As consumers tightened their purse strings, same-store sales for Shoppers Stop grew 1%
Mumbai: Retailer Shoppers Stop Ltd reported an increase in its consolidated net loss to ₹ 11 crore from a loss of ₹ 1.5 crore a year ago for the three months ended June, missing analyst expectations on the back of slowing economic growth and weak consumer sentiment.
Bloomberg had estimated a profit of ₹ 4.4 crore. The loss was primarily due to the poor standalone performance of the Shoppers Stop department store chain. Its net profit fell 95.7% to ₹ 50 lakh from ₹ 11.7 crore in the year-ago quarter. Shoppers Stop contributes 67.54% of the group’s overall revenue.
First-quarter consolidated revenue for the K. Raheja Corp. group company, which operates large-format department stores and speciality stores such as Crossword, Mothercare, MAC, and hypermarkets under HyperCity, grew 15% to ₹ 764 crore on account of new store openings.
As consumers tightened their purse strings due to global uncertainties and a slowdown in the Indian economy, same-store sales for Shoppers Stop grew 1%. This is a measure of growth based on sales in stores that have been open for at least a year.
Volume growth at HyperCity was driven by food sales. Overall sales were up 15% at HyperCity and like-to-like sales growth was 7%. The loss-making subsidiary with 12 stores also had a margin growth of 1% as the company increased its focus on fashion, a higher-margin business.
“The overall economic outlook has been soft. However, Shoppers Stop continues with its growth trajectory by adding new stores across formats," said Govind Shrikhande, customer care associate and managing director, Shoppers Stop.
Equity analyst Abhishek Ranganathan of MF Global Sify Securities India Pvt. Ltd said the earnings were below estimates. “Even the margins have been below expectations as the new stores are taking time to ramp up," said Ranganathan. Operating profit margin narrowed from 6% to 3.6% year-on-year (y-o-y).
In the first quarter, the retailer added two Shoppers Stop stores, three MAC stores, one Clinique store and one Mothercare store. In addition to these, the company opened four new Crossword stores and closed seven stores taking the total count to 81.
Tata Group company, Titan Industries Ltd, also missed analyst expectations. The watch and jewellery retail chain recorded a net profit rise of 8.7% to ₹ 156 crore, while revenue rose 9% to ₹ 2,205 crore from the year ago.
Trent Ltd, a Tata group company, which operates the Westside and Star Bazaar retail chains and announced its first-quarter results on 27 July, saw net profit increase 24.6% to ₹ 12.76 crore from ₹ 10.24 crore a year-ago.
Revenues grew 22.4% from ₹ 169.24 crore to ₹ 207.1 crore during the same period.
India’s largest listed retailer by revenue, Pantaloon Retail India Ltd, will announce June quarter results on 8 August.
Shoppers Stop closed at ₹ 370 on BSE, up 5.61%, while the benchmark Sensex rose 0.54% to close at 17,236.18 points. The stock lost 12.84% in the quarter under review, compared with an 18.81% rise in Pantaloon Retail.