Covid-19 to shave off over a third of apparel retailers' revenues

While operating profitability is likely to be impacted by around 200 bps, absolute fall in operating profits will be much sharper, necessitating additional funding

The Rs 1.7-trillion organised apparel retail sector is likely to witness a 30-35 per cent decline in revenues this financial year because of temporary store closures, restricted mobility, and low-income visibility for consumers owing to the Covid-19 pandemic, says a Crisil Ratings study.

While operating profitability is expected to be impacted by around 200 basis points (bps), the absolute fall in operating profit can be much sharper, necessitating additional fundraising, mainly debt, by firms to make up for the cash flow shortfall. This will affect credit metrics for apparel retailers, the study says.

The analysis, based on a sample of 60 Crisil-rated