BackFuture Retail Q1 profit plunges 91%
Net sales surprised by growing at 22.85% to Rs2,846.84 crore in the June quarter from Rs2,317.15 crore a year ago
Premium
Mumbai: Kishore Biyani-led Future Retail Ltd, which operates hypermarket and retail chains such as Big Bazaar, Food Bazaar, FBB, Home Town and eZone, missed analyst expectations as its stand-alone net profit plunged 90.82% to R6.10 crore in the June quarter. In the year-ago quarter, net profit stood at R66.48 crore.
An average of two analysts’ estimates put stand-alone net profit at R30.2 crore and net sales at R2,795.2 crore.
However, net sales surprised by growing at 22.85% to R2,846.84 crore in the June quarter from R2,317.15 crore a year ago.
An analysis of same-store sales growth shows that the value business, that primarily operates Big Bazaar, grew 10.3%, while home business growth remained tepid at 3.8%. Same-store sales growth looks at comparable growth of stores that have been operational for over a year. it does not take into account growth due to new store openings.
“While urban consumption in staples has picked up, discretionary consumption is still to take off," said Abneesh Roy, associate director-institutional equities research, Edelweiss Securities Ltd, while pointing out that even the home segment had taken a hit due to the heavy discounting offered by online companies.
Future Retail’s operating profit grew 17% to ₹ 294 crore in the June quarter compared with ₹ 252 crore in the corresponding quarter last year.
During the quarter, Future Retail opened four Home Town stores, adding 40,000 square feet to its total area of 11.28 million sq. ft.
But it also closed one Big Bazaar, FBB and eZone outlet each and two Food Bazaar stores, in keeping with its rationalization strategy.
In the June quarter, the company reduced its debt by ₹ 1,600 crore, a result of the rights issue in January. However, it had to pay a one-time penalty for prepayment, which led to its operating profit margin dipping after 12 quarters of expansion.
“Interest costs will fall in the second quarter of the fiscal year," said Roy.
On Friday, the Future Retail stock lost 1.71% to close at ₹ 126.25 on BSE, while the benchmark Sensex lost 0.22% to close at 28,236.39 points.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
