30 September 2022, Mumbai:
The operating margin of India’s footwear industry is anticipated to increase by 200 to 300 bps in fiscal 2023. The projection equates to a sales growth of around ten percent over pre-Covid levels.
Driven by increased footfalls and an uptick in discretionary spending the demand for footwear is expected to remain healthy, especially in the offline retail route during the upcoming festival and wedding seasons. While the recovery derailed slightly in the fourth quarter owing to the third wave, the sector bounced back in March 2022.
In addition to the formal footwear segments, the growing athleisure segment further supports revenue growth. Moreover, increasing Omni channel presence has also added to the sales volumes.
While cost rationalization was the focus area in fiscal 2021, and companies saved on employee and other expenses, including rental concessions and advertisement expenses, a large portion of such costs were back to pre-Covid levels in fiscal 2022.
Although these costs are expected to increase further in the current fiscal, the profitability of these players would witness an improvement because of healthy volume growth. In addition, raw material prices have started moderating in recent months, which, if sustained, would also support the profitability of footwear players in fiscal 2023.
