Home textile exporters have been facing a consistent decline in operating margins. So says Icra.

Among the reasons for the decline in margins are the high and increasing raw material and logistic costs. The demand scenario has normalised and inflation is exerting pressure on consumer discretionary spending. Slower-than-expected sales have resulted in higher-than-average inventory levels in recent months (June 2022 and July 2022).

Rising inflationary concerns, the resultant slowdown in consumer discretionary spending, uncertainty about the economic growth outlook and cautious buying by retailers to manage inventories are affecting sales in key export markets.

The turnover of home textile exporters is expected to contract further in the quarter ended September 2022 with muted sales in the December quarter as well. Overall, there may be a double-digit contraction in turnover as well as moderation in margins for home textile exporters in fiscal year 2023 following all-time high sales and profits in fiscal year 2022.As a result, retailers may go slow/cautious on buying in the subsequent months to rationalise their inventory levels. This is corroborated by the slow off take being experienced by domestic exporters, despite healthy order book trends witnessed till a few months back.

Home textiles include bed linen, bed sheet and other bedroom textiles, bath linen, carpets and rugs, blankets, kitchen linen, curtains, cushions, cushion cover, and covers for quilts.