Unlike FY19, direct to consumer (D2C) fashion brand Bewakoof has recorded loss in the year ending March 2020. The Mumbai-based company registered a 27% growth in revenue from operations which increased to Rs 208.33 crore in FY20 from Rs 164.22 crore it earned in FY19.
Around 97.25% i.e Rs 202.6 crore were earned through sales of products on its platform and the remaining Rs 5.73 crore were collected as membership, cash on delivery fees and sale of scrap material.
It seems like there has been a stagnation of growth for the fashion brand in the last fiscal. In FY19, Bewakoof’s operating revenue had grown by 233%. While Bwakoof has not managed to keep up its growth figures in line with the previous fiscal, there has been a steady jump in cash burn for the company during FY20.
Bewakoof had posted an annual profit of Rs 29.5 lakhs in FY19 but the increased run rate of expenses has caused the annual results to go back in red in FY20.
Bewakoof’s annual consolidated losses for FY20 stood at Rs 28.26 crore and EBITDA margins slipped from 3.56% in FY19 to -9.5% in FY20.
Bewakoof operates on an asset-light model and it could be noticed from its asset turnover ratio of 2.25X. It outsources most of the garment manufacturing work to job work contractors. It spent Rs 55.05 crore on such payments during FY20, growing by 21% from Rs 45.53 crore in FY19.
Expenses on purchase of stock in trade shot up 6X to Rs 9.83 crore while the cost of raw materials consumed has gone down by 2.5% from Rs 51.7 crores in FY19 to Rs 50.4 crore in FY20.
Further, costs related to the transportation of merchandise have grown by 25.5% to Rs 28.64 crore in FY20 from Rs 30.8 crore along with 96% increase in payments towards rent and power which amounted to around Rs 10 crore in FY20.
Bewakoof aggressively pushed sales on its websites through content and social media marketing and its expenses sheet substantiates it. Advertising and promotional expenditure ballooned 2.1X to Rs 41 crore in FY20 from Rs 19.4 crore in FY19.
Bewakoof spent another Rs 3.8 crore on IT-related expenses and pushed its total expenditure to Rs 238.82 crore in FY20, a jump of 48%from expenses of Rs 161.3 during FY19. The company spent Rs 1.15 to earn a single rupee of operating revenue as compared to Rs 0.98 spent on the same during FY19.
While the disruption in business was not reflected in the financial results for the fiscal ended in March 2020, Bewakoof’s revenue is likely to go down in the ongoing fiscal due to the pandemic. Like other businesses, fashion brands were suffering during the April- August period. Apart from recording nil revenue, they have also been facing a shortage of workers.
Bewakoof’s financial performance in FY20 has not been as good as FY19, but it’s one of the few D2C brands in apparel space to surpass Rs 200 crore revenue mark. It appears that the growth of the company has started taking a downturn, but it’s poised to be one of the potential fashion brands in a few years from now.
