Denying the recent reports of Myntra’s offline stores running into losses and a change in its offline strategy, the company’s spokesperson in a conversation with Inc42 said that the company will continue to focus on its franchise offline stores.
Earlier today an ET report stated that Myntra had closed two of its prominent offline stores as both the stores were making losses and sales were weak compared to the high rentals. The stores include — Mango store in Palladium Mall, Mumbai and Roadster store in Indiranagar, Bengaluru.
However, according to an Inc42 source who confirmed the shut down of these two stores — “the Roadster store was shut down because of the property’s building compliance issues and it will be relocated to a different location. For the Mango store, the source said that a women only Mango store will be opened in the place of the existing unisex store.”
The report also stated that Myntra is looking for a change in business strategy after acquisition of its parent company Flipkart by Walmart last year.
However, denying any such change in strategy, the spokesperson told Inc42, “The information on offline business isn’t correct. While we do not comment on our strategy for opening or closing stores in particular locations due to competitive reasons, Myntra continues to move forward in its strategic direction including through franchise offline stores as per the plan.”
Myntra’s Push To Private Labels And Offline Strategy
In 2017, Myntra had launched its first set of offline stores to further its O2O (Online-To-Offline) strategy. Starting with the Roadster’s flagship store to plans of opening beauty and multi-brand stores.
Later in 2018, the Bengaluru-based company said it will expand its offline presence to 100 stores in the next two years. Myntra had also targeted to close financial year 2019 with a Gross Merchandise Value (GMV) of $1.9 Bn, with the help of private labels and offline expansion.
Myntra had earlier reported that it spent 2018 developing its private labels, which are now responsible for generating 25% of its revenue. The company is believed to have more than 14 private label brands and about 30-40 exclusive brand partnerships.
Other Battles Fought
Earlier in January 2019, a Tofler report also claimed that Myntra witnessed an 80% drop in revenue for the year ended March 2018 as it clocked in revenue of $60.6 Mn (INR 427 Cr). Its losses for the year stood at $21.4 Mn (INR 151 Cr) while its total expenses were recorded at $131.5 Mn (INR 926 Cr). However, at that time as well, Myntra denied these data points and suggested that the company “continue to grow at a healthy rate with a firm focus on delivering the best of fashion and lifestyle for our customers.”
Also, the new FDI ecommerce policy which came into effect from February 1st, prohibits ecommerce companies from selling products on its platform in which it owns a stake. Further, to ensure equal opportunities for both online and offline players, the rules also forbid ecommerce players from offering deep discounts through their in-house companies listed as sellers.
Commenting on the policy’s impact, Myntra had recently clarified that it is in compliance with the latest FDI rules for ecommerce companies because it does not own any equity stake in its platform sellers, as it sells brands through third-party sellers.
The online fashion company had also received a capital infusion of $63.68 Mn (INR 414 Cr) from Flipkart’s Singapore-based subsidiary FK Myntra Holdings. Prior to this, Flipkart infused $176 Mn in its fashion arm Myntra Jabong.