Fashion firms feel slowdown pangs for second straight quarter; sales down

Same-store sales growth down to 2-7% in Q1, lower than 3-9% reported in Q4

For the second quarter in a row, the country’s top fashion retailers are feeling the slowdown pangs, much like their counterparts in food services. 

Chains such as Brand Factory, Pantaloons, Shoppers Stop, Central and V-Mart have all reported same-store sales growth (SSG) in the region of 2-7 per cent in the June quarter (Q1). This is lower than the 3-9 per cent SSG range seen in Q4 of the last financial year.

The only exception here is Westside from Trent, which has seen double-digit SSG (12 per cent) in Q1, the highest in six quarters. SSG is sales growth of stores that are at least one year old and is a crucial metric tracked by analysts.

Barring Westside, the fall in SSG for most fashion players over two straight quarters, say sector experts, points to a sustained slowdown in the market. Quick-service restaurants (QSRs), such as Jubilant FoodWorks and Westlife Development, which run Domino’s and McDonald’s stores, respectively, also reported single-digit SSG in Q1. The Q4 figures were no different as consumers cut back on discretionary spending.

Retail chief executive officers (CEOs) admitted that sales growth was muted over the last few months and a recovery would happen during the festive season. “We have started with our Independence Day sales across formats and are hopeful that consumers will take advantage of the discounts and offers available during the period,” said Kishore Biyani, founder and CEO, Future group, which runs Central and Brand Factory. “I think the second half of the year should be better than the first half,” he added.

Ashish Dikshit, managing director (MD), Aditya Birla Fashion and Retail, which runs the Pantaloons chain, said, “While we are not immune to the general consumption slowdown in the economy. Our business is also dependent on festivals and special occasions, when consumers do spend. We see that as a key growth driver. Secondly, the secular trend of moving from unorganised to organised retail remains because modern trade is relatively under-penetrated in India. To us, that is another growth driver.”

Chains such as Shoppers Stop are lining up key launches in the next few months, coinciding with the festive season. This includes licenced brands such as French Connection (from the UK) and Jones New York in men’s and women’s wear and private labels such as Back to Earth (into ladies’ Indian wear) and Carrot (kids wear). Shoppers Stop is also relaunching celebrity collections such as Rheson, promoted by Sonam and Rhea Kapoor, which are available at its outlets and will be rolling out a new celebrity line with a film star shortly.

Rajiv Suri, MD and CEO, Shoppers Stop, said new launches and private labels should get consumers back into its stores. 

“We are on track to launch these brands and subject to no big shocks on the macroeconomic front, we think private brands from a growth point of view should start to show improvement in autumn-winter (October-December) 2019. This should enhance in the January-February period as summer sets in,” he said in an investor call last week.

Aditya Birla Fashion is also investing in new brands, having acquired ethnic labels such as Jaypore and Shantanu & Nikhil last month. The company will be adding exclusive stores of the two brands in the next few months as it eyes a larger presence in men’s and women’s ethnic wear.