Image Pakistan Ltd (PSX: IMAGE) is selling more clothes, but not fast enough to outrun the scars of Pakistan’s inflation shock.
The listed clothing and fabric manufacturer reported another year of double-digit revenue growth in FY25. Yet in an economy where consumer prices surged at rates north of 20% in 2022 and 2023 and remained elevated in 2024, its top line is rising more slowly than the general price level, suggesting that real volumes and basket sizes are still under pressure.
Management is responding with a familiar retail playbook: opening more stores, leaning on e-commerce and pushing into lifestyle and perfumes. Whether that will be enough to offset a cautious middle-class shopper base remains the key question for investors.
For the year ended June 2025, Image’s consolidated net sales rose 16% to Rs4.6 billion from Rs4.0 billion a year earlier. At first glance that looks healthy, but set against the inflationary backdrop it is more modest. The company’s nominal revenue growth lagged nationwide price increases.
The story further into the income statement is more upbeat. Cost of sales grew just 2%, lifting gross profit by 37% to Rs2.1 billion and pushing the gross margin up from 39% to 46%. Operating profit almost doubled, climbing 93% to Rs1.2 billion, helped by relatively flat selling and distribution expenses and only a modest rise in administrative costs. Profit after tax surged 90% to Rs759 million, and basic earnings per share rose to Rs3.3 from Rs2.5.
Net margin expanded from 10% to 17%, a sizeable jump for a mid-tier fashion retailer. The board declared a cash dividend of Rs2.0 per share, having paid nothing in the previous year. As of this past Friday, the stock was trading around Rs23.9, implying a market capitalisation of roughly Rs5.5 billion, with a 52-week range between Rs14.9 and Rs36.8.
The most recent quarter paints a more nuanced picture. In 1QFY26, net sales grew a mere 7% year-on-year to Rs1.0 billion, while cost of sales jumped 17%. That shaved the gross margin down from an unusually high 54% in the same period last year to 50%, and gross profit dipped 3% to Rs505 million. Operating profit was flat at Rs302 million, and higher finance costs – almost triple from Rs18 million to Rs50 million – pushed profit after tax down 12% to Rs242 million. Quarterly EPS slipped from Rs1.2 to Rs1.1.
The spike in finance charges is unsurprising. Businesses are still digesting the lagged effect of the State Bank’s policy rate, which was held at a record 22% for much of 2023 and only gradually cut to 12% by early 2025. Retailers like Image, which have invested in store networks and machinery, are carrying that interest burden into their P&Ls even as inflation cools.
Despite these headwinds, management has set an ambitious revenue target of Rs5.0–5.5 billion for FY26, implying top-line growth of about 20%. They expect gross margins to stay broadly in line with FY25, signalling confidence that the product mix – tilted towards higher-margin embroidered fabrics and ready-to-wear – can absorb cost pressures.
Image Pakistan’s corporate and brand histories are intertwined but distinct.
The listed entity began life as Tri-Star Polyester Ltd, incorporated as a public company in 1990 and focused on manufacturing polyester filament yarn and fabric out of Karachi’s industrial estates. In 2021, as its fabric business increasingly revolved around the “Image” label, the company formally rebranded to Image Pakistan Ltd, aligning the corporate identity with the consumer-facing brand.
The brand itself predates that name change. Asad Ahmed and Farnaz Ahmed launched Image in 1993 as an embroidered-fabric specialist, selling premium Schiffli work wholesale to well-known fabric retailers in Lahore and Karachi. The first flagship store opened on Karachi’s Zamzama strip in 1998, marking the brand’s move into direct retail.
Initially, the market was dominated by unstitched cloth; as one director recalled, stitched ready-to-wear made up perhaps 5% of demand in the 1990s. But as malls proliferated and urban consumers warmed to off-the-rack kurtas in the 2010s, Image followed the trend, adding pret lines and gradually building a chain-store footprint.
Today the company describes itself as a fashion and retail house with a presence across five major cities – Karachi, Lahore, Islamabad, Rawalpindi and Peshawar – supported by a strong e-commerce platform. In 2021 it became one of the first Pakistani clothing brands to be officially listed as a seller on Amazon, and in 2022 it received a Prime Minister’s award recognising its e-commerce performance.
At the helm of the listed business is CEO Asad Ahmad, with headquarters located on Karachi’s Shahrah-e-Faisal and manufacturing facilities in SITE.
Image operates in two related domains: value-added textiles and branded fashion retail.
On the manufacturing side, the company produces embroidered fabrics – notably Schiffli embroidery – as well as ready-to-wear and unstitched suits aimed primarily at women. Its product range spans
- Embroidered and printed fabrics, often sold as three-piece or two-piece suits.
- Ready-to-wear kurtas and co-ords, many featuring heavy embroidery, appliqué and chikankari work.
- Seasonal collections – lawn and light cottons for summer, heavier fabrics and jacquards for winter – marketed both through physical stores and the online shop.
The company says it currently runs 72 multi-head embroidery machines and plans to add three more, taking the total to 75. Bank financing is already lined up for additional imports should demand justify further capacity expansion.
On the retail side, the brand operates a growing network of boutiques and mall outlets. Management told investors they aim to reach 18 outlets by the first quarter of calendar 2026, with locations across major cities including Karachi, Lahore, Islamabad, Rawalpindi, Multan, Gujrat, Faisalabad and Peshawar. They highlighted that rent at their high-profile store in Karachi’s Dolmen Mall averages around 10% of sales – a healthy ratio by regional mall standards.
Internationally, Image is building a footprint in markets with sizeable South Asian diasporas – notably the UK, USA, UAE and European Union – primarily through online channels but increasingly via partnerships and pop-up formats.
Management is keen to diversify beyond fabrics and apparel into perfumes and lifestyle products, an increasingly crowded but higher-margin corner of the fashion market. They told analysts that Image is in the product-development phase and plans to launch three to four new perfumes each quarter once the line is established, potentially within FY26.
If executed well, this move could help smooth seasonality and deepen the brand’s relationship with its core female customer, but it also pits Image against specialised fragrance and cosmetics players at a time when discretionary spending is under strain.
Image’s trajectory cannot be understood in isolation from the broader formalisation of Pakistani retail.
A generation ago, apparel shopping largely meant buying fabric by the yard from neighbourhood stores and having it stitched by a family tailor. That paradigm began to shift in the late 2000s and early 2010s, as mall culture spread and branded lawn and pret labels such as Khaadi, Gul Ahmed, Nishat Linen, Sapphire and Sana Safinaz normalised the idea of chain-store fashion.
The growth has been rapid but remains shallow relative to the size of the population. A study by the Pakistan Institute of Development Economics estimates there are about 134 domestic chain-store brands in the country, with 73 of them in clothing and apparel, making it the largest formal segment. In total, these brands operate roughly 3,900 stores nationwide, with half of them concentrated in Karachi, Lahore and the Islamabad–Rawalpindi belt. The median chain has just 15 outlets.
The same paper describes Pakistan’s chain-store sector as still in its early stages of development, noting that even the biggest supermarket and fashion chains have far fewer outlets than comparable peers in India, and that only a handful of Pakistani clothing brands have a meaningful international presence.
In other words, the likes of Khaadi, Nishat Linen and Ideas by Gul Ahmed have built national awareness and dozens of stores, but the overall penetration of organised apparel retail remains low. These brands are now experimenting with large-format “experience stores” – such as Ideas’ massive new outlet at Dolmen Mall Clifton – as well as online-to-offline integration and tech-driven personalisation.
Image sits in the middle of this evolution: smaller than the leading textile-backed giants, but with a more substantial footprint and brand equity than the niche labels that still rely on multi-brand retailers and seasonal exhibitions.
The retail opportunity is significant. One research house projects that Pakistan’s overall retail market could grow at a compound rate of about 6.5% from 2025 to 2031, driven by urbanisation, rising internet penetration and a slowly expanding middle class.
Yet the last three years have been brutal for household budgets. Pakistan’s inflation rate hit multi-decade highs in 2023, with some months recording year-on-year price increases of around 30% or more. While inflation has dropped sharply in 2025 – even touching low single digits early in the year – this reflects a statistical base effect more than a return to pre-crisis affordability.
For apparel chains, that translates into three challenges. Customers trade down from premium lines to basic suits or skip seasonal refreshes altogether. Mall visits spike around Eid and wedding seasons but remain muted otherwise. Fashion cycles do not slow down just because wallets are squeezed; the wrong bet on colour, cut or price point can be costly.
Image’s financials reflect these dynamics. Revenue growth in the mid-teens and single digits, as seen in FY25 and 1QFY26, is respectable but underwhelming once high past inflation is considered. The strong improvement in gross and net margins last year owes much to tight cost control and a favourable product mix, but the margin slippage in the latest quarter shows how quickly that cushion can erode when costs spike or discounting is required to clear stock.
Despite a challenging macro backdrop, Image’s management is clearly positioning the company for a more formal and brand-centric retail future.
The planned expansion to 18 domestic outlets within months, a continued push into the UK, US and Gulf markets, and the upcoming foray into perfumes all point to a growth-minded strategy rather than pure consolidation. The addition of more embroidery machines and the option to finance further capacity suggest confidence that demand for its core value-added textiles will eventually catch up.
For now, Image is doing enough to keep profitability moving in the right direction but not yet enough to break decisively away from the gravity of Pakistan’s bruised consumer. The inflation storm may have passed, but the dampness it left in shoppers’ wallets is still weighing on the company’s growth prospects.
