Winning Bizness Desk

Mumbai. Like other industries, the fashion industry is also witnessing a boom period for a few months as the sales of fashion retailing companies are indicating so. In the first nine months of the current financial year, the income of fashion retailing companies has shot up by about 55%. This was largely driven by strong sales due to festivals during the October-December quarter. Experts of this industry believe that the sales in January-March may be a bit dull, but the sales of fashion retailers are expected to increase by 45% in the entire financial year 2022-23. Rating agency ICRA has said in one of its reports that economic activities picked up pace after the epidemic. People spent more on branded apparel. Because of these, the income of the fashion retail sector increased by 55% between April-December 2022.This is 35% more than the income earned in the first 9 months of the pre-Covid i.e. FY 2019-20.

Several stores opened across country

This performance of the fashion retail sector was helped by the opening of additional stores of about 5 million sq. feet between 2019-20 and 2021-22 across the country. Companies increased capital expenditure by 55% to Rs 1,400 crore this fiscal. In the last nine months, sales of premium brands increased in major cities. But in the value-fashion segment, companies are facing the impact of inflation in the sale of apparel. Companies reported negative growth in value-fashion segment sales in the same period of the current financial year as compared to the first nine months of 2019-20.

Retailers passing increased cost of raw materials to customers

Sakshi Suneja, vice president and sector head (corporate ratings), ICRA, said fashion retailers are passing on the increased cost of raw materials to customers. Their gross margin in April-December 2022 remained the same as in 2021-22. Rent, employee cost and advertising expenses have increased. Due to this, the operating profit margin of fashion retailers is likely to be 7-7.3% in 2022-23, despite the rapid growth in earnings. This is less than pre-covid.