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Myntra’s private brands show profit

The online fashion store, Myntra said the company’s private label business which is called Myntra Fashion Brands has turned profitable while the company is still on the course to clock profits by the March quarter for the current fiscal. Ananth Narayanan, the chief executive mentioned that Myntra Fashion Brands has a portfolio of 13 brands which are owned by the company. It currently clocks $300 million in sales on an annual basis which means monthly sales of $25 million. This accounts for 23% of the overall sales of the company.

Retailers fall back on the private labels in order to improve the margins and move towards profitability. These are all the brands owned by the retailers where they can control everything from the sourcing to manufacturing and distribution. With a control over the supply chain and distribution, the brands command a higher margin for private labels as compared to third party brands.

The Myntra Fashion Group reached an EBIDTA of 5% in June which is the first step towards reaching overall profitability. The company expects to turn profitable by the end of the year. Roadster, one of Myntra’s earliest private brands has annualized revenue of $100 million and is the largest brand on Myntra in terms of sales. Other large private brands include HRX and Mast and Harbour which are clocking about $25 million in annualized revenues.

Myntra, which is a wholly owned subsidiary of Flipkart has also started selling various private brands on Jabong, which it bought from Rocket Internet in July last year with a price deal for $70 million. In the three months since their launch on Jabong, the private labels account for an overall sales of 8% of Jabong. Narayanan maintained that Myntra would remain a multi brand platform and the overall contribution of the private labels will not exceed 35% to 40% of the overall sales of Myntra in the next 18-24 months.

These private brands have performed exceptionally well and the approach of building own brands makes Myntra unique. The private brands, under Myntra Fashion Brands is a part of Myntra’s strategy to build a differential offering and cementing the loyalty of the shopper which will increase profitability. The fashion brands occupy nine out of the 20 brands on the platform.

Myntra was acquired by Flipkart in 2014 for an amount of $350 million. It is by far the largest online fashion store in the country and helps Flipkart maintain a strong lead over Amazon. Fashion is a significant category for the online retailers due to the higher margins and the high repeat purchase. Margins in fashion could vary between 20-25% as against a 3-7% margin for electronic devices and mobile phones.

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