Mumbai: Retailer Shoppers Stop expects the weak rupee to reduce non-apparel sales starting in February, but this will be offset somewhat by stronger demand for apparel as cotton prices soften, its managing director said.
Apparel, which is mainly sourced locally, accounts for about 58% of the company’s sales. The non-apparel segment largely depends on imports.
A weak rupee is expected to reduce non-apparel sales as the cost of importing products such as watches, cosmetics and handbags continues to rise, managing director Govind Shrikhande said at a store opening on Thursday.
The rupee has fallen more than 16% from its July high against the dollar.
The company’s apparel sales have taken a hit as result of high cotton prices and a new excise duty that pushed up prices by 15-17%.
“We expect apparel demand to be better next year because cotton prices have softened and that should push down prices by around 5%,” Shrikhande said.
“We are most likely going to get some reprieve in the coming budget on the excise duty in apparel, which will reduce prices further...say total by around 8%,” he added.
Same-store sales growth is expected to fall to 6-7% in October-March due to sluggish consumer spending, he said.
The company had said earlier that it expected single-digit growth in same-store sales in the current fiscal year. In the quarter ended September, the sales growth was 12%.
“The impact on same-store sales will be visible even in the first half of next year, (after) which things are likely to improve,” Shrikhande said.
The company expects overall sales growth to be in the 18-20% range, similar to the past few years, as it opens new stores.
Shoppers Stop opened 11 stores this fiscal year and will add eight in the next fiscal year starting April.
It launched its 49th store in Mumbai on Thursday.
Shares of the company fell 1.1% in a firm Mumbai market. The stock has dropped 29% since the start of the year, compared with a 23% fall in the benchmark index.