Koovs sales double but losses surge amid India's 'black' money crackdown

22nd Dec 2016 09:34

(ShareCast News) - Koovs' enjoyed strong sales growth in the first half of the year but losses widened by almost two thirds as the Indian online fashion retailer was hit by the government's demonetisation programme as it bids to clamp down on 'black money'.For the six months ended 30 September, revenue of £4m was double that produced in the same period last year, as website traffic soared 132% to 38m visitors during the half-year period and the number of registered users rocketed to 1.5m from 600,000.However, pre-tax losses widened by about 60% to £9.1m, which the company said was in line with expectations as it invests in marketing and technology, while the £26.2m raised in additional share capital during the period meant it entered the second half with the equivalent of £7.7m in the bankThe Indian government's demonetisation on 8 November, whereby it replaced Rs500 and Rs1,000 notes with new Rs500 and Rs 2,000 denominations to root out cash earned illegally or not declared to tax officials, had a "short-term" impact on the market and liquidity problems, Koovs said.E-commerce companies in particular were affected since the crackdown as cash on delivery is commonplace in India.But chief executive Mary Turner said that offering alternative payment options, including a doorstep conversion to card and e-wallet, reduced the impact and "we have seen good growth in November and had some of our best days for sales in December"It added that due to the Reserve Bank of India's recent approval for a new online payment up to Rs2,000 it was in a "strong position in the medium term" to capitalise on digital transactions and to maximise the space in the market created by the monetary transition.Order though mobiles jumped to 62% of transactions , including a 421% year-on-year on orders using its app.Overall, Turner said it was "another amazing six months" of customer and sales growth."We have delivered on both our strategic and financial objectives and are in line with expectations. The increases in our customer base, registered base and social followers will provide an excellent opportunity for future growth."She pointed out that the Indian online fashion market is projected to grow to £2.5bn by 2020 and said Koovs was "well positioned to capture a significant market share in this rapidly growing market".Shares in Koovs were down 6.67% to 49p at 0933 GMT.