Apparel companies likely to lag retail peers for the June quarter

Higher inventory may lead to discounting, dent profitability

Apparel companies would likely be the worst hit among listed retailers in the June quarter, pegged back by falling footfall and higher inventory. Sales updates, so far, indicate steady growth trends for staples, even as discretionary segments continue to lag.

While the staple category could post growth even on a two-year basis (low base last year), recovery levels for apparel makers are in the 25-45 per cent range as compared to the Q1FY20 levels.

Nihal Mahesh Jham and Abneesh Roy of Edelweiss Research say: “Apparel retailers will again see the biggest impact across discretionary categories due to the second wave.” Unlike quick-service