Aditya Birla Fashion and Retail Limited (ABFRL) Q3 FY26 Earnings Call Summary

Summary

Aditya Birla Fashion and Retail Limited (ABFRL) - Q3 FY 2026 Earnings Call Summary Friday, February 6, 2026, 5:00 PM IST

Event Participants

Executives 3 Ashish Dikshit (Managing Director), Jagdish Bajaj (CFO), Sangeeta Tanwani (Director and CEO, Pantaloons)

Analysts 6 Ankit Kedia, Archana Menon, Devanshu Bansal, Gaurav Jogani, Garima Mishra, Rajiv B

Financials & KPIs

Geographic & Segment Commentary

• Pantaloons: The segment faced a strategic 12-day deferment of the End of Season Sale (EOSS) into Q4, which temporarily suppressed Q3 revenue but aimed to protect margins during the full-price December period. A premiumization strategy is underway, with new retail identities showing higher productivity and a shift toward younger customer profiles. Western wear and non-apparel categories outperformed expectations, while the value-sub-brand OWND! grew 54% YoY.
• Ethnic Portfolio: This ₹2,200 crore annual scale business saw 30% growth in designer brands (Sabyasachi, Tarun Tahiliani) and 26% growth in Tasva. TCNS Clothing is undergoing a turnaround with 50 store closures in the last year, leading to a 500 bps margin improvement and an 8% LTL growth. The segment is pivoting toward more “celebration wear” to drive store productivity.
• Luxury & TMRW: Luxury retail grew 16% YoY, bolstered by the November 2025 launch of Galeries Lafayette in Mumbai (90,000 sq. ft.). TMRW, the digital-first portfolio, remains 95% online-centric with brands like Bewakoof growing at 40-50% YoY. Management expects to increase the offline share for TMRW brands to improve brand visibility and gross margins.

Company-Specific & Strategic Commentary

• Premiumization Pivot: Pantaloons is shifting away from purely value-led fashion toward a “fashion-forward” mid-market premium position, evidenced by a 2-3% increase in Average Selling Price (ASP).
• TCNS Turnaround: Aggressive rationalization has reduced the network from 650 to 480 stores; expansion will resume in Q4 with a target of 50-60 new stores next year as the business approaches pre-Ind AS breakeven.
• Offline Expansion: Added 5.5 lakh square feet over 12 months, with a focus on larger-format Pantaloons stores (18,000-30,000 sq. ft.) in Tier 1 and Metro markets to accommodate a higher premium mix.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Pantaloons Performance & EOSS Shift

• Question: Why was EOSS deferred and is there a risk of market share loss? (Sameer Gupta)
• Answer: We chose to maximize full-price sales during the peak Christmas/holiday shopping period. We are confident volume will be recovered in Q4 (Ashish Dikshit).
• Answer: Early January traction and improved sell-through rates on new merchandise validate the timing shift (Sangeeta Tanwani).

Ethnic Business Profitability

• Question: What is the trajectory for breakeven in the ethnic segments? (Gaurav Jogani)
• Answer: Designer brands are already highly profitable. TCNS has halved its losses YoY and is near breakeven. Tasva is seeing 20% LTL growth but remains in an investment phase; full profitability is expected as it scales beyond 85 stores (Ashish Dikshit).

TMRW Strategy

• Question: Is TMRW growth organic and what is the channel mix? (Garima Mishra)
• Answer: Growth is 100% organic. Currently, 95% is online, but we are aggressively moving successful brands like Bewakoof and Nobero into offline stores to improve gross margins (Ashish Dikshit).

Galeries Lafayette Investment

• Question: What is the capital outlay and expected return for the new luxury store? (Rajiv B)
• Answer: Fixed asset investment was ₹125-130 crores with ₹60-70 crores in inventory. We target 20% store-level profitability in steady state (Ashish Dikshit).

Key Takeaway

ABFRL delivered a mixed Q3 FY26, with revenue growing 8% to ₹2,374 crores and EBITDA margins expanding to 15.6%. Performance was weighed down by the strategic deferment of the Pantaloons EOSS to Q4 and a festive shift to Q2, though adjusted Pantaloons LTL growth remained positive at 3%. The ethnic segment continues to be the primary margin driver, with 20% revenue growth and 350 bps margin expansion, while the TCNS turnaround has progressed significantly with losses halving YoY. TMRW continues to scale organically at 29% YoY, reaching a ₹1,100 crore run rate. Management remains focused on transitioning the portfolio toward premiumization, with a clear path to consolidated pre-Ind AS profitability (ex-TMRW) by FY27. ABFRL enters the next fiscal year with a strong cash position of ₹2,100 crores to fund the resumed expansion of TCNS and Pantaloons.