Expenses Rise by 41%, on the other hand Myntra Slashes Back Losses In FY17

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Myntra Reportedly faced a 25% Drop In Its FY17 and  Loss of $96.06 Mn. While Its Cost Increased To $391.14 Million.

Fashion e-retailer Myntra, owned by Flipkart, has cut back its loses in FY 17 by 25% to $96.06 Mn (INR 655 Cr) as against $120.7 Mn (INR 823 Cr) in the previous year, as the focus on its private labels  continues to drive results, as per company documents filed with MCA.

Image Credits:financialexpress.com

This inversion could also be attributed to the 100% growth in its accessories category as recorded in FY 17.  While the company has been able to curtail losses by 25%, expenses continue to increase with total expenses up by 41% to $391.14 Mn (INR 2667 Cr),  from last year. This rise was driven by advertising expenses which rose by 50% 42.4 Mn (INR 289 Cr).

To address the cost issue, Myntra’s board of directors has approved a ‘slump sale’ of its wholesale B2B business to Myntra Jabong India, reflecting that the business did not yield expected financial results for the fashion and lifestyle e-commerce player.

A slump sale of an undertaking means the transfer of the undertaking as a going concern, for a lump-sum consideration, by the seller company to the purchaser company.

In July 2017, Myntra had renamed one of its associated entities: QuickRoutes Internet Pvt Ltd as Myntra Jabong Pvt Ltd to become a B2B seller. Myntra Jabong acts as a B2B seller of fashion and fashion-related merchandise to e-commerce marketplaces.

Myntra plays a primary role in the overall commerce battle in India between Flipkart and Amazon. During the investor call after Walmart’s acquisition of Flipkart, its CEO Doug McMillon referred to Myntra as a “piece” of the company that is positioned well to take advantage of India’s growing middle class and relatively young population.

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In the month of March, Myntra designed, the main entity that runs Myntra’s marketplace, received an infusion of  $60.73 Mn (INR 414 Cr) from its Singapore-based entity FK Myntra Holdings. Earlier in the year, Myntra Designs had reportedly posted a turnover of $314.6Mn (INR 2,000 Cr) for the fiscal year 2016-17, a 94% increase in FY17 from the previous year.

All in all, the path to being a leader in e-commerce in India leads through online fashion retail, a market which, according to Technavio, is expected to grow “impressively” at a CAGR of around 63% by 2020.

For more such news stay tuned with inventiva.co.in.

Featured Image Credits:officechai.com

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