Sales in April could decline by 20-50% from the previous month, warned clothing retailers
Jan and Feb had seen improved footfall owing to sales events and declining covid cases
NEW DELHI :
Clothing firms that saw sales rebound in the March quarter are again staring at a slump in demand as partial lockdowns, closure of malls and curbs on late evening movement keep consumers home.
Sales in April could fall by 20-50% from March, retailers said. In Maharashtra, where non-essential stores have been ordered to shut for the full month, the impact is likely to be worse.
January and February saw improved footfall owing to sales events and declining covid cases, analysts at ICICI Securities said in a report on Monday. However, the pace of recovery slowed in the second half of March, owing to rising cases and related restrictions.
“Apparel brands and retail firms under our coverage are likely to report low single-digit revenue growth year-on-year in Q4FY21 despite low base, implying an 80-85% pre-covid recovery," said ICICI Securities analysts.
Apparel sales and retail started recovering when lockdown restrictions were eased last year, said Siddarth Bindra, managing director, Biba India, the women’s ethnic wear brand.
“But partial lockdowns will adversely impact the sales around festivals, which begin next week, including Gudi Padwa, Ugadi and other spring festivals that mark the traditional New Year. We see a 30-50% drop in sale now, depending on the locations. It’s likely to be even more in Maharashtra, of course," he said.
Close to 35 of its stores are temporarily closed in Maharashtra, in line with the state government’s orders.
Bindra said the retailer is seeing a direct correlation between the surge in covid cases and business. “Wherever the covid cases have been high or partial lockdowns have been implemented, the consumer sentiment is low. People are apprehensive about stepping out, which impacts footfall at malls and in high streets," he added.
Shoppers, who typically use this time to upgrade their summer wardrobes, are not showing up at stores in big numbers, said Akhil Jain, executive director, Jain Amar Clothing Pvt. Ltd, which owns the women’s fashion brand Madame.
Jain said night curfews are affecting footfall as shoppers usually step out between 6pm and 8pm. Besides, with a full weekend lockdown in Maharashtra, the retailer will lose out on key shopping days.
“If we touch just the March numbers, we will be fine," he said, adding that sales could fall 20% in April from the previous month.
Most apparel retailers have been struggling as consumers swapped occasion and formal wear for casual clothing for most of 2020. They also cut back on discretionary purchases, a trend that started improving over the past few months.
“If the second wave would not have come, we would have been at 95%, or let’s say 100% of Q2 2019 numbers because things were getting back on track. But with this surge, maybe we will see 80% or 85% of 2019," said Sundeep Chugh, managing director and chief executive officer, Benetton India.
“We planned our inventory in such a way that we had assumed a second covid wave, if not in quarter one, but in quarter two," Chugh added.
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