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Apparel retail revenue to see 30-35% drop in FY21, says CRISIL

Updated : June 26, 2020 06:01 PM IST

The COVID-19 pandemic, the subsequent lockdown, and the graded reopening thereafter have brought most segments of the economy to a halt. The organised retail sector has been one of the worst-hit segments, with most shops shut during the lockdown and only a partial reopening in the last few weeks. Even online apparel sales took a hit as the sale of non-essential goods was not allowed during the lockdown period.

According to the rating agency, CRISIL, the organised apparel retail sector in India, which has a market size of Rs 1.7 lakh crore is expected to witness a 30 to 35 percent drop in its revenues this fiscal.

The CRISIL report also says the sector's profitability is likely to be impacted by about 200 basis points from 7 to 8 percent last year. However, it believes the absolute drop in operating profits will be much sharper, necessitating additional funding, mainly debt by firms to make up for cash flow shortfall. Experts believe that in the current fiscal, online platforms will contribute a larger chunk of apparel sales, due to the changes in consumer behaviour patterns.

Let us also have a quick look at the kind of impact India’s luxury goods market is likely to see, analysts expect the segment to witness a 50 percent drop in sales this year. While some demand is likely to return during the festive season. The beauty and wellness category is expected to revive first as things open up. On the other hand, the fashion industry is likely to find it challenging to sell without "touch & feel".

To take the discussion forward Neeta Lulla, managing director of House of Neeta Lulla, Kavindra Mishra, the CEO of House of Anita Dongre. Amar Nagaram, the CEO of Myntra and Prashant Gaurav Gupta the business head of DLF's Luxury Malls is in conversation with CNBC-TV18’s Shereen Bhan.
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