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L to R: Manohar Kamath, chief of Myntra Fashion Brands and Ananth Narayanan, CEO, Myntra & Jabong
TMT

Myntra’s private label business turns profitable

31 August, 2017

Flipkart-owned fashion e-tailer Myntra’s private label vertical has turned profitable in past two consecutive months, registering a positive EBITDA of 5% in June this year, a company statement said.

Myntra Fashion Brands registered 100% year-on-year growth and is on track to yield $300 million in revenues by the end of this year, Ananth Narayanan, chief executive of Myntra and Jabong, said at a press conference. Myntra is expected to sustain an EBITDA positive rate of 3-5% in the long term even as it continues to grow, he added.

The company claims to have achieved this by leveraging machine learning and artificial intelligence, offering a wide range and high-quality fashion products, speeding up its supply chain, and identifying demand through better forecasting capabilities.

Currently, Myntra’s overall business is currently operating on a $1.5 billion revenue run rate and is expected to hit $2 billion and attain overall profitability by the end of the last quarter of this financial year, Narayanan explained.

“Even as we have hit this milestone, there is more happening in other brands as well. We continue to optimise supply chain costs resulting in overall scale benefits, which translates into a rise in revenues but not in fixed costs. We are also optimising our marketing, customer, and acquisition costs to reach this goal,” said Narayanan.

Myntra currently has 13 private labels that include Roadster, HRX, Mast & Harbour, Dressberry, Ether, Anouk, K&K, Harvard, and Invictus among others, which currently contribute to 23% of its total revenues.

“The goal is to eventually make our private labels account for 35%-40% (not beyond that) of our total revenues, which we hope to achieve in 18 months. Being a multi-brand platform will continue to remain the crux of our business,” said Narayanan.

Roadster, which is currently its largest private fashion label hit a run rate of Rs 500 crore in 2016 and is on track to clock Rs 600 crore ($100 million) by the end of this year. Some of its other private labels which are revenue spinners, according to Narayanan, include HRX and Mast & Harbour, with both of them roughly clocking in Rs 180-200 crore in sales.

Myntra’s private labels, which were launched on Jabong about 15 months ago, also accounted for nearly 7-8% of its total sales, Narayanan said.

Going forward, the core investment areas for Myntra’s private labels will include technology, design and sourcing, and marketing in order to promote them as national brands. For Myntra’s overall business, the core investment will be in technology, content—to engage with customers—and marketing.

While Roadster, HRX, and All About You are already national brands, the company has identified Mast & Harbour and Dressberry for marketing investments next year. According to Narayanan, Myntra is expected to open two to three exclusive offline stores for its private label brands and the broad contours for its conceptualisation is currently underway, he added.

In March this year, Myntra opened its first exclusive offline store in Bangalore for its flagship private label Roadster.

Likewise, Myntra is also expected to open more offline stores through an exclusive franchisee model for other fashion brands. In February last year, Myntra bagged the rights to manage brick-and-mortar outlets of Spanish fashion label Mango in India along with exclusive online rights. However, Narayanan refused to divulge further details on this.

With Flipkart having recently built a war chest of nearly $4 billion, Myntra is expected to receive funding that will go towards strategic growth investments. According to Narayanan, Myntra is considering acquiring certain brands and tech companies among other things to contribute to the overall growth of the platform.

“The way we think, we definitely want to become cash flow positive and operationally profitable. So, any investment that will be required will be invested from an overall Flipkart standpoint,” said Narayanan.

He said that Myntra will not depend on Flipkart for funding for its operations, but will leverage its parent to build its overall market share.

“We are at 2.5-3% penetration and the eventual goal is to reach 30% if we want to become a market leader. There is potential to build a business of $6-7 billion at Myntra,” said Narayanan.

For its working capital needs, Myntra seems to have resorted to bank credit lines for its operational expenditure. On Thursday, VCCircle reported that Myntra’s B2B fashion retail arm secured a loan of Rs 199 crore ($31.1 million) from Yes Bank.

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Myntra’s private label business turns profitable

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