As per a report by the Ratings Agency ICRA, Fashion retailers are likely to record revenue growth of up to 15 percent in FY25 owing to network expansion. While giving a stable outlook on the fashion retail segment; ICRA said; “The network expansion of fashion retailers would support revenue increases in the current fiscal year despite inflationary headwinds. The operating profit margin (OPM) of its sample set of companies is likely to remain in the range of 13-14 percent in FY2025. This is despite a robust 14-15 percent YoY (Year-on-Year) revenue growth estimated for the year, supported by network expansion. The revenue growth is likely to pick up during the festive season, which coupled with regular network expansion, is expected to result in a 14-15 percent YoY revenue expansion in FY2025.”
ICRA expects fashion retailers to report marginal sequential sales growth in Q2 FY2025, especially with the shift from the festive season to Q3 this year. The fashion retail segment has been struggling with a slowdown in demand since Q4FY23 due to inflationary headwinds. However, in Q1FY25 fashion retailers in ICRA's sample set reported a YoY sales growth of 18 percent, led by expansion in store network and introduction of new product categories. However, the premium segment reported a 3 percent contraction in average sales per square feet (ASPSF) in the June quarter. However, the value fashion segments showed positive traction and touched their pre-pandemic level for the first time.
Sakshi Suneja, Vice President & Sector Head - Corporate Ratings at ICRA, said; “The discount levels have remained limited since Q2 FY2024 as players focus on protecting their gross margins. Retailers, however, continue to spend aggressively on advertisement and promotions, especially with the festive season around the corner.”
