Subdued demand shapes Q1 for apparel giants, value retailers lead

23 August 2024, Mumbai

The first quarter results of fiscal year 2024-25 revealed while some companies clocked in good growth others faced challenges due to subdued consumer demand and macroeconomic headwinds. Value retailers reported strong growth while the big players reported a drop in revenue.

Key Highlights of Q1

Subdued demand and macroeconomic challenges: Several companies, including Aditya Birla Fashion and Indian Terrain, reported a decline in revenue and profits due to muted consumer demand, which was intensified by factors such as prolonged heat waves and a weak wedding season. The inflationary environment also impacted consumer spending on discretionary items like apparel.

Value and emerging segments on top: Value fashion segment, such as V2 Retail, and those catering to emerging consumer segments witnessed strong growth. V2 Retail reported a significant increase in revenue and net profit, driven by its expansion strategy and growing brand acceptance.

Table: Company’s financial performance

E-commerce and exports were growth drivers: Dollar Industries reported a substantial increase in revenue from e-commerce and exports, highlighting the growing importance of these channels for apparel companies.

Interestingly despite the challenges in Q1, many companies are optimistic about the second half of the fiscal year, anticipating improved demand during the festive and wedding seasons. Credo Brands and Cantabil Retail, in particular, expect a rebound in consumer spending, driven by favorable monsoon predictions and government initiatives to boost consumption.

Meanwhile, companies are focusing on strategic initiatives such as expanding their retail footprint, strengthening their online presence, and diversifying their product portfolios to drive future growth. Cantabil Retail plans to continue its omni-channel expansion, while Rupa & Company aims to add over 100 new stores in FY25.

Overall, the apparel sector is going through a challenging phase, but companies are adapting strategies to capitalize on emerging opportunities and position themselves for long-term growth. The performance in the second half of the fiscal year will be crucial in determining the overall trajectory of the sector in FY25.

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