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Indian clothing retailer Arvind posted a 40% fall in its first-quarter profit, as inflationary pressures weighed on consumer spending on apparels despite discounts.

The company, which sells international brands like Tommy Hilfiger, Arrow and Calvin Klein, said its consolidated net profit fell to 393.1 million rupees ($4.7 million) from 658.7 million rupees a year earlier.

Arvind's shares fell 2.8% after the results.

Indian textile manufacturers were met with weak demand environment throughout fiscal year 2024, as consumers were weary of spending on discretionary items.

Following this, the retail inflation rate for the April-June quarter hovered around 5%, primarily due to high food prices. This led to a decrease in spending on non-essential items.

Arvind posted a 1% fall in revenue from operations, while revenue from its core textile segment, which accounts for 73% of total sales, slipped 5% from a year earlier.

The company also flagged "illegal workers' unrest" that impaired the performance at its largest factory for 21 days, affecting businesses like the woven and denim segments.

The strike had an approximate impact of about 2 billion rupees on revenue, the company said.

Retailers have been offering discounts to sway customers into buying their products.

Arvind's total expenses rose 1%, further hurting its margins.

The advanced materials segment, through which Arvind makes fabrics and protective gear for construction work, fell about 4%.

Earlier this month, rival department-store chain Shoppers Stop swung to a quarterly loss, as high inflation weighed on consumer spending.

($1 = 83.7250 Indian rupees)