Uncertainty around business conditions for Value & Lifestyle Fashion Retailers looms with sharp rise in Covid-19 cases and local lockdowns announced by various state governments, though imposition of nation-wide lockdown is unlikely at present, ICRA has stated in a report.
Given the low base of FY2021 and YoY gradual improvement in footfalls, ICRA estimates fashion retailers to report 23-25% increase in revenues in FY2022; OPM though expected to improve, will remain lower by 250 bps vis-a-vis FY2020 levels.
The rating agency estimates that a 42-45%, YoY revenue decline for fashion retailers in FY2021, with a decline in operating profit margin (OPM) by 400 bps. Shutdown of malls and closure of non-essential stores across most states in the country in Q1 FY202.
Food and grocery retailers outlook stable
Given the essential nature of operations, F&G retailers will witness limited impact on sales due to rising infections, though operations in Q1 FY2022 remain susceptible to restrictions on store operating hours as well as local lockdowns which restrict the sale of general merchandise, ICRA has stated.
On the outlook for the first quarter of FY 2021, the rating agency has noted that there could be a spurt in demand as consumers started panic buying around uncertainties of stock-outs and closure of these stores as well.