The vaccination rate has improved. fashion retail segment in India According to the rating agency ICRA’s sample set, fashion retailers are expected to increase capital expenditure on store additions in fiscal 2021-22 by more than 45 percent.
This growth will translate to an annual revenue increase of 23-25 percent in this fiscal.
Rent concessions were significantly lower in the first quarter this fiscal year, by as much as 55 percent compared to the previous wave.
In India, has been adopted as an alternative to for online retailing. Most retailers have reported a jump of more than 50% on a year-over-year basis.
The ICRA base case for the third quarter could be reduced by up to 40% if a third wave peaks in October and November 2021.
ICRA’s checks of the channel suggest that in July and August of this year, sales of the segment recovered to a healthy 70-85 percent of their pre-COVID levels.
The current recovery contrasts with a relatively modest recovery (upto 48-50 percent of sales before COVID) reported in the second quarter last fiscal after the reopening of the first wave.
Retail entities have three main cost components: employee costs, rent and sales/promotion expenses. These costs account for 30 percent of total retail costs. The first round of rental negotiations was delayed until March 2021. Fashion retailers invoked force majeure clauses in their rental agreements to renegotiate rents.
ICRA said that the extent of rental concessions was lower in the first quarter this fiscal by as much as 55 percent than in first wave.
