V-Mart raises prices for first time in 15 years

By

Isabelle Crossley

Published
Feb 28, 2022

Value fashion chain V-Mart has increased prices in numerous product categories by around 8% to 10% to pass on recent yarn price hikes representing its first time raising prices in 15 years. 

After having to raise prices, V-Mart will not rule out further increases amid an uncertain backdrop of war in Ukraine, continued inflation, and other financial challenges, ER Bureau reported. Although the business had always been able to absorb financial pressure from inflation, the recent yarn price hikes of upwards of 50% proved too steep to handle. 
 
“The litmus test is going to be how soon can we bring the full year operations to normalcy in south India and improve the performance by 20% to 25% in terms of sales throughput which should bring the overall EBITDA for the south India market to roughly around 5% or so in pre-Ind-AS,” V-Mart Retail’s CFO Anand Agarwal told ET Now in an interview. 

The business is also waiting to see if the government goes ahead with its proposed goods and services price hike from 5% to 12% on apparel, said Agarwal. If the government does implement the tax increase, which it was postponed in December, 2021 amid protests, V-Mart will need to implement a 7% increase in retail prices to account for this. 
 
To date, V-Mart has not seen its price increases affect sales volumes, according to Agarwal. However, he acknowledged that further price increases could lead to lower sales volumes. 

“We have been able to maintain the margins because we have been able to pass on the full impact of the price rise on the retail pricing and going forward also I am not anticipating a very big impact,” said Agarwal.