Pantaloon Retail, the country’s largest retailer, has seen its same-store sales dip for the first time in four years, on subdued consumer sentiment.
Reflecting the trend, the stock of the company fell 5.1% to Rs189.8, even as the Sensex rose 3.3%. Same-store sales in December in the Value Retail segment, led by Big Bazaar and Food Bazaar formats, fell 4%.
The decline indicates that consumers are buying less of discretionary items. Overall, same-store sales of Pantaloon’s Lifestyle Retail segment dropped 14% and Home Retail 10%.
We believe that Pantaloon Retail, on account of its presence across consumption and price points of Indian consumers apart from having a pan-India presence and lower execution risks, stands to benefit in the long run.
This is reflected in the fact that Pantaloon Retail has grown by 36% on y-o-y basis between July-Dec08 with Value Retailing growing at 35%, Lifestyle Retailing at about 30% and Home Retailing clocking a growth of 52%.
Hence, we maintain our BUY recommendation on the stock.