ICRA report :Third COVID-19 wave to stave off retailers’ revenues

19 January 2022, Mumbai:

The third wave of COVID-19 in India is likely to stave off an estimated 8 per cent of fashion retailers’ revenues in the current financial fiscal, says credit rating agency ICRA.

Key highlights: 

• Fashion retailers to achieve 70-72 percent of pre-pandemic revenue.
• The retailers are set to be hit by restrictions in place adds the report. 
• This hit is marked by an excessive stock pileup. 
• Omicron wave remains the downside risk 

In the current fiscal, fashion retailers are expected to achieve 70-72 per cent of their pre-pandemic revenues as against the earlier projection of 78-80 per cent. 

Their sales, however, rebound to those witnessed post the second COVID-19, adds the ICRA report

The agency gives the fashion segment a negative outlook as it expects retailers to return to pre-COVID levels by the second quarter of the next financial year.

The recent surge in Omicron cases has once again brought with it localised restrictions in the form of night curfews and timing restrictions.

As a result, retailers are now stuck with excessive stocks and face a greater risk of significant inventory markdowns.

While the third wave will dent profitability in Q4 FY22, the credit profile of large, listed entities is expected to remain adequately supported by strong balance sheets, says Sakshi Suneja, Assistant Vice President, ICRA.

Credits: Business Standard  

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