Discounts hurt Madura sales in April-June quarter

Sales at Madura Fashion and Lifestyle, which has premium brands, fell three per cent in April-June, the second consecutive quarterly drop. As the company refrained from deep discounting to protect brand value, volumes fell, impacting the unit’s operating profit. Price discounts on online platforms and frequent sales drives are unsettling Aditya Birla Fashion and Retail’s premium brands business and driving a strategy rethink.

Sales at Pantaloons, which operates in the value segment, grew 31 percent, helping the company register a respectable revenue growth of eight percent. Since Madura is more profitable than Pantaloons, a significant part of Aditya Birla Fashion and Retail’s capital is invested in Madura. Roughly half of stand-alone assets are in Madura. The division generates more than half of AB Fashion’s revenues.

The company is reducing fixed costs, increasing the season cycles and is driving digital transformation through the omni channel program. Shoppers can check unavailable inventory at stores and order online. The measures and inventory drawdown process are estimated to take another quarter to begin showing results, which means the second quarter could also be weak. Aided by the wedding and festive season, the company expects Madura’s performance to recover from October or in the second half of the fiscal year.