Indian merchandiser Vishal Retail Ltd, which runs 100 discount stores nationwide, said its profit rose 62.37% to Rs40.69 crore for the year ended on 31 March, as it nearly doubled the number of stores in the year. Its profit was Rs25.06 crore last year.
Sales at the discount retailer also rose 67.6% to Rs1,014.4 crore for the fiscal year, from Rs605 crore last year.
The retailer doubled the number of its stores to 100 from 49 last year and sold more goods to Indians thronging shopping malls looking for discounted deals on everything ranging from white shirts to cookware. “We have grown seven times in the last three years,” said Manmohan Agrawal, chief executive of corporate affairs at Vishal Retail. The chain will add 80-90 stores this fiscal year.
The growth comes despite ballooning expenditure and staff costs, and some slowing in the fourth quarter. While total expenditure went up to Rs913.07 crore, up 65.74%, from Rs550.9 crore in the previous year, staff costs more than doubled to Rs68.78 crore for the year ended in March from Rs 27.4 crore last year. “We had planned for staff costs to go up,” he said. “We are adding talent to fuel growth and build a cushion for later.”
But for the quarter ended March, profits dropped to Rs10.4 crore from Rs15.55 crore in the previous quarter. This was below what Alok Dalal, retail analyst at New Delhi-based Religare Securities Ltd had expected.
He had said the company’s net profit may be Rs13 crore, 16% down from the previous quarter because of the cost of adding stores. He said the company would announce sales of around Rs399 crore. But actual sales came lower at Rs 321.8 crore.
The company did not provide year-ago quarter’s figures as its stock was not listed then.
Agrawal said the previous quarter was an exception because there had been strong festive buying. “This quarter is more like the average.”
Religare’s Dalal said while the company was spending on expansion quickly, these stores will add to profits only after a few quarters.
Vishal Retail’s stock closed at Rs791.35 on the Bombay Stock Exchange on Tuesday, down 1.51%.