Summary
Purple United Sales Limited - Q3 FY26 Earnings Call Summary Wednesday, 21st January, 2026, 11:00 AM
Event Participants
Executives 2 JD Seth (Managing Director), Naresh Kumar (Chief Financial Officer)
Analysts 1 Siddhi (Finportal - Moderator; facilitating investor questions)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations (H1 FY26) | ₹60 crores | +99% YoY; growth driven by expansion of retail stores and seasonal ASP increases. |
| EBITDA (H1 FY26) | Not Specified | +81% YoY; margin expansion partially offset by hiring and marketing investments. |
| PAT (H1 FY26) | Not Specified | +53% YoY; follows strong top-line growth and operational scaling. |
| Exclusive Brand Outlets (EBOs) | 91 Count | Reaching 100+ by Jan 2026; 25% in malls and 75% on high streets. |
| Average Transaction Value (ATV) | ₹800–₹1,400 | Seasonal variation: ₹800-900 in Summer, ₹1,200-1,400 in Winter due to higher ASPs. |
| Promoter Holding | 64% | 36% held by public post-listing. |
| Customer Return Rate | 27% | Reflective of industry standards in the premium kids’ fashion segment. |
Geographic & Segment Commentary
- Apparel (62% of Top-line): Focuses on western and casual wear for ages 0-14. Management is avoiding the ethnic wear category to maintain a premium contemporary fashion identity.
- Footwear (37% of Top-line): Operates under sub-brands “Toothless” (core), “Striders” (open footwear), and “Boltzy” (sports). Management identified footwear as an underserved organized segment with higher yield per square foot.
- Retail (EBOs): Currently contributes ~50% of revenue (up from 21% last year). Strategy favors high-street standalone stores (75%) over malls to secure better facades and customer connection in new-age urban colonies.
Company-Specific & Strategic Commentary
- Omni-channel Migration: Transitioned website from .in to .com and moved platform from Magento to Shopify. Targeting 400 orders/day via D2C within 3 months, up from the current 70-80 orders/day.
- “Control Business” Focus: Priority is placed on B2C (EBOs) and D2C (Website) channels to own the customer relationship. E-commerce is targeted to reach 10-12% of the mix by FY27.
- Sourcing Model: Employs an asset-light sourcing model with in-house design teams (NIFT/FDDI) and third-party manufacturing in Delhi NCR, Ludhiana, and Agra.
- Inventory & Receivables: Higher receivables in H1 are attributed to seasonal “peak billing” to distributors for season launches. Management expects these to normalize as the retail (cash-and-carry) mix increases.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Store Count | 120-130 Stores (FY26) | 30 stores currently in “project stage” to follow the 100-store milestone. |
| Revenue Mix (H2) | 65% of Annual Sales | Second half historically stronger due to Winter ASPs and festive demand. |
| E-commerce Contribution | 10-12% (FY27) | Driven by scaling D2C orders and marketing spend on the revamped .com platform. |
| Margins | +/- 25-50 bps | Gross margin gains from scale likely offset by senior hires and increased marketing (3-4% of sales). |
Risks & Constraints
| Risk | Context |
|---|---|
| Competitive Intensity | Rapid entry of D2C startups in the kids’ space increasing customer acquisition costs. Management mitigates this through a multi-category (apparel + footwear) and multi-channel (offline + online) approach. |
| Working Capital Pressure | Seasonal inventory builds and distributor payment cycles (90-100 days) strain liquidity. Company is balancing this with debt, a reduced equity round, and franchise deposits. |
| Execution Risk | Scaling to 100+ stores requires complex logistics and senior management oversight. 55 stores are currently EBITDA positive; the remainder are in the 2.5-year payback cycle. |
Q&A Highlights
Channel Mix & Profitability
- Question: What is the difference between apparel and footwear margins? (Siddhi)
- Answer: Margins are aligned between 55-63%. Core essentials are at 55-56%, while seasonal fashion items reach 60-63%. (JD Seth)
D2C Growth
- Question: What is the mix of online sales and are there margin differences? (Siddhi)
- Answer: Currently 75-80 orders/day on D2C vs 300 on marketplaces. D2C has higher gross margins but requires higher marketing spend; target is 800-1,000 total daily online orders. (JD Seth)
Receivables Management
- Question: Will receivables come down as retail share increases? (Siddhi)
- Answer: Yes, they have already started to decline. March and September involve heavy distributor billing for season launches, which artificially inflates the debtor position at reporting dates. (JD Seth)
Store Breakeven
- Question: How many stores have reached breakeven? (Siddhi)
- Answer: 55 stores are currently EBITDA positive. Another 10-15 stores are expected to reach breakeven by next month. (Naresh Kumar)
Key Takeaway
Purple United Sales Limited demonstrated significant scaling in H1 FY26, with revenue growing 99% YoY to ₹60 crores, primarily driven by its rapid retail expansion to 91 EBOs. The company is successfully transitioning its revenue mix, with retail now contributing 50% of the top line compared to 21% in the previous year. Strategically, management is focusing on “control businesses”—specifically its own EBOs and a revamped Shopify-based D2C platform—while maintaining an asset-light sourcing model. Despite competitive pressures from new D2C startups, the company’s dual-category focus (Apparel and Footwear) provides a wider moat than single-category competitors. Looking ahead, the company expects a seasonally stronger H2 (contributing 65% of annual sales) and aims for a 100+ store count by the end of January 2026. Management remains focused on stabilizing margins as they balance scaling costs with the benefits of a higher-margin retail and D2C mix.
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