Vedant Fashions Q4 FY26: Margin resilience, disciplined stores, and a renewed push for same-store growth

Vedant Fashions Limited, the wedding and celebration wear player behind Manyavar and Mohey, closed Q4 FY26 with a stronger quarter even as the full year reflected softer profitability. Revenue from operations in Q4 FY26 rose to INR 399.4 crore, up 8.7 percent year on year, and profit after tax increased to INR 114.3 crore, up 13.0 percent. The quarter also saw PAT margin expand to 28.6 percent.

For FY26, revenue from operations grew to INR 1,435.5 crore, up 3.5 percent. But PAT declined to INR 375.5 crore, down 3.3 percent, with PAT margin at 26.2 percent. Management linked a key part of the margin compression versus FY25 to the revised GST rates implemented in September 2025, which they said impacted revenue and gross margin reporting.

Beyond reported revenue, the company’s preferred operating lens is “sales of customers” (retail sales at RSP across channels). This metric crossed the INR 2,000 crore milestone in FY26, reaching INR 2,008.1 crore, up 6.1 percent. Same-store sales growth was 2.7 percent for the year and improved to 4.6 percent in Q4, suggesting momentum was stronger in the closing quarter.

Q4 performance: growth led by retail sales momentum

Management commentary on the earnings call pointed to March as a particularly strong month, aided by the timing of wedding dates. Q4 retail sales were INR 561.2 crore, up 7.8 percent year on year. The company noted that footfalls improved in low single digits during the quarter, a change it framed as meaningful after multiple quarters of pressure. Conversions remained stable, which management described as already high, and average basket size improved by about 1.5 percent.

On the profitability side, Q4 gross margin was reported at 65.0 percent, EBITDA margin at 45.6 percent, and PAT margin at 28.6 percent. The company also highlighted its brand-building activity as a driver of visibility, especially the Made for Each Other campaign featuring Rashmika Mandanna and Vijay Deverakonda, which it said surpassed 700 million views.

FY26: revenue growth with profit pressure, but cash conversion strengthens

FY26 delivered moderate growth in the company’s operating revenue and retail sales, but profitability eased. Gross margin for FY26 was 65.7 percent versus 67.2 percent in FY25. EBITDA margin declined to 44.3 percent from 46.6 percent, and PAT margin declined to 26.2 percent from 28.0 percent.

Management attributed much of the gross margin contraction to the GST changes rolled out in September 2025. On costs, management acknowledged the possibility of input inflation due to geopolitical factors, but also stated that fabric is a relatively small component of overall product cost versus MRP and that any cost inflation should be manageable.

The cash flow statement was a brighter spot. Net cash generated from operating activities rose to INR 481.4 crore in FY26 from INR 388.6 crore in FY25. The company also highlighted a cash conversion ratio of 98 percent in FY26, calculated as operating cash flow divided by PAT excluding finance income. This was positioned as a key improvement versus FY25.

Stores and distribution: a quality-first stance in a high-rent market

A central theme across the investor presentation and concall was disciplined network expansion. As of FY26, Vedant Fashions reported an EBO network of about 1.79 million square feet across 669 stores in 252 cities and towns globally, including 17 international EBOs across the United States, the United Arab Emirates, Canada, the United Kingdom, and Australia.

But net addition in FY26 was limited to about 4,200 square feet, reflecting a year of selective openings and rationalisation of underperforming locations. Management said the biggest constraint is not franchisee appetite but the real estate market, with rental levels described as elevated even in cities where the company sees white space.

Importantly, management offered a productivity lens to support its approach. It said the average revenue per square foot of the stores opened in FY26 was about 85 percent higher than the average revenue per square foot of the stores closed in FY26, signalling that the company is trying to lift the overall quality of the store base even if headline expansion stays measured.

FY27 priorities: SSSG, higher ASP through merchandising, and AI-led execution

Management did not provide numeric guidance for FY27 SSSG or store additions. But it was clear about priorities.

First, the company intends to push same-store growth through a mix of marketing, conversion-focused technology initiatives, and training aimed at improving basket size. Second, it plans to improve ASP, which management said had not moved as quickly over the last 2 to 3 years. The approach described is not a price hike on existing products, but an upgradation of collections so that new merchandise is introduced at higher price points.

Third, management highlighted customer retention as a meaningful opportunity. It stated the company has data for about 90 lakh customers and had historically not focused on reactivating existing consumers. FY27 is expected to see targeted workstreams in this area.

Fourth, the company described investments in AI as an enabling layer across functions, including marketing optimisation at scale. An example shared was an AI system that analyses about 20,000 Google search keywords and makes changes autonomously, beyond what human teams would typically review.

Finally, in terms of brand and format expansion, Twamev and Mohey were discussed as emerging brand levers, with the caveat that premium store rollouts can have long lead times due to build-to-suit properties. For Diwas, management said there are no current plans for a physical store rollout in FY27, though it may pilot concepts internally. It also mentioned exploring smaller-format Manyavar stores focused primarily on kurtas and jackets as a pilot concept.

Takeaways

Vedant Fashions ended FY26 with moderate growth and margin pressure at the full-year level, but Q4 showed better momentum in both reported revenue and retail sales. The company’s strategy for the near term is clear: prioritise same-store growth, improve product ASP through upgraded merchandising, strengthen customer retention, and continue pruning and upgrading the store network rather than expanding aggressively in a high-rent environment.

The combination of strong brand equity, high gross margins, and improved cash conversion provides operating resilience. The key monitorable for FY27 will be whether the company can translate its internal initiatives into sustained mid-single-digit or better SSSG while keeping margins stable under the new tax and cost backdrop.