Mumbai: Shoppers Stop Ltd reported a 54% drop in its consolidated net profit at Rs.4.32 crore for the quarter ended 31 December, burdened by its money-losing hyper market chain HyperCity. The company posted a profit of Rs.9.33 crore a year ago.
Consolidated revenue for the K. Raheja Corp. group firm, which operates large-format department stores and specialty stores such as Crossword and Mothercare, grew 15% to Rs.959.46 crore, helped by the large number of sales and promotions coupled with the Diwali and Christmas festivals in the reporting quarter.
Parent department store chain Shoppers Stop’s net profit fell 11% to Rs.17.09 crore and revenue grew 20% to Rs.697.11 crore. Bloomberg had estimated a net profit of Rs.17.78 crore and net sales of Rs.638.7 crore for Shoppers Stop that accounts for more than 70% of overall revenue.
Like-to-like same store growth for the company stood at 12.5%, driven by a 9% price increase and 3.5% volume growth.
The company saw its volume grow after almost four-five quarters of it being negligible or close to 1%. Like-to-like sales growth is a measure of growth based on sales in stores that have been open for at least a year.
“The good news is that the quarter saw top-line growth and margin on sales grow after nearly four quarters,” said Govind Shrikhande, customer care associate and managing director, Shoppers Stop. He added the company hopes growth in the January-March quarter will be in the 7-8% range following bi-annual sales and promotions in January.
“From here on, we expect gross margins to continue to improve as raw material costs are now comfortable,” said Abneesh Roy, associate director—institutional equities—research, Edelweiss Securities Ltd. He said the earnings were in line with estimates.
In the December quarter, the retailer added one new Shoppers Stop store in Bangalore, taking the total to 55. It added two Crossword stores, two stand-alone MAC stores and one Clinque stand-alone store. The company now has more than 4.82 million sq. ft of total retail space in 25 cities.
HyperCity’s loss narrowed marginally to Rs.23.6 crore from Rs.24.5 crore a year ago. Its sales remained flat growing 0.6% to Rs.216 crore in the reporting quarter.
Shrikhande expects HyperCity to turn profitable in another 24 months following corrective measures of reducing store sizes and increasing apparel sales to improve profitability.
The stock price of Shoppers Stop ended Tuesday at Rs.435 on BSE, up 0.59%, while the benchmark Sensex fell 0.56% to close at 19990.90 points.
The results were declared after market hours.