Did Myntra's falling revenue lead to management rejig?

The exit of top management at Flipkart’s group company, Myntra, which included the resignation of its present CEO Amar Nagaram, along with the chief financial officer and chief marketing officer, has raised questions on the online platform’s performance.

Although, company insiders have denied any correlation between the sliding profits and the management exits, the emergence of Reliance Retail’s Ajio platform as a top competitor to Myntra since the start of the Covid-19 pandemic, as per the analysis by research firms, could have upset Flipkart-backed fashion marketplace’s revenue numbers.

“The management exits in succession are coincidental. Amar and another senior executive have decided to start their ventures,” company sources said.

An internal email -- seen by BusinessToday.In -- by the outgoing CEO Amar Nagaram, who will leave in December, stated CFO Ramesh Bafna and CMO Harish Narayanan have also quit the company. Flipkart’s CFO Sriram Venkatraman will act as the interim CFO of Myntra, the memo further stated. Nandita Sinha, Vice President, Customer Growth and Marketing, will take over as the Myntra CEO.

“This decision comes at a time when Ramesh Bafna, CFO, Myntra, who has been with the Flipkart Group for the last 7 years, has decided to pursue career opportunities outside of Myntra. Ramesh has contributed immensely during his stint at Myntra, strengthening the finance function and setting systems and processes to help scale the growth further. At this juncture, where Myntra is ready to make new strides, the Group CFO, Sriram Venkatraman, will be a key advisor to the leadership team as interim CFO for the next few months,” his email said.

“The evolution of Myntra over the years has been enabled by a set of able leaders, including Harish Narayanan. Under his leadership, Myntra’s marketing function has shifted to digital, strengthening its content and commerce play. In pursuit of his passion for early-stage start-ups, after nearly two-and-a-half years, he has decided to write the next chapter of his career in the ed-tech space,” Nagaram said.

A Myntra spokesperson declined to comment when BusinessToday.In reached out to the company.

Despite Myntra providing a shot in the arm to Flipkart’s annualised revenues and margins, Myntra’s reported revenue for FY20, according to business intelligence firm Tofler, was Rs 4,262 crore in FY20, a steep 6 per cent fall from Rs 4,516 crore in FY19. However, during the same period, the online fashion marketplace also cut its losses to Rs 874 crore in FY20 from Rs 1,165 crore in FY19.

Research firms have pegged Reliance Retail’s online platform Ajio has emerged as a top competitor to Myntra in the fashion category. In the last two quarters, Ajio had reported the highest-ever revenues on the back of impactful activation, strong execution and wider catalogue, as per Reliance’s July-September quarter results.

A spokesperson from consulting firm RedSeer said during this year’s festive season sales, Ajio emerged as a top rival to Myntra, with fashion contributing to 23 per cent of the overall sales. “Qualitatively, our data shows the top players in online fashion are Flipkart-Myntra, along with Ajio, with multiple players coming up, including Meesho,” the spokesperson said.

However, a Bank of America report released last year showed Reliance’s strong presence in the rural belts, coupled with its omnichannel approach, and COVID-19, led shopping the behaviour shift has worked for Ajio with average monthly visits at 23.5 million, compared to 21 million users for Myntra.

An industry executive, on condition of anonymity, said the deep discounts offered by Ajio have enabled its expansion beyond metros and Tier-1 towns, whereas for Myntra, not generating profitability despite huge marketing and celebrity endorsement campaigns, is emerging as a concern.

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