Myntra to fall short of year-end target after note ban hits sales

The Bengaluru-based company is said to have sold goods worth more than Rs350 crore during the recent three-day sale, falling significantly short of its own targets


Myntra chief executive officer Ananth Narayanan. Photo: Bloomberg
Myntra chief executive officer Ananth Narayanan. Photo: Bloomberg

New Delhi/Bengaluru: Flipkart-owned online fashion retailer Myntra suffered a setback with its recent sale, highlighting the broader challenges facing India’s e-tail industry over the past six months, even as the after-effects of demonetisation kept potential consumers away. The company conceded it would fall marginally short of its year-end goal of touching Rs5,000 crore in sales.

The Bengaluru-based company sold goods worth more than Rs350 crore during the three-day sale, falling short of its own targets by a considerable margin, according to three people in the know.

Flipkart-owned Jabong too managed just over Rs100 crore worth of sales during the three-day sale.

Myntra did not comment on specific revenue numbers.

It was forced to hand out additional discounts on top of the normal discounts during the three days. Its sales plummeted on the second day of the sale and the company struggled to recover after that, the people said.

But, according to the company, it posted a 160% growth in revenue during the ‘End of Reason Sale’ (EORS) held between 3-5 January, with 2.1 million app installs.

Myntra claimed it witnessed a peak of 8,000 orders a minute during the first day of the sale, with a total of 1.6 million orders during the three days.

In an interview on Friday, Myntra chief executive officer (CEO) Ananth Narayanan conceded that demonetization had hit online retailers and the broader retail industry and said that the industry would take time to recover, adding that Myntra might fall short of its year-end target of Rs5,000 crore in sales “by about Rs200-odd crore”.

Narayanan, while conceding the Day 2 impact on sales, denied that the company had fallen short of its target.

“I don’t think so (that we fell short). Although internally I always push the teams to do more, but if you look at our expectations as to where we got to, it was essentially Rs8 crore over what we originally expected,” said Narayanan.

“Day 1 was the best by far, but even on Day 3, it was our best Day 3 ever. Day 2 was lower than what we expected, but we’ve never had a three-day sale before. So the pattern is very different from a two-day sale. Also, it was a weekday sale—but overall I wouldn’t read too much into Day 2 being down,” he added.

On 30 December, Mint reported that Myntra witnessed a sharp slowdown in sales growth for the year ended March 2016, as its move to become an app-only platform turned customers away.

Myntra expected gross sales, net of discounts, of roughly Rs5,000 crore this financial year, Narayanan had said in a May interview. That target may be out of reach after the demonetisation initiative, which has hit sales at all online retailers.

However, according to Anurag Mathur, leader-retail at PwC, organized fashion retailers gained after the demonetisation move and the fact that the retailers planned their ‘End of Season’ sale earlier could have impacted e-commerce firms.

E-commerce firms on the other hand are still recovering from the impact of demonetisation. According to research and analytics firm Kala Gato, the entire e-commerce industry is still down 15-20% from the usual monthly average.

In December, Myntra, which acquired smaller rival Jabong earlier this year, said that it would aim to hit $2 billion in annual revenue run rate and also turn profitable during 2017-18, driven mainly by a rapidly growing user base. A $2 billion annual revenue run rate implies monthly revenues of roughly $165 million.

“In absolute growth terms, customer acquisition as well as consumer experience, it’s been phenomenal. So I actually feel great (about this year’s sale). This year was better compared to last year’s EORS, when the first 15-20 minutes were shaky...This year it was much better from a customer experience perspective. If you compare last January to now, this year has been fantastic with 160% growth—even with demonetisation,” Narayanan said on Friday.

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