- Revenue fell 9% YoY, driven by a 36% plunge in Large‑Format Store (LFS) sales.
- Same‑store sales (SSSG) dropped 4.5%, signaling lingering foot‑traffic weakness.
- Pre‑Ind AS EBITDA and PAT slumped 57% and 71% respectively, exposing operating leverage gaps.
- Valuation sits near 30× TTM earnings – a price that hinges on a sustainable SSSG recovery.
- Motilal Oswal retains a BUY rating with a target of INR 465, based on 23× forward earnings.
You missed the warning sign in Go Fashion’s latest earnings—here’s why it matters.
Go Fashion India posted a disappointing third quarter of FY26, with topline revenue slipping 9% year‑over‑year. The primary culprit? A severe operational disruption at a key Large‑Format Store (LFS) partner that erased 36% of LFS‑derived revenue. Meanwhile, the company’s Enterprise Business Operations (EBO) managed only a modest 2% decline, underscoring that footfall pressure is not confined to a single channel. The bottom line took an even harsher hit: pre‑Ind AS EBITDA fell 57% and profit after tax (PAT) tumbled 71% YoY, a clear symptom of limited cost absorption and operating deleverage.
Why Go Fashion’s Revenue Decline Beats the Sector Pulse
The Indian apparel retail sector has been wrestling with a post‑pandemic foot‑traffic correction. While many peers have begun to see a modest rebound, Go Fashion’s 9% revenue contraction outpaces the sector average of roughly 4% for the same period. This divergence suggests a company‑specific issue rather than a pure macro‑driven slowdown. The LFS disruption magnifies the risk because large‑format stores traditionally command higher basket sizes and better margin contributions. When that channel falters, the revenue hit is disproportionately large.
Operational Disruption at the LFS Partner: What It Means for Profitability
LFS revenue slumped 36% YoY, dragging overall profitability down. Operating leverage—a measure of how fixed costs amplify earnings volatility—has turned hostile for Go Fashion. In a high‑leverage model, a 1% revenue decline can erode EBITDA by more than 1% if cost structures remain static. The company’s inability to spread fixed overhead across a shrinking sales base resulted in a 57% EBITDA drop. Investors should watch the upcoming quarter for signs of cost rationalisation, such as rent renegotiations or supply‑chain efficiencies, which could restore a healthier cost‑to‑revenue ratio.
Same‑Store Sales Slippage: Historical Context and Peer Comparison
Same‑store sales (SSSG) fell 4.5%, a metric that strips away new store openings to reveal organic growth health. Historically, a double‑digit SSSG decline in the Indian apparel space has preceded a multi‑quarter earnings trough. Competitors like Reliance Fashion and Aditya Birla Fashion have weathered similar dips, but they rebounded within two quarters by leveraging omnichannel integration and aggressive promotions.
For instance, Reliance Fashion’s SSSG fell 7% in Q3 FY25, yet a strategic “store‑to‑online” sync drove a 12% rebound in Q1 FY26. Go Fashion’s modest 2% EBO decline suggests a latent online capability, but the company has yet to unleash a cohesive digital‑offline playbook. Investors should assess whether Go Fashion can emulate the rapid SSSG recovery seen in its larger rivals.
Valuation Snapshot: Is 30× TTM Earnings Justified?
Motilal Oswal pegs Go Fashion’s current valuation at roughly 30× trailing twelve‑month (TTM) earnings. In a sector where the median EV/EBITDA hovers around 22×, Go Fashion appears premium. The analyst’s forward‑looking price target of INR 465 is derived from a 23× forward‑earnings multiple, implying that the market is pricing in a swift SSSG turnaround.
If the same‑store sales recovery stalls beyond the next two quarters, the valuation cushion evaporates quickly, pushing the multiple into unsustainable territory. Conversely, a clear path to 5‑7% SSSG growth could vindicate the premium, aligning Go Fashion with higher‑margin peers and unlocking upside.
Investor Playbook: Bull vs. Bear Cases for Go Fashion
Bull Case: A rapid resolution of the LFS partner issue, coupled with an accelerated omnichannel push, restores footfall and drives SSSG growth of 6‑8% YoY. Cost‑absorption improves, EBITDA margins rebound to pre‑disruption levels, and the forward‑earnings multiple compresses to 20×, delivering a multi‑digit upside to the INR 465 target.
Bear Case: LFS disruptions linger, and footfall pressure deepens, leading to a prolonged SSSG decline of >5% YoY. Operating leverage remains negative, forcing the company into margin compression below 5% EBITDA. The premium valuation erodes, and the stock slides below the 30‑day moving average, forcing investors to reconsider the BUY rating.
Bottom line: The next 12‑month earnings trajectory hinges on Go Fashion’s ability to repair the LFS channel, rejuvenate same‑store sales, and tighten its cost structure. Keep a close eye on quarterly footfall reports and cost‑to‑revenue ratios—those will be the decisive levers for your position.