Indian apparel retail likely to rebound in FY22: Ind-Ra

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector’s share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.

 

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector's share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.#

While the profitability will be affected in FY21, apparel retail companies have "focused on cash preservation by taking a multi-pronged approach. They have undertaken additional borrowings to manage cash losses while deferring their capital expenditure and dividend payments to conserve liquidity," the report said.

 

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector's share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.#

Ind-Ra expects companies in the apparel retail sector to weather the near-term demand volatility and sluggishness through effective liquidity management, while also improving their competitive advantage by increasing the operational efficiencies and controlling costs.

 

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector's share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.#

It expects a demand recovery from the second half of Q3 FY21 during the festive season, assuming that COVID-19 related fears will subside. "However, the household income would continue to be under pressure throughout FY21. Given the growing presence and profitable portfolio of large retail players, Ind-Ra believes that robust sales growth in FY22 will lead to strengthening of the financial profile, closer to levels seen in FY19 and FY20," the report adds.

 

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector's share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.#

Post COVID-19, the shift to organised from unorganised would accelerate, as small players would find it difficult to sustain operations, given lower footfalls, apprehension among customers related to store hygiene and sanitisation, and credit crunch, making the business unviable, according to Ind-Ra.

 

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector's share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.#

In Q1 FY21 (April-June 2020), revenues were below 20 per cent of the pre-COVID levels. Players with exposure in value retail and to tier-2 and tier-3 cities were marginally placed than retailers primarily in metros, driven by more relaxations in lockdowns and down trading from lower consumer income levels.

 

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector's share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.#

The upward sales trend witnessed in June 2020 was slowed down by intermittent lockdowns across the country, and the pandemic spreading to non-metro cities as well in Q2 FY21. Despite about 80 per cent of stores being open as of August 2020, the clothing retail sector could only witness a slow-but-incremental recovery with the prevalence of social distancing norms to prevent the spread of virus, leading to reduced footfalls in stores, and prioritisation of spends towards essentials and low-ticket discretionary items amidst a squeeze on income levels. Ind-Ra said it expects sales of around 45 per cent of the pre-COVID levels during the July-September quarter.

 

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector's share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.#

Ind-Ra expects a meaningful recovery in Q3 FY21, driven by the pent-up festive and wedding season demand, even as social distancing norms and slowing economy continue to be a drag. Overall, Ind-Ra expects sales to touch around 85 per cent of the pre COVID-19 levels. Consumer behaviour patterns such as ‘revenge buying’ may play out and support revenues during the quarter.

 

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector's share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.#

During Q4 FY21, Ind-Ra expects pre-COVID-19 level demand to be achieved, with the impact of COVID-19 led demand erosion gradually declining, and economic recovery accelerating. "The lower base effect from the COVID-19 impacted March 2020 would also support year-on-year quarterly revenues," the report said.

 

Apparel retail sales in India will see a sharp recovery year-on-year in FY22, with a lower base effect and new store openings as the organised sector's share continues to grow, according to a latest report by India Ratings and Research (Ind-Ra). The Fitch Group company expects 40-45 per cent decline in the revenues of apparel retailers in the current fiscal.#