Synopsis:
Arvind Fashions posted a sharp turnaround in Q1FY26 with net profit of Rs 25 crore, driven by strong growth in direct-to-consumer channels and margin expansion. Despite a sequential dip in revenue, retail and online B2C sales surged. The stock jumped nearly 10 percent following the upbeat earnings and operational strength.
A leading fashion and retail stock jumped sharply in Tuesday’s trade after posting a turnaround in net profit and solid margin improvement. Despite a sequential drop in revenue and operating profit, investors reacted positively to the company’s growth in direct-to-consumer channels and expanding store footprint.
The stock in focus is Arvind Fashions Ltd, which has a market capitalization of Rs 7,183 crore. The stock opened at Rs 518 and surged to an intraday high of Rs 549.25, compared to its previous close of Rs 500.35, marking an increase of 9.77 percent.
What’s the News?
Quarter-on-Quarter (Q1FY26 vs Q4FY25): Arvind Fashions reported a decline in revenue from Rs 1,189 crore in Q4FY25 to Rs 1,107 crore in Q1FY26, a fall of 6.9 percent. Operating profit dropped from Rs 159 crore to Rs 133 crore, down 16.4 percent.
Profit before tax decreased 40.9 percent to Rs 39 crore from Rs 66 crore. However, the company swung to a net profit of Rs 25 crore in Q1FY26 from a net loss of Rs 72 crore in the previous quarter.
Year-on-Year (Q1FY26 vs Q1FY25): Revenue rose by 15.9 percent from Rs 955 crore in Q1FY25 to Rs 1,107 crore in Q1FY26. Operating profit grew 14.7 percent from Rs 116 crore to Rs 133 crore.
Profit before tax increased by 62.5 percent from Rs 24 crore to Rs 39 crore. Net profit climbed 78.6 percent to Rs 25 crore, compared to Rs 14 crore in the same period last year.
Comments from Management
Commenting on the performance of the company, Mr. Shailesh Chaturvedi, MD & CEO said “Q1 FY26 witnessed a bright start to this year with revenue growth reaching 16%. This is a testimony of our conscious efforts of investing in higher marketing to re-energize our industry leading brands leading to strong awareness and higher footfalls along with market share gains. Moving ahead, we will continue to focus on our direct channel strategy resulting in higher bottom-line & ROCE.”
Operational Highlights
The company saw a strong push in its direct-channels, with like-to-like retail sales growth of 8.1 percent and over 30 percent growth in the online B2C channel. Overall retail channel sales grew nearly 15 percent year-on-year.
The wholesale channel also witnessed a 10 percent growth year-on-year. Gross margins expanded by 60 basis points to 55.9 percent, aided by lower discounting. EBITDA for the quarter stood at Rs 148 crore, up 20 percent year-on-year, with EBITDA margin expansion of 50 basis points to 13.4%, despite higher marketing spends.
During the quarter, Arvind Fashions added a net 38,000 square feet of retail space across 29 exclusive brand outlets, taking the total to 987 stores. Inventory turns remained stable at 4 times while net working capital days stayed at 59 days. Adjacent categories witnessed over 20 percent growth.
Retail remained the dominant channel, accounting for 44 percent of sales, followed by wholesale (23 percent), online B2C (15 percent), and online B2B and others (18 percent). The company maintained stable inventory efficiency and margin improvement while aggressively expanding its direct sales footprint. Arvind Fashions continues to focus on store expansion through the FOFO model and aims to increase the share of direct channels by 100 to 200 basis points in FY26.
About the Company
Arvind Fashions Ltd is India’s number one casual and denim player with a diversified portfolio of international and homegrown brands. Its leading brands include U.S. Polo Assn., Arrow, Tommy Hilfiger, Calvin Klein, and Flying Machine. The company has a presence across premium, bridge-to-luxury, and mass-market categories, catering to a wide range of consumers.
Written By Manan Gangwar
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