Credo Brands Marketing (MUFTI) reported Q3 FY26 financial results showing revenue decline amid ongoing brand transformation initiatives. The company held its earnings conference call on February 10, 2026, discussing performance for the quarter and nine months ended December 31, 2025.

Financial Performance Overview

The company's financial metrics for Q3 FY26 reflected challenging market conditions in the apparel industry:

For the nine months period, the company reported revenue of ₹430 crores compared to ₹465 crores in the corresponding period of FY25. Nine-month EBITDA stood at ₹113 crores with margin of 26.2%, while PAT reached ₹32 crores representing 7.5% margin.

MUFTI 2.0 Transformation Strategy

The company continues implementing its MUFTI 2.0 transformation focused on premiumization across three key areas: store experience, merchandise quality, and brand storytelling. During Q3 FY26, 12 stores under the new retail identity were opened, bringing the total to 20 premium format stores by quarter-end.

Management indicated plans to close 21 stores and add 6 new locations in Q4 FY26, resulting in net reduction of 10 stores for the full year to approximately 431 total stores.

Marketing Investment Strategy

The company significantly increased its marketing focus, with advertising and branding spend reaching approximately 5% of revenue for nine months FY26. Management announced plans to further increase this to 8-10% of revenue for the next year, even if it impacts short-term profitability.

Chairman and Managing Director Kamal Khushlani explained the rationale: "As the market keeps changing and market keeps evolving, there is new brands, new things that come into the market. So to stay relevant, you have to change your course."

Operational Improvements

Despite revenue challenges, the company achieved notable working capital improvements:

The improvement reflected stronger collections and tighter credit discipline across channels, though the cycle remains structurally higher due to the company's deliberate risk absorption model.

Market Challenges and GST Impact

Q3 FY26 proved challenging for the apparel industry, marked by cautious consumer sentiment and lower footfalls. The festive season performance did not meet expectations, impacting overall sales momentum.

Gross margins were temporarily affected by recent GST reforms as the company consciously passed tax benefits to customers on products priced below ₹2,500 while avoiding price increases on products above ₹2,500. This measured approach aimed to protect volumes during the softer demand phase.

Digital Performance and Future Outlook

The company reported strong digital growth with website business increasing 87% over the previous year period. Management expects to see growth benefits from spring/summer 2026 onwards as transformation initiatives gain traction.

CFO Rasik Mittal noted that EBITDA margin should reach approximately 25% by Q4 end, while gross margins are expected to be sustained going forward. For FY26, the company anticipates revenue to be 5-6% lower than the previous year.

Credo Brands Marketing Limited has announced its unaudited standalone financial results for the quarter and nine months ended December 31, 2025. The company's Board of Directors approved the financial results at a meeting held on February 09, 2026, following recommendations from the Audit Committee.

Financial Performance Overview

The company reported challenging performance for Q3FY26 compared to the previous year. Total revenue declined to ₹146.1 crore from ₹155.5 crore in the corresponding quarter of the previous year, representing a decrease of 6.03%.

Nine Months Performance

For the nine months ended December 31, 2025, the company's performance showed a declining trend across key metrics compared to the same period in the previous year.

Operational Highlights

The company maintained its retail expansion with 446 stores as of December 31, 2025. The sales mix for 9M FY26 showed EBO contributing 57%, MBO 24%, LFS 5%, Online 11%, and Others 3%. Product mix remained diversified with Bottomwear leading at 40%, followed by Shirts at 35%, T-shirts at 14%, Outerwear at 8%, and Others at 3%.

Strategic Transformation and Premiumization

The company is executing its MUFTI 2.0 transformation strategy focused on premiumization of store experience and elevated merchandise. Twelve stores under the new retail identity have been opened, with plans for strategic expansion of 20 premium stores in FY26. The company is increasing focus on digital channels, leveraging platforms like Google and Meta to amplify digital brand presence and support omnichannel retail strategy.

Management Commentary

Chairman & MD Kamal Khushlani commented that Q3 FY26 was a muted quarter for the apparel industry with softer consumer sentiment and a festive season that fell short of expectations. Gross profit margins were impacted following recent GST reforms, as the company passed on tax benefits to customers for products priced below ₹2,500. The company invested approximately 5% of revenues in advertising and branding for 9M FY26 and plans to increase this to 8-10% of revenues to strengthen long-term brand equity.

Regulatory Compliance

The announcement was made in compliance with Regulations 30 and 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Company Secretary and Compliance Officer Sanjay Kumar Mutha signed the official communication to stock exchanges. The media release was made available on the company's website at www.credobrands.in .