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The women’s bottom-wear category is extremely attractive for branded players considering the core essential nature of the product and increasing consumer preference for quality and wider product offerings – this has led to high pace of formalisation (branded market growing at 2x industry) and higher growth in the category vs. the overall women’s apparel market. The benefit of category resilience is also visible in Go Fashion’s sales outperformance (24% sales CAGR with low-double-digit SSSG over FY19-23) compared to peers (Page, Pantaloons, Vmart, TCNS) in the apparel retail segment. Also, within essential apparel categories, bottomwear has relatively higher scope of horizontal expansion, with consumers experimenting with evolving styles. Go Colors is the ‘top brand in recall’ in bottom-wear, and continues to leverage brand strength and innovation capabilities to create newer growth vectors and expand portfolio within bottom-wear itself rather than going into the adjacent apparel category, which may require newer brand entity and entail higher investments. The benefit of being the first mover is also clearly visible in Go Fashion’s faster growth/larger scale/better profitability vs. some of the peers in bottom-wear, and we expect this superior execution to continue. This, along with the company’s target to reduce working capital and the promoter’s assurance on pledge-closure by end of FY24, allays key investor concerns. BUY.

* Category construct remains favourable: Within apparels, innerwear and bottom-wear categories are essential in nature and the unorganised segment has a high share in them (c.60-75%+). Both Page (Jockey) and Go Fashion (Go Colors) built capabilities and were able to successfully capitalise on the opportunity in their respective categories. However, between the two categories, bottom-wear provides higher scope for horizontal expansion (Exhibit 1) as the fashion element is relatively higher vs. innerwear, with the category witnessing experimentation with styles/colours. Go Colors has strong equity in the women’s bottom-wear category; leveraging its strong design capabilities, it has offerings across sub-segments of bottom-wear under one brand. On the other hand, the fashion element in men’s innerwear is low; hence, scope for innovation-led horizontal expansion within the category is relatively lower. Further, Jockey’s brand image resonates more with men’s innerwear; hence, successfully extending into a newer category using the same brand is more challenging, in our view (visible from the challenges in the women’s innerwear segment, and adjacent apparel segments).

* Go Fashion far ahead of pack in bottom-wear:  As a first mover, Go Fashion is far ahead of peers in terms of portfolio offering (50+ styles in 120+ colours, 3,000+ SKUs) and pricing power (>95% of sales are full price, zero discount on online channel vs. 10-50% discount offered by other players). Also, it was ahead of competition in identifying EBOs as the right channel to expand in bottom-wear compared to MBOs and the same tactic is now being adopted by its peers. This strategy has not only helped Go Fashion to enhance Go Colors’ brand equity but has also resulted in the brand growing at a much faster pace (especially vs. distribution-led brands like Lyra/Dollar Missy - Exhibit 3) and reaching larger scale (Exhibit 2: 603 EBOs compared to 30-60 EBOs for other key branded players) with better profitability (Exhibit 7) compared to some of the peers in the category. 

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