One of the worst COVID-19 hit sectors, fashion retail may close the year with 23-25 cent revenue growth if there is no third wave, according to a report by Icra Ratings.

According to SakshiSuneja, , the sector head at the agency, with an improvement in the vaccination coverage, the fashion retail is expected to clip at 15-17 per cent from Q2 onwards, translating into annual revenue growth of 23-25 per cent in the year to March 2022.

This shall, however, remain lower by up to 20 per cent from the pre-pandemic sales, and thus the agency maintains its negative outlook on the segment and expects it to revert to pre-pandemic sales only by Q2 of FY23, she added.

Two other reasons for the optimism is the massive 55 per cent fall in rentals in Q1 of FY2022 and more adoption of online retailing to the tune of over 50 per cent jump in volume on-year.

However, the report warns that if there is a third wave, which virologists still do not rule out, it can potentially shave off up to 40 per cent of revenue. And even if the sector closes the year with a 25 per cent growth, it will still be 20 per cent lower than the pre-pandemic volumes. Therefore, the agency maintains its negative outlook on the sector and expects full recovery only from the second quarter of the next fiscal.