Key Takeaways: •
Management targets PKR 5bn in FY25 sales; PKR 4.5–4.75bn would still be a satisfactory outcome.
• Management projects ~25% YoY growth for FY26, implying revenue of PKR 5.6–5.75bn.
• 3 new stores and 1 store expansion planned in CY25.
In 3QFY25, net sales remained flat at PKR 1,205mn compared to PKR 1,204mn in the same period last year. However, for 9MFY25, sales rose by 16% YoY to PKR 3,330mn. Retail sales during the nine-month period stood at PKR 2.5 billion, accounting for 76% of total revenue, while e-commerce contributed PKR 788 million or 24% of total sales. Gross margins improved significantly to 51% from 43% in the prior period in 9MFY25.
Management reiterated its gross margin target of 50%, and noted that it is generally comfortable operating within a 45–50% range. Profit before tax in 9MFY25 grew by 77% YoY to PKR 989mn. Despite higher taxation (up 190% YoY), net profit rose 58% YoY to PKR 766mn. Net margin improved from 17% to 23% in 9MFY25. However, in 3QFY25, net profit declined 12% YoY to PKR 209mn, and net margin narrowed to 17% from 20% in 3QFY24. Earnings per share (EPS) for 9MFY25 was PKR 3.33, slightly higher than PKR 3.21 in the prior year.
A dividend of PKR 1.00/share was announced, compared to nil in the same period last year. Management reaffirmed its sales target of PKR 5 billion for FY25 and indicated that the company is on track to meet this goal despite some disruption in early May due to regional uncertainty. However, even if sales close between PKR 4.5 to 4.75 billion, the outcome would still be deemed satisfactory. For FY26, the company is guiding for approximately 25% year-on-year growth, translating to projected revenue of PKR 5.6 to 5.75 billion. A sales pickup is expected in the June quarter due to Eid-ul-Adha, helping offset slower activity seen in May.
The company incurred PKR 193 million in Capex during 9MFY25 and plans an additional PKR 400 million by December 2025 — PKR 250 million for multi-head embroidery machine imports and PKR 150 million for store expansions. For embroidery machines, a commercial bank line of PKR 250 million has been arranged to retire LCs on machinery imports, while Image will cover duties, installation, and working capital through internal funds. The use of debt (instead of equity) was a deliberate shift given the decline in interest rates from 22% to 11%.
Embroidery capacity remains fully utilized, forcing some outsourcing during 9MFY25. The company will add 20 embroidery machines to ease this capacity constraint, although management believes even more may be needed if growth continues. All retail store performance is measured by the Rent-to-Sales ratio, which ranges from 3% to 10%. Image aims for each outlet to break even within 2 years; some stores have achieved this in as little as 9 months. The company targets opening at least three new stores per year, with current plans including Zamzama (expansion of existing store) , DHA Bukhari, F-6 Islamabad, and Giga Mall Rawalpindi.
Online business continues to show high customer loyalty, with about 90% of customers being repeat buyers. The company has maintained a strong Return on Ad Spend (ROAS) of over 20%, which is significantly higher than the industry average of 12–14%. However, the March 2025 quarter saw flat sales due to underperformance in e-commerce, while retail stores met internal growth targets.
Management emphasized the need to improve performance marketing to attract new customers. On working capital, management acknowledged that a large portion remains tied up in inventory rather than receivables, largely due to seasonal stocking and the long fashion production cycle. They expect this to ease by June 2025. The typical inventory cycle spans 3–4 months from raw material procurement to sale, longer than in most industries. Management is working to optimize inventory without overstocking.
The company announced a dividend of PKR 1/share in 3QFY25, resuming payouts after skipping FY24 when capital was raised via right issue. Management continues to pursue a balanced dividend policy, targeting a combined yield (dividend + capital gains) of 20–25% for shareholders. The effective tax rate remains low due to the tech subsidiary’s tax exemption and benefits from accelerated depreciation on Capex.
The company previously also availed exemptions under Section 65B. Going forward, Image is preparing to enter the perfume segment, which has been in R&D for 1.5–2 years. The launch has been delayed due to capital intensity — estimated at USD 1 million — and management’s preference to first scale the core apparel business. Given the brand’s positioning and repeat customer base, the company sees strong potential for success once launched. In parallel, Image REIT remains an associated entity with shared sponsors and directors. It is being structured to leverage Image Pakistan’s brand and operational strength, with the goal of maximizing returns for all investor classes.
Important Disclosures
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