RETAIL: Shopping was not so fashionable in Q4

Demand hasn’t seen a major revival, and that shows in the financials of retail companies in the March quarter


Low demand for winter wear and bringing forward discount sale season to December this time, instead of in January, affected numbers. Photo: Mint
Low demand for winter wear and bringing forward discount sale season to December this time, instead of in January, affected numbers. Photo: Mint

Demand hasn’t seen a major uptick, and that shows in the retail companies’ March quarter financials.

For instance, after Shoppers Stop Ltd clocked as much as a 17.4% like-to-like sales growth in the December quarter, led by the festival season, it was natural that investor expectations rose.

But its 5.9% like-to-like sales growth in Shoppers Stop department stores for the March quarter was discouraging. Motilal Oswal Securities Ltd had estimated the measure at 9%.

Low demand for winter wear and bringing forward its discount sale season to the end of December this time, instead of in January, affected the like-to-like numbers.

Like-to-like sales growth is the comparable sales growth of stores that have been operational for more than a year.

Subsidiary HyperCITY’s performance continues to be weak as it posted an earnings before interest, taxes, depreciation and amortization (Ebitda) loss at the company level for the March quarter as well as the full fiscal.

Titan Co. Ltd’s numbers, too, didn’t sparkle. The advancing of promotions to December in both watches and jewellery divisions and other factors, particularly lower walk-ins, affected revenues badly in the March quarter, the company said. Its revenue declined 1.6%, year-on-year, looking rather poor, compared with the 17% revenue growth in the December quarter. Jewellery revenue remained flat, while that of watches, accounting for a relatively much smaller share of revenue, declined 13%, year-on-year. The watch business was affected on account of an early activation (of promotions) and a 19% volume decline due to the exit from a few low-ticket products.

Shoe maker Bata India Ltd’s financials were a bit more satisfactory. A revenue growth of about 11% suggests a mid-single digit same store sales growth which signifies things have started to steady after the recent management transition, point out analysts from Nomura Financial Advisory and Securities (India) Pvt. Ltd. Having said that, “January-March 2016 results for Bata India were below our and consensus expectations at the revenue, Ebitda and PAT (profit after tax) levels,” said Nomura in a note on 31 May.

In the days to come, a better monsoon, the implementation of the Seventh Pay Commission and demand revival are expected to help these firms. Competition is a concern though. Share prices of Bata and Titan have increased over the first two months of this fiscal, while those of Shoppers Stop have declined.

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