Spykar Lifestyles plans ‘forward’ for the period after the lockdown as spending has been hit

Homegrown denim-wear brand, Spykar, will look to conserve cash; while temporarily putting on hold expansion plans as it looks at the business re-boot post the lockdown.

Retailers across India have been badly hit with a virus-induced lockdown forcing shops to remain shut for over 40 days. Even a staggered exit plan continues to be of little help as most shops are uanable to re-open across malls or high streets.

According to Sanjay Vakharia, CEO, Spykar Lifestyles, the slowdown in economic activity is expected to have an impact even after the lockdown is lifted. So it becomes all the more important to “plan forward” and “see through the year”. This means not just conserving cash; but also protecting employees.

Rent negotiations are on; apart from store expansion being stalled for at least a “three-to-four month” period. There could also be renegotiations for stores that aren’t doing well. Other cost control measures are being put into effect.

Spykar, which competes with the likes of Levis and Jack and Jones in the denim-wear category, has 280 stores – 250 standalone and another 30 “yellow ticket” (discount stores) –pan-India. Stores are either company-owned and franchise-operated; or franchise-owned and franchise-operated. Some 17-odd stores were opened after the Centre allowed opening of some stores in green and orange zones.

“The period that will follow after the lockdown is lifted, is when the slowdown hit. Se we have to plan forward and see through the year,” he told BusinessLine.

The challenge also remains in making operational production units. Units, although they are third party, are yet to resume operations.

Spykar’s FY-20 revenues are expected to be upwards of 8 per cent over FY-19 and in the range of around ₹400 crore. In terms of profitability, the company says, it is “better than industry average”. The financial impact of the lockdown and slowdown in sales are yet to be ascertained.

Festive season

Market sources say, a delayed festive season has led to recovery in sales during the second half of FY-21. The challenge though remains in “bringing people out to buy”.

Spending is most likely to be hit. People will be looking at more “value for offerings”. Brands which have a wide spread across price points are likely to benefit; even if consumers downgrade. Markets are also anticipating deep discounts in a bid to liquidate stocks and ensure availability of working capital.

“It is very unlikely that fresh stocks – the spring-summer collection – which generally move in by March, is likely to be on discount. This is the fresh stock at the moment. Presuming some normalcy during festive season, they will try to see through this period with existing stocks and try pushing new collections during the festive season,” Vakharia said.

E-commerce though will continue to see discounted offerings, especially, for older stock or for collections from previous seasons.

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