Flipkart-owned Myntra posted better-than-expected sales in January and touched an annual revenue run-rate of $1.6 billion, two executives familiar with the numbers said.
Myntra recorded sales of over Rs850 crore during January, including gross sales from its unit Jabong, the executives mentioned above said, on condition of anonymity. In January and July, when Myntra holds its heavily advertised End of Reason sale, the online retailer generates significantly higher sales than parent firm Flipkart and rival Amazon India. The two months also see clearance sales at offline retailers.
In an interview, Myntra CEO Ananth Narayanan declined to comment on the sales figures, but said the fashion retailer posted strong numbers in January due to better selection of products, adding Myntra is looking to bring more exclusive brands on board over the coming months.
“We are also focusing on our Myntra Brand Accelerator programme where we are trying to incubate more brands—we are trying to see whether we can bring more designers and brands into Myntra which will obviously be at a higher margin, but will be exclusive to us," said Narayanan. “We will continue to look for strategic opportunities—whether it’s acquisitions or brands we can partner with," he added.
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In January, Mint reported that Bengaluru-based Myntra sold goods worth more than Rs350 crore during the three-day End of Reason Sale, after a slower-than-usual start to the year. Including Jabong, gross sales were over Rs400 crore. E-commerce firms were at the time still recovering from the impact of demonetization. According to research and analytics firm Kala Gato in January, the entire e-commerce industry was down 15-20% from the usual monthly average.
Last year, Myntra had forecast gross sales, net of discounts, of roughly Rs5,000 crore this financial year, while in an interview in January, Narayanan had said Myntra would fall marginally short of the target by about “Rs200-odd crore". In the latest interview, Narayanan said Myntra will report numbers slightly higher than its revised guidance.
In December, Myntra, which acquired smaller rival Jabong earlier this year, said 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 sales of roughly $165 million.
In January, Mint reported that Myntra has changed its legal structure in order to comply with foreign direct investment (FDI) laws that cap a third-party seller’s contribution at 25% of total sales.
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Myntra, which earlier had just one retail partner called Vector E-commerce Pvt. Ltd, has now added three new sellers on its platform. Vector E-Commerce reported revenue of Rs1,747 crore for the year ended March 2016, an increase of about 40% from the year-ago period, while Myntra Designs reported a revenue of Rs1,069 crore, compared with Rs773 crore a year earlier. The 38% increase in sales in the last fiscal year reflected a slowdown in growth for Myntra from the past two years, when its sales expanded by at least 75%.
Myntra, which is aiming to turn Earnings before interest, tax, depreciation and amortization (Ebitda)-positive by the end of the next financial year, is also taking further steps to trim costs across the company.
“Our burn rate is already down from what it was—I expect we will continue to reduce burn rates as we go towards Ebitda-zero, where we’re not burning money, but generating cash," said Narayanan.
“Supply chain costs continue both with the scale that we will get, but also through technology innovation—how do I reduce my supply chain costs. Then, we will push Myntra fashion brands, which is more at Jabong but also at Myntra—which is also a big margin driver for us. We will also use artificial intelligence and technology to continue to personalize the platform for all customers," he added.