After health, men's innerwear hit by post-pandemic affects

A report noted that men tend to buy more underwear when the economy is dipping, which if true, is what happened in the pandemic.

As the festive season is around the corner, Indians are back to their philosophy of shop till you drop. With office parties and house parties marked in everyone’s calendars, the demand for festive clothing, cosmetics and shoes have been hitting the roof for sure. But you know what is not experiencing an increased demand? Men’s underwear and athleisure.

During the pandemic, when most of the people were working from home and preferred to be in comfort clothing, several innerwear companies had started selling an athleisure segment as well to meet the rising demand of comfort wear. 

However, now that the people are mostly back to work from office for over a year, the demand for athleisure has lowered, reported The Economic Times.

While Rupa & Company’s director Ramesh Agarwal said the sales in the athleisure category was “relatively” flat in the first quarter, Yogesh Kabra, the founder of XYXX brand noted that there wasn't a dip in sale for the premium category and blamed the stock pile-up of mass brands as one of the factors.

“Most consumer products are going through a premiumisation trend post-pandemic. Most of the brands that suffered the dip in sales, are mass brands. And this was mainly because of inventory pile-up," Kabra told the publication.

The innerwear market in India is estimated to be worth around Rs 48,123 crore, the publication reported quoting Euromonitor International. The men’s and women’s category is believed to contribute around 39 per cent and 61 per cent, respectively.

The managing director of Page Industries, the parent company of brands like Jockey and Speedo in India, said, “The first quarter witnessed a sequential revenue growth of 28 per cent and a volume growth of 31 per cent. During this quarter, the macro headwinds and market conditions did pose some challenges leading to a slight year-on-year degrowth reflected in a 7.5 per cent decline in revenue and 11.5 per cent decline in volume compared to Q1 of the previous year.”

Apart from Page Industries, several other listed men's underwear brands also reported degrowth. 

As per industry players, miscalculated inventory for this year and price fluctuations of raw materials may be listed as the primary reasons behind poor sales in Q1 FY24.

Kabra pointed out that the demand for innerwear products increased in the pandemic leading to an increased stocking of inventory by retailers. While the inventory increased month-on-month to compliment the increased demand, unexpected change in demand patterns resulted in piling up of inventory. 

“This is primarily happening for inventory stocked by offline retailers. The online channel sales have been growing steadily at 25 per cent-40 per cent. This industry does discount on pricing. And online channel sales, especially for men’s underwear, has no way dipped. This is purely a post-pandemic forecast sales miscalculation issue and will sort itself out in the next few months,” Kabra added. 

Jockey India has experienced one of the strongest quarters in Q2 FY21 with sales growing by around 160 per cent quarter on quarter. This was despite an overall yearly revenue decline. 

“Last Q1 (FY23) was a historically high quarter. I can say it was partly abnormal because of the supply-chain disruptions, which we had. And then there was a pent-up demand, there was 'revenge shopping' happening, so you could not compare that quarter with this quarter from a baseline point of view. That apart, the inventory is high,” Ganesh from Page industries said.

'Revenge shopping' refers to the sudden surge in purchase of consumer goods, after people have been denied their opportunity to shop, in this case, the pandemic was the reason. 

If inventory remains unsold for 8-9 months, it is most likely that desperate retailers and distributors will engage in a price-discount war. 

“If you go to the market, except a few, almost all the brands are having offers, promotions by one way or the other. When I look at retailers, there are a lot of schemes that are happening. If you look at it from a bottom line point of view, these are not sustainable, and it is not 'Ebitda' (Earnings Before Interest, Taxes, Depreciation, and Amortization) or bottom line friendly,” Ganesh of Page Industries said. 

As Ramesh Agarwal, whole-time director, Rupa & Company Ltd shed light on 'volatile raw material prices' in 2023 for impacting the gross margins, he also said that their high advertising expenditure may have added to the problem.

“We witnessed growth in volume of around 5 per cent during this quarter. Also, pursuant to various celebrities onboarded in the preceding quarter across different product segments, the advertising campaign pre-planned resulted in higher advertising expenditure during the quarter at the rate of 12 per cent of the revenue,” Agarwal said.

Rupa & Company Ltd witnessed a decline in the annual revenue of around 21 per cent in FY23 and -9 per cent in Q1 of FY24 compared to FY23, the ET report read. 

However, women’s innerwear did not experience the same hit as the males' did. The report believes that a reason for this is continued demand among women for athleisure and activewear. While the demand for sleep and loungewear did experience a commendable growth in the pandemic, activewear still drives a chunk of demand and further growth is expected. 

The report also noted that men tend to buy more underwear when the economy is dipping, which if true, is what happened in the pandemic.