Home >Companies >Company-results >Shoppers Stop’s stand-alone Q4 net profit drops 46.61% as costs rise

Mumbai: Shoppers Stop Ltd’s fourth-quarter consolidated net profit dropped by 19% from a year ago because of high discounting in a slowing Indian economy.

Net profit fell to 97 lakh in the three months ended 31 March from 1.2 crore in the year earlier. Revenue for the K. Raheja Corp. group company, which operates large-format department stores and speciality stores such as Crossword, Mothercare, M.A.C., and hypermarkets under the HyperCity brand, increased 19% to 1,120 crore from 943 crore a year-ago.

For the year ended 31 March, the retailer recorded a net loss of 8.3 crore which was lesser than the loss of 11 crore a year-ago. The retailer’s revenue increased by 18% to 3,576 crore.

Consolidated net profit includes the yet-to-turn-profitable hypermarket chain HyperCity.

Fourth quarter stand-alone net profit of Shoppers Stop, which is of the departmental store chain, dropped by 46.61% to 8.1 crore because of high costs in a slowing economy.

“This is due to the large expansion programme, an increase in depreciation and interest. We are investing for growth," said Govind Shrikhande, managing director, Shoppers Stop.

However, stand-alone sales grew 18.06% to 737.45 crore during the fourth quarter from 624.65 crore a year-ago. The retailer recorded a 8.4% same-store sales growth. “This quarter the like-to-like is driven by volumes of 6.5% and average selling price is gone up by 1%. Volumes driving the growth is good as this indicates an increase of our share in the consumers wardrobe," said Shrikhande.

Same-store sales is a measure of growth based on sales in stores that have been open for at least a year. The growth is been driven by the eastern region which is growing in double digits.

The operating profit remained flat at 38 crore, while gross margins were lower by 40 basis points, because of a longer discount period of eight days in the fiscal year.

“The profitability is lower than our expectations. Their costs like employee costs, interest and depreciation has increased," said Abhishek Ranganathan, vice president, PhillipCapital (India) Pvt. Ltd.

In the fourth quarter, the retailer added two Shoppers Stop stores, one store each of Clinique and Estée Lauder and seven Crossword stores.

During the year, Shoppers Stop added 13 department stores, and overall it added 39 stores across formats. This is the highest-ever store openings in a year in its 23 years of operations. The retailer added 5.5 lakh sq. ft of space during the year increasing its total operational space to 5.4 million sq. ft.

Trent Ltd, a retail chain run by the Tata group that operates Westside and Star Bazaar stores, and Future Group companies Future Retail Ltd which operates Big Bazaar and Foodhall, and Future Lifestyle Fashions Ltd which runs department chain Central, has not declared a date for its earnings announcement.

Earlier this month, Reliance Retail Ltd, the retail arm of conglomerate Reliance Industries Ltd announced that the retail subsidiary’s revenue went up 34% in the fiscal year ending March 2014 to 14,496 crore. The company’s profit before depreciation, interest and tax rose to 363 crore.

On Tuesday, Shoppers Stop lost 1.09% to close at 357.30 on BSE. The exchange’s benchmark Sensex lost 0.73% to end at 22,466.19 points.

The earnings were announced after market hours.

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