Home >companies >Aditya Birla Fashion posts Rs10 crore loss in Q2 on GST impact

Mumbai: Aditya Birla Fashion and Retail Ltd (ABFR), owner of one of India’s largest apparel retail chains, Pantaloons, posted a loss of Rs10 crore in the September quarter, hurt by a slowdown on the implementation of the goods and services tax (GST).

The company had reported a profit after tax of Rs65 crore a year earlier. Revenue fell 4.34% year-on-year to Rs18.04 crore in the second quarter.

“Q2FY18 has been impacted by GST rollout, transition issues and steep fall in consumer sentiment in July immediately post GST," the company said in an investor presentation on Friday.

The company said it lost sales during the September quarter because it advanced the end of season sales to June, right before the GST was implemented.

“Footfalls dropped sharply post GST affecting July sales with August showing some recovery," it added.

Like-for-like sales in the Aditya Birla Fashion network of stores — including standalone stores of brands like Van Huesen and Allen Solly — fell 26% year-on-year in July and 5% in August, but recovered with a 21% growth in September, it said in the investor presentation.

Like-for-like sales in Pantaloons — the company’s multi-brand apparel retail chain — fell 32% in July and 8% year-on-year in August, but recovered with 23% year-on-year growth in September.

ABFRL’s brands saw a decline in sales across all channels, including wholesale and retail.

“Market sentiment started picking up in August. September showed strong sales growth with the onset of the festive season," the company said.

ABFRL said it is expecting Forever 21 — a fast fashion brand — to break even at the EBITDA or operational level in the second half of FY17-18.

EBITDA stands for earnings before interest, tax, depreciation and amortization.

Aditya Birla Group acquired Forever21’s India business in July last year and from that date, it made sales worth Rs200.57 crore in FY16-17, as per its annual report.

The company is also buying the Abof brand from its sister firm, Aditya Birla Online Fashion, for Rs10-15 crore, “to be sold in Departmental Stores and third party online platforms," it said in the presentation.

Aditya Birla Group shut down e-commerce venture abof.com, Mint reported on 22 September.

“Both GST and the early end-of-season sales affected earnings, but the recovery is already happening," said an analyst tracking the firm, requesting anonymity. “The company has taken on abof the brand, and not the e-commerce business, but this is not likely to have a significant impact because it is a very small component of the business. And given Forever 21’s growth trajectory, EBITDA profit is possible but it is likely to happen only in Q4 (quarter ending March 2018)," the analyst said.

Shares of ABFRL closed at Rs147.95, down 0.27% while the benchmark BSE Sensex closed at 33,157.22 points, up 0.03%.

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