within two days, and even same-day or next-day in major urban areas, enhancing customer experience and reducing cancellation rates.

Thomas Scott is also at the forefront of integrating cutting-edge Generative AI (GenAI) capabilities into its operations. Two key applications, thread.ai and catalog.ai, are currently in pilot stage. thread.ai acts as an intelligent co-pilot for fashion and lifestyle, providing data-driven insights for design, pricing, and merchandising strategies by identifying trending and high-demand styles. catalog.ai revolutionizes e-commerce visuals and listings by automating product shoots with AI models and backgrounds, streamlining editing, and intelligently managing catalog tasks. The company has already seen tangible benefits, with catalog.ai improving conversion rates in the kids wear segment by at least 80 basis points, from 1.1-1.2% to 1.9-2%.

Diverse Brand Portfolio and Strategic Expansion

Thomas Scott operates a diverse portfolio of brands, catering to the aspirational, brand-conscious middle-class consumer. Its main brand, 'Thomas Scott,' is a premium menswear fashion brand focusing on sustainable, ethically produced, high-quality apparel. This brand has achieved significant traction, reaching INR 50 crore ARR individually through online channels by June 2024. The company also supports a range of licensed and international brands, including Nautica, Aeropostale, FCUK, Invictus, Here&Now, Mast&Harbour, and Moda Rapido, through exclusive partnerships with marketplaces like Myntra, Ajio, and Namshi in the GCC region. This multi-brand strategy allows Thomas Scott to cater to various fashion sensibilities and price points, while leveraging the reach of established e-commerce platforms.

In terms of category expansion, the company has made early successes in kids wear and handbags. The handbags category, in particular, has shown promising results with lower customer return percentages, making it a lucrative area for growth. The company is also exploring quick commerce channels, having initiated pilots with Big Basket and Myntra's Mnow, focusing on profitable partnerships to enhance delivery speed and customer convenience.

Outlook and Strategic Priorities

Looking ahead, Thomas Scott India is focused on several strategic priorities to sustain its growth trajectory. The company aims to continue its high double-digit growth in sales for the coming financial year, while maintaining double-digit EBITDA margins. E-commerce will remain the primary sales channel, supported by the 'high-width low-depth' strategy for trend-focused designs. International expansion, particularly building on the success in the GCC region, is a key focus. The company also plans to further premiumize its product portfolio through continued associations with international brands.

Continuous capital expenditure is planned to increase manufacturing capacity by approximately 20% over the next six months, especially at the Solapur plant, to meet the growing demand. The company's asset-light, technology-driven business model, coupled with its disciplined capital allocation and proactive adoption of AI, positions it well for sustained profitable growth in the dynamic Indian fashion retail market. Thomas Scott India is not just selling clothes; it's selling a vision of smart, efficient, and trend-aware fashion, powered by data and technology.