Fiscal 2013: Positive sales growth but net profits suffer

With the Indian rupee sinking to an all time low against the dollar and other currencies, it does not augur well for the economy. Indeed, the fashion and apparel industry which is still coming to terms with two consecutive years of low growth. However,

the positive Q1 results of this fiscal, has spread some positivity in the air. Now brands and retailers are looking to recover some ground.

A cursory look at the overall results for the financial year 2013 shows that while apparel retail chains and fashion accessories brands were able to book positive net sales, the apparel brands still suffered marginally. And profit margins for the year remained subdued owing to low consumer sentiment. The positivity in net sales was mainly triggered by the year end sale season, when people loosened their purse strings.

While apparel retailer Shoppers Stop recorded net sales of Rs 2,255.89 crores with a 16.88 per cent increase over last year, Tata’s retail arm Trent saw a 13.87 per cent rise at Rs 935.80 crores. Vishal Retail too registered net sales of Rs 105.67 crores with 163.12 per cent increase over 2012. While Bata and SRS posted 18.58 per cent and 27.39 per cent growth respectively.

However, when it comes to apparel brands, barring a few, most witnessed a dip in net sales percentage compared to the previous year. For instance, Provogue, Zodiac, and Cantabil registered a decline in percentage at 11.37, 0.15 and 27.55 per cent respectively. However, Arvind reported net sales of Rs 3,780.29 crores with an 8.19 per cent growth over last year and net sales of Brand House Retail stood at Rs 814.85 crores showing a rise of 4 per cent.

A look at the net profit booked by companies for the fiscal 2013 clearly reflects traces of an economic slowdown. Most apparel retailers and brands did not witness a rise in net profit as compared to last year, except Kewal Kiran and Zodiac, who clocked in a marginal rise in net profit rise of 2.45 per cent and 0.73 per cent respectively. While Shoppers Stop’s net profit was Rs 39.17 crores, a 39.04 per cent dip, Arvind suffered 39.84 per cent loss at Rs 261.22 crores. Provogue, Cantabil and Brandhouse Retail too witnessed their net profit dip by 48.50 per cent, 29.45 per cent and 752. 94 per cent respectively.

Given the current global economic scenario coupled with high inflation rate, low consumer sentiment there seems too little respite for the industry.