Global Threads

Q2 records low­est ever growth at 0.18 points; Small Brands trail the pack as per CMAI’s Ap­parel In­dex for Q2, July-Septem­ber FY 2018-19.

Apparel - - Contents -

A round-up of im­por­tant news and events


CMAI’s Ap­parel In­dex for Q2 (July-Septem­ber FY 2018-19) in­di­cates that growth has fallen to al­most a no-growth level and has touched 0.18 points. It is the low­est ever in the last five years. Small Brands are the big losers, with a neg­a­tive growth of -1.71 points. How­ever, Big Brands’ (Mid, Large and Gi­ant to­gether) cu­mu­la­tive growth of 3.39 points (much lower than 6.55 points in the last quar­ter) also failed to pull up the in­dex sig­nif­i­cantly.

It is im­por­tant to ob­serve, if Sales Turnover was to be con­sid­ered as the only pa­ram­e­ter for de­ter­min­ing the Ap­parel In­dex, this quar­ter, the over­all Ap­parel In­dex would have been neg­a­tive at -1.80 points.

CMAI’s Q2 Ap­parel In­dex recorded a mea­gre growth of 0.18 points, whereas Small Brands (turnover of R10 crore to R25 crore) is neg­a­tive at -1.71 points. For Mid Brands (turnover of

R25 crore to R100 crore), growth stands at 1.03 points, al­most five times that of the over­all in­dex; Large Brands’ growth is 3.61 points, 20 times that of the over­all in­dex. Whereas in the last quar­ter, Large Brands’ growth was just three times (2.95 times) that of the over­all in­dex.

As usual, it’s the Gi­ant Brands that grew the most at 8.36 points, 46 times that of the over­all in­dex. Gi­ant Brands have con­sis­tently been do­ing well every quar­ter; their rate of growth this quar­ter is much more than the oth­ers, while be­ing higher than in the pre­vi­ous quar­ter.

At 0.18 points, the over­all Q2 in­dex is much lower than the pre­vi­ous quar­ter’s (April-June FY 2018-19) 3.24 points and Q2 of the pre­vi­ous year, which was 1.87 points. While Big Brands to­gether have grown at 3.39 points, in­di­vid­u­ally Mid, Large and Gi­ant Brands have grown at 1.03 points, 3.61 points and 8.36 points re­spec­tively (pre­vi­ous quar­ter fig­ures 6.35 points, 5.95 points and 8.07 points). Only Large Brands have shown some buoy­ancy. Mid and Large Brands grew much lesser than in the pre­vi­ous quar­ter.

Much like all the pre­vi­ous quar­ters, the big­gest brand group–Gi­ant Brands–are con­tin­u­ously grow­ing at the high­est level, out­grow­ing any kind of re­ces­sion­ary trends. The gap this quar­ter is huge; in fact, it’s the high­est ever.

Small Brands, at -1.71 points, seem to be in a bad phase, un­able to pull along and re­flect growth. They are not in a po­si­tion to out­smart their busi­ness prac­tices. The over­all growth in­dex is be­ing pulled down by the small play­ers. In fact, Small Brands’ con­tin­u­ously falling in­dex is cer­tainly a point of con­cern.


The cu­mu­la­tive Sales Turnover in Q2 re­flected a dip for the first time at -0.72 (pre­vi­ous quar­ter fig­ures were 1.88 point). Around 32 per cent brands re­ported an in­crease this quar­ter. Per­haps for the first time, al­most 45 per cent brands have re­ported a loss in Sales Turnover. In­ci­den­tally, be­sides Large and Gi­ant Brands, both Small and Mid Brand groups re­ported sales losses. A whop­ping num­ber of re­spon­dents who re­ported a loss in Sales Turnover were among Small Brands. “We were able to get a good num­ber of book­ings. This has helped us in­crease Sales Turnover,” said Deepak Singla, Cantabil’s Head of Mar­ket­ing.

Sell Through recorded an in­dex growth of 1.14 points this quar­ter, lower than 1.23 points in the pre­vi­ous quar­ter. Max­i­mum growth in Sell Through was re­ported by Gi­ant Brands, fol­lowed by Small Brands. “Sell Through has in­creased as cost re­al­i­sa­tion is less. We were not able to make great prof­its as raw ma­te­ri­als have be­come costlier, but we have kept our prices con­stant. Hence, Sell Through has in­creased,” ex­plains Manu Chawla, Pro­pre­itor, Taiga Kids.

While 53 per cent brands re­ported an im­prove­ment in Sell Through, how­ever, 37 per cent brands saw no change and around 10 per cent recorded a dip in growth. As Paresh Ded­hia, Owner, Dare Jeans points out, “There is an in­crease in ex­pen­di­ture as ev­ery­thing is cor­re­lated. In­ven­tory Hold­ing and Sell Through has gone up as the pre­vail­ing mar­ket is slow. Buy­ing and plac­ing or­ders has come down and the cash flow is slow. Hence, ex­pen­di­ture has in­creased.”

In­ven­tory Hold­ing growth was at 2.1 points, higher than 1.58 points recorded in Q1. Al­most 64 per cent re­spon­dents across brands have said that their In­ven­tory Hold­ing moved north this quar­ter-in­deed a sig­nif­i­cant num­ber - and they were re­spon­si­ble for pulling down the over­all Ap­parel In­dex value. In­crease in In­ven­tory Hold­ing im­pacts the over­all in­dex neg­a­tively. Higher In­ven­tory Hold­ing in­di­cates longer hold­ing of in­ven­to­ries in ware­houses or shop shelves.

One pos­i­tive as­pect of Q2 is that fresh In­vest­ments have gone up by nearly 1.80 points as against 1.70 points last quar­ter. High­est In­vest­ments came from Mid Brands, fol­lowed by Gi­ant Brands.

Over­all, nearly 86 per cent re­spon­dents re­ported a rise in In­vest­ments, which is much higher than 77 per cent in the pre­vi­ous quar­ter. It in­di­cates that most brands had to in­vest to man­age and grow, which means that growth is not com­ing eas­ily. “We are ex­pand­ing and since we are ven­tur­ing into new mar­kets, we need to ad­ver­tise to make our pres­ence felt and this in­curs cost. There are also some fixed ex­pen­di­tures in open­ing a new store, etc. Hence, the ex­penses have gone up com­pared to last year,” points out Mayank Jain, GM, Monte Carlo.


Around 50 per cent brands say the out­look for next quar­ter is ‘Av­er­age’, while 38 per cent be­lieve it will be ‘Good’. Only six per cent feel that the quar­ter will be ‘Ex­cel­lent’. How­ever, an­other six per cent be­lieve it will be ‘Be­low Av­er­age’. Com­par­a­tively, the out­look recorded in the pre­vi­ous quar­ter was ‘Good to Ex­cel­lent’. Gen­er­ally, in Q3 of the fi­na­cial year, a num­ber of fes­ti­vals come up with sales pick­ing up, so the over­all mood is pos­i­tive. How­ever, this doesn’t seem to be re­flected this time due to the lack­lus­tre per­for­mance of Q2.


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. The in­dex is an­a­lysed on as­sess­ing the per­for­mance on four pa­ram­e­ters: Sales Turnover, Sell Through (per­cent­age of fresh stocks sold), num­ber of days of In­ven­tory Hold­ing, and in­vest­ments (sig­ni­fy­ing fu­ture con­fi­dence) in brand devel­op­ment and brand build­ing. The Ap­parel In­dex re­search is con­ducted by DFU Pub­li­ca­tions.

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