Q2 Results: India’s apparel brands report growth amidst challenges

12 November 2024, Mumbai

Second quarter (Q2) of FY25 results of India's apparel retail sector was a mixed one, with clear trends like premiumization and value-market pushing growth amidst inflationary pressures and strong competition.

While some players like Arvind Fashions and Vedant Fashions reported strong growth in profit, others like Shoppers Stop faced headwinds.

Strong Q2 performances

Table: Revenue growth and key drivers

Strong festive demand and wedding season sales drove up growth for brands like Vedant Fashions (Manyavar) and Kewal Kiran Clothing (Killer Jeans). In fact, Vedant Fashions the ethnic wear giant reported a 21 per cent YoY jump in revenue, driven by strong festive demand and expansion into new markets. The company's focus on occasion wear and premium offerings continues to resonate with consumers. Value segment showed resilience with players like, V-Mart and V2 Retail reporting positive numbers, indicating continued strength in the value-conscious consumer segment.

Meanwhile companies like Shoppers Stop are focusing on expanding their store network and diversifying their offerings to drive growth. The department store chain reported a 12 per cent rise in revenue, driven by store network expansion and growth in private label brands. The company's omnichannel strategy is also gaining traction. Rising raw material and operating costs continue to impact margins across the sector. Even as online channels remain a key growth driver for many brands, although profitability remains a challenge for some.

The Q2 results indicate a mixed bag for the Indian apparel sector. While festive demand and expansion strategies are driving growth for some, rising costs and a challenging macroeconomic environment are impacting others. The trend suggests a growing divergence between brands catering to different consumer segments and adopting varying strategies.

While some brands like Vedant Fashions and Kewal Kiran Clothing report strong double-digit growth, others like Credo Brands show more moderate growth, highlighting the varying impact of market conditions and individual company strategies.

Overall, the Q2 FY25 performance shows a moderate improvement compared to the same period last year when the sector was still recovering from the pandemic-induced slowdown. However, growth is uneven across the sector, and challenges remain. While the sector is witnessing growth driven by festive demand and brand consciousness, companies are also grappling with challenges like rising costs and intense competition. The ability to adapt to evolving consumer preferences, embrace online channels, and maintain operational efficiency will be crucial for success in this dynamic market.

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