Giant brands make big leap

Giant brands make big leap

The CMAI?s Apparel Index for the third quarter, FY2014-15 from October to December 2014, with overall Apparel Index value up at 5.01, once again revealed the low sentiment among small brands, those with turnovers of Rs 10 to 25 crore.

The CMAI?s Apparel Index for the third quarter, FY2014-15 from October to December 2014, with overall Apparel Index value up at 5.01, once again revealed the low sentiment among small brands, those with turnovers of Rs 10 to 25 crore. They witnessed practically no growth at 0.55 points due to high inventory pile up. On the other hand, giant brands, with a turnover of above Rs 300 crore, topped the Index growth at 10.29, followed by Large Brands at 9.28 having turnover of Rs 100-300 crore and big brands, brands with turnover of above Rs 25 crore were at 8.02 points. 
 
Small brands who constitute the larger section of the market, have not had a good run so far and their pessimism persists despite a change in government at the Centre. However, bigger brands have been able to manage their business better and have clocked in higher growth rates in Q3.
 
High inventory has an adverse impact 
An increase in inventory holding period has had an adverse affect on the performance and profitability of brands. The quarter saw negative impact of high inventory holding on most brands, which also brought down the apparel index value. Small brands have been the worst hit and this has had a deep negative impact on their bottomline, making them the worst performers. 
 
The Apparel Index Value of small brands shows that inventory holding is almost double that of sales turnover increase. Almost 87.5 per cent of small brands increased inventory holding, with most of them reporting 21-40 per cent rise, losing 4.25 points. Almost 61.66 per cent big brands also said that their inventory holding increased, resulting in a loss of 1.67 points, which however is much lesser compared to the performance of small brands. 
 
CMAI?s Apparel Index aims to set a benchmark for the entire domestic apparel industry and helps brands in taking informed business decisions. For investors, industry players, stakeholders and policymakers the index is a useful tool offering concrete and credible information, and is an excellent source for assessing the performance of the industry. DFU Publications, publishers of ?Inside Fashion? magazine executes the Research and Data Analysis procedure. 
 
Positive trend of other parameters 
With high inventories, the quarter also saw almost all brands reporting a rise in sales turnover with 70 per cent brands reporting improved sell through and an increase in investments to create improved facilities and infrastructure. All giant brands surveyed have registered growth, with 71.4 per cent of them growing between 21-40 per cent. Almost 95.6 per cent of large brands surveyed reflected growth in turnover, half of them grew between 1-20 per cent. Interestingly, 57.5 per cent of small brands too have shown growth, most of them grew between 1-20 per cent. And 88.3 per cent of big brands (with turnover of above 25 crores) registered growth, indicating the quarter has been good for sales turnover growth. Only 10 per cent brands have responded by saying same level of sales turnover, whereas another 14 per cent have responded that the sales have gone down. 
 
Nearly 70 per cent of the brands surveyed have improved sell through. Maximum improvement was shown by large brands (87 per cent), half of them saw between 21-40 per cent, indicating a remarkable improvement in contribution to profits. For 15 per cent, it remained the same and for the rest 15 per cent sell through per cent went down indicating that they had to further increase discounts to clear their stocks. Among small brands only a few have their own brand retail stores, others generally do not in practice to discount their goods, 62.5 per cent of small brands said sell through improved with considerable growth<

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