Fashion etailer 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.
This turnaround 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), as per company documents filed with MCA.
To address the cost issue, the company’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 ecommerce player, ET reported.
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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, the fashion etailer 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 ecommerce marketplaces.
Myntra plays a crucial 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.
In March, Myntra Designs, the main entity that runs the 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 ecommerce 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.