Terming the pandemic-impacted April-June 2020 quarter as “the darkest hour of the fiscal”, the country’s leading player in suiting and shirting Raymond said a recovery in the segment would take a “mid-term time frame” when life is back to normalcy, primarily driven by occasion- and celebration-led dressing along with ongoing vaccination.
Demand for clothing, which is a non-essential item, with discretionary spending has been impacted, said Raymonds in its latest annual report while talking about branded textiles, its flagship business.
It expects “modest growth” in the fabric business with increasing competition from ready-made garments, besides low traction for the near term in the exports market due to the pandemic.
In 2020-21, sales of branded textiles had declined nearly 46 per cent to Rs 1,572 crore, as against Rs 2,917 crore of 2019-20.
While discussing the outlook for the segment, Raymond said: “With vaccination gaining momentum, there is an uptick in consumer sentiments leading to pent-up demand, increased footfalls and higher conversion rate.”
“Key sales drivers like impending wedding season, festivities and markets reopening fully are expected to amplify demand,” it added.
While talking about its branded apparel business, which has four differentiated brands Raymond Ready to Wear (RRTW), Park Avenue, ColorPlus and Parx had witnessed a 71.8 per cent decline in sales to Rs 457 crore in 2020-21 as against Rs 1,619 crore a year ago.
“The second wave of the pandemic further dampened consumer sentiments and discretionary spends that are likely to dominate the consumption landscape,” it said.
Raymond said it is facing challenges such as low consumer sentiments, heavy discounting by players to clear old inventory including on e-commerce marketplaces, and extended end of season sale (EoSS). Alluring price cuts are also mounting pressure on margins, it added.
Besides, retail operations of the company, which operates in several formats including The Raymond Shop, exclusive brand outlets for its in-house brands, was also “majorly impacted” due to the lockdowns in H1 FY2020-21, it added.
The company added that consumer demand picked up in the second half with Unlock-1, festivities, EoSS and wedding season, it added.
“The unprecedented market disruptions and continuously prevailing uncertainties have impacted the consumer sentiments, leading to limited visibility for the short to mid term,” said Raymond while discussing the outlook of the retail segment.
The retail segment has challenges as the pandemic altered the trend of witnessing the substantial footfalls in malls mainly impacting enterprise business objects (EBOs) for short to mid term.
Besides, it is also facing round-the-year sales promotions and deep discounting by e-commerce marketplaces.
Moreover, during the pandemic going with a shift in consumer behaviour towards online, Raymond enhanced its digital capabilities.
“As we enhanced and strengthened our digital capabilities to enable seamless customer journeys across platforms, the challenging year triggered us to present an increased number of technology interfaces for consumer convenience and safety for shopping both virtually and physically,” it said.
Addressing shareholders, Raymond Chairman and Managing Director Gautam Hari Singhania said COVID-19 demarcated consumer products into essential and non-essential categories, which took over spending trends in the near term.
“The first quarter was the darkest hour of the fiscal when neither businesses had an idea how to deal with the pandemic nor they were aware of the severity of the impact.
“Given the lack of short-term visibility, it was time to introspect and undertake immediate measures to stay on course,” he said.
The first two quarters of the fiscal were committed to ensuring that these metrics are prioritised and at Raymond, “we committed ourselves to achieve the same”, Singhania added.
“We took some tough decisions during the year that reaped results for us, as we pared debt in FY 2020-21 demonstrating our resilience, especially during the pandemic.
“Having witnessed the second wave of COVID-19 causing more devastation and its reluctance to go away soon, the key for the economy to come back on track is through the accelerated pace of vaccination,” he said.
The company also operates in tools and hardware and auto components segments. They, according to Singhania, were the “dark horses” and “defied all odds posed by the pandemic”. The segments delivered high growth rates both in terms of revenue and Ebitda margins. Its realty business has emerged as the “new core” of the company, he added.
Ebitda stands for earnings before interest, tax, depreciation and amortisation.
Raymond’s consolidated revenue stood at Rs 3,648 crore for the financial year ended March 31, 2021. It had a revenue of Rs 6,578 crore in 2019-20.