Myntra got a $54 million cash injection from parent company Flipkart amidst stiff competition from Reliance’s Ajio and Tata Cliq in the online fashion sector.
As per filings in Singapore, FK Myntra Holdings Pvt Ltd, Myntra’s parent company, received this funding in January, marking the second investment from Flipkart within a year. Flipkart had previously invested $105 million in Myntra in March 2023.
For the fiscal year ending March 31, 2023, Myntra witnessed a 25% increase in operating revenue compared to the previous year, amounting to Rs 4,375 crore. However, the net loss expanded to Rs 782 crore during this period.
In January, Myntra Designs Pvt Ltd, Myntra’s India unit, secured Rs 689 crore (approximately $83 million) from FK Myntra Holdings based in Singapore.
Myntra has been actively expanding its collection of international brands, primarily focusing on premium offerings, as it observes rapid growth in this segment. In contrast, the demand for online fashion in lower-price categories has experienced a recent slowdown.
With over 420 global brands in its portfolio, Myntra derives approximately 25% of its revenue from international brands, marking a significant increase from two years ago when it had 280 international labels.
In a shift in strategy, Myntra is now concentrating on specific private labels rather than maintaining a broad range of in-house brands introduced earlier in the apparel sector. Last July, the company underwent a restructuring initiative that led to the termination of 50 employees.
According to a research note by Bernstein in January, Myntra holds a 55% market share in the fashion e-commerce segment based on monthly active users (MAUs). Ajio, owned by Reliance, has been steadily acquiring users and maintains an approximately 33% market share, while Nykaa Fashion, operated by FSN E-commerce Ventures, holds around 6% in MAU terms.
“In December 2023, Myntra exhibited the highest growth rate amongst peers at 25%,” the report said.
Nevertheless, the report highlighted a concerning trend in Myntra’s business, indicating that users on the app were not engaging in transactions as frequently as before. Myntra’s gross merchandise value (GMV) grew only 12% in FY23, a significant drop from the 35% growth observed in FY22, followed by Bernstein.
“The fashion market is extremely fragmented offline, and the online market is seeing similar trends with multiple players emerging to gain share,” it added.
Flipkart’s injection of funds into Myntra closely follows the horizontal marketplace’s substantial commitment from its US-based parent, Walmart, amounting to $600 million. This investment is part of a $1 billion funding round for Flipkart.
