Fashion trumps FMCG in Q1 FY18 as shoppers flocked to season end, pre-GST sales
Fashion witnessed slight increase in volume in Q1 FY18 while FMCG remained flat.
- On the back of pre-GST and End of Season sales, fashion segment witnessed higher sales growth.
- FMCG sales on the other hand remained flat.
- Fashion e-tailing quotient were given a boost from increasing orders from tier-2 and tier-2+ cities.
While shoppers took advantage of the sales before the rollout of Goods and Services Tax (GST) followed by ‘End of Season’ sales that were announced in June this year, the fast moving consumer goods category fell behind.
“End-of-season sale and Pre-GST sale in fashion for many players was the primary reason for higher volumes in Q2’17 (Q1 FY18),” a report by RedSeer Consulting said on Tuesday.
However FMCG witnessed flat growth which was also impacted due to destocking in the pre-GST era.
Fashion orders were in the range of a near 50% growth while FMCG sales were much lower.
“FMCG remains a small category in volume terms even as players experiment with various business models,” the report added.
FMCG companies reported drop in profit up to 12% in Q1 FY18. Top companies in India like – Britannia, Marico and Hindustan Unilever (HUL) were all impacted by GST.
Britannia’s Q1 consolidated net profit fell 1.41% to Rs 216.12 crore; Marico witnessed volume decline of 9% on the backdrop of destocking by trade and HUL’s volume decline of 9% on the backdrop of destocking by trade in June.
While fashion companies on the other hand like Aditya Birla Fashion revenues reached Rs 6633 crore this year post the acquisition of Forever 21 India rights. The company’s standalone net loss shrank to Rs 20 crore from Rs 21 crore in the same period last year.
Future Lifestyle Fashion Ltd (FLFL), part of Kishore Biyani-led Future Group, reported a 42.33% increase in its standalone net profit to Rs 3.53 crore for Q1 FY18.
Fashion e-tailing quotient were also helped by increasing orders from Tier 2 and Tier 2+ Indian cities.
“Fashion E-tailing Industry witnesses increase in order share from T2+ cities. Order share from Tier-2+ cities witnessed marginal growth in Q1 FY18,” the RedSeer report said.
The orders were helped by improved delivery times and focus on tier-2 specific assortment by players led to increase in order share, the report added.