1. Aditya Birla Fashion and Retail to cut price points, to focus on value fashion

Aditya Birla Fashion and Retail to cut price points, to focus on value fashion

Aditya Birla Fashion and Retail (ABFR), which trimmed prices of its apparel range by around 4% to 5% last year may consider a similar cut this year as it sharpens its focus on value fashion.

By: | Published: June 1, 2017 7:26 AM
ABFR to cut price points, ABFR, Aditya Birla Fashion and Retail, Pranab Barua, fashion segment, lifestyle segment, retail, Pantaloons stores, Pantaloons stores in India, PWC, EBITDA Value fashion or fashion at affordable rates ranging between Rs 500 to Rs 1,500, had emerged as one of the fastest growing segments with all large players rapidly expanding their footprints. (Image: Reuters)

Aditya Birla Fashion and Retail (ABFR), which trimmed prices of its apparel range by around 4% to 5% last year may consider a similar cut this year as it sharpens its focus on value fashion, Pranab Barua, managing director, ABFR, said. Barua said value fashion or fashion at affordable rates ranging between Rs 500 to Rs 1,500, had emerged as one of the fastest growing segments with all large players rapidly expanding their footprints. International players in the premium and mid-premium segments too have adjusted price points for the Indian market, Barua said.

“As we sort of discover and get stronger in the value fashion space, we would remain open to any opportunities for corrections in the pricing. It is a balancing act one needs to do along with other costs,” Barua added. The performance of the lifestyle brands helped ABFRL to swing to a profit of Rs 21.83 crore (stand- alone) in Q4FY17 from a net loss of Rs 108.97 crore in Q4FY16. Sales for Q4 FY17 grew 13% y-o-y to Rs 1,625 crore while EBITDA grew 37% y-o-y to Rs 131 crore.

Revenues from Pantaloons stores —which house the value fashion range — grew 11% y-o-y to Rs 586 crore in Q4FY17 while EBITDA for the quarter was Rs 14 crore fell from Rs 31 crore last year. Same-store-sales declined 5% y-o-y in Q4FY17 due to the shutdown and renovation of two stores. The company expanded its store network to 209 stores, up from 180 stores at the beginning of the quarter.

It is not ABFR alone that has taken a price cut. Even foreign brands like Zara, H&M, Gap are focusing on value fashion. Gap is also looking to bring down prices of certain products by 10-15% by allowing its India franchisee Arvind Lifestyle Brands to manufacture them locally. Zara too had trimmed prices by 10 to 12% last year with H&M entering the country.

Retailers would continue to introduce products at lower price points, says Rajat Wahi, partner, Deloitte, adding price points for value fashion are between Rs 699 and Rs 2,000. “Most value retailers stock the maximum range at this price point,” Wahi said. Meanwhile, market players are awaiting a final decision on the GST rate for branded apparel which will be decided on June 3.

Anurag Mathur, partner, PWC, said that while the total tax on branded apparel is expected to be around 18%, taxes on other raw materials like fabric and thread are expected to be lower providing room for further price cut. “Moreover transportation and logistic costs are also expected to be rationalised. However one needs to see on the overall impact and whether the retailers are able to further bring down prices,” Mathur said.

You might also want to see this:

Around 190 of ABFR’s exclusive brand outlets (EBOs) stocking lifestyle brands like Louis Philippe, Van Heusen, Allan Solley, Peter England, were shut in FY17 while 194 stores were opened; the total network currently has 1,759 stores. This rationalization of EBOs has helped the company to improve EBITDA margins in the lifestyle business. Q4 FY17 sales grew 4% y-o-y to Rs 909 crore while EBITDA for the quarter grew by 30% y-o-y to Rs 142 crore.

At the end of March, 2017 Pantaloons had 28 franchisee stores. The Fast Fashion portfolio — People and Forever21— continued to see losses in FY17.

  1. No Comments.

Go to Top