Synopsis :- Companies in the footwear and apparel space experienced differing levels of impact from the GST changes.
GST cuts were expected to boost demand, but apparel and footwear retailers saw no revival due to early Diwali, weak discretionary spending, and weather disruptions. Confusion during the long GST transition period also led retailers and distributors to delay purchases.
GST on footwear and apparel was simplified into two slabs—5 percent and 18 percent. Items priced up to Rs. 2,500 now fall under the cheaper 5 percent rate, making budget products more affordable. But apparel above Rs. 2,500 now faces higher GST (18 percent instead of 12 percent), hurting mid-premium and festive-wear segments.
Many footwear and apparel companies did not perform well even after the GST cuts. Lower-priced items didn’t sell much, mid-range products struggled, and many retailers had to offer early discounts, which reduced their profits. Overall, these companies were hurt by weak consumer demand rather than tax changes.
Companies Not Seeing the Impact as Expected
Khadim India’s September-quarter sales fell to Rs. 101 crore from Rs. 109 crore last year. The company expects the recent GST cut to gradually revive demand, helping narrow the gap between unorganised and organised players.
V-Mart said the impact of the GST cut has not yet shown up in lower-ticket categories. Management noted that expected gains didn’t materialize as consumer response remained weaker than anticipated.
Trent reported low single-digit growth, citing muted consumer sentiment, unseasonal rains, and GST transition issues. Mirae Asset noted that while GST rationalisation may support small-ticket discretionary demand ahead, the company’s slower revenue growth signals a broader consumption slowdown.
Companies That Are Benefiting
Metro Brands
Metro Brands experienced a strong post-GST demand surge, as nearly 90 percent of Walkway and a large portion of Metro and Mochi products qualified for tax reductions. The GST cut resulted in 11 percent lower prices for footwear priced Rs. 1,000–Rs. 2,500 and around 6 percent reduction for footwear under Rs. 1,000.
CEO Nissan Joseph said customers delayed purchases in September, waiting for the rate change, further pressured by prolonged monsoons, but demand accelerated immediately after the GST rollout. The company also recorded strong e-commerce growth and expects a better second half.
Aditya Birla Fashion & Retail Ltd (ABFRL)
ABFRL reported steady demand with no GST-related slowdown, unlike many rivals. The early onset of Pujo lifted footfall and conversions. Management said the 5–6 percent GST increase did not significantly affect consumer behaviour, given the premium nature of brands such as Louis Philippe, Van Heusen, and Pantaloons.
Pantaloons delivered 7 percent like-to-like (LTL) growth in Q2, while youth brand OWND! grew 43 percent YoY, outperforming most peers. Short-term disruptions from rains in Kolkata and brief Northeast shutdowns did not materially affect the overall festive-season performance.
Conclusion
The GST cut offered limited relief as reduced discounts offset its benefits, and items above Rs. 2,500 saw no tax advantage. Festive spending was fragmented due to the Durga Puja–Diwali overlap, while e-commerce shifted buying earlier.
Heavy rains further hit footfalls, forcing early discounts and hurting margins. Analysts expect only mild improvement ahead, with demand constrained by competition and low discretionary spending.
Written by Akshay Sanghavi
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