The June quarter’s 19.8% like-to-like sales growth for the Shoppers Stop department stores is impressive, especially coming after 1.1% decline in the measure in the March quarter.

Edelweiss Securities Ltd was expecting like-to-like growth at 12%, clearly a big beat from Shoppers Stop. Like-to-like sales growth is the comparable sales growth of stores that have been operational for more than a year.

Nevertheless, investors must take the brick-and-mortar retailer’s June quarter numbers with a pinch of salt. The discount sale season was preponed by five days in the month of June, and that helped a great deal in boosting sales for the firm. In fact, like-to-like sales volume increased 16% for the June quarter.

As a result, Shoppers Stop’s standalone revenue increased 22% year-on-year to Rs941 crore. But that wasn’t enough for the company to report profits.

The stock fell 1.5% on Friday, the day results were announced. Shoppers Stop’s pre-tax and exceptional item loss reduced to Rs6 crore from Rs22 crore in last year’s June quarter.

After robust sales growth in the June quarter, how the first half of the financial year 2018 pans out will be important. In any case, the June quarter like-to-like growth is not sustainable. The fact that the discount sale period commenced in June will eat into sales for the month of July, said Govind Shrikhande, managing director of Shoppers Stop. Shrikhande hopes that sales for Dussehra will compensate to an extent. This quarter also has Ganesh Chaturthi, which may fetch more sales. Still, expectations for the September quarter like-to-like growth are not running high. “We estimate like-to-like growth will be 6-8% this quarter," said Shrikhande. That is not encouraging.

On a consolidated basis, pre-tax loss has dropped to Rs34 crore Rs48 crore in the same period last year.

Shoppers Stop’s hypermarket chain, HyperCity Retail India Ltd continues to struggle, weighing on the consolidated numbers. Needless to say, investors will have to keep a close tab on signs of improvement in HyperCity. For the standalone business, sustained sales growth is essential.

So far this financial year, the Shoppers Stop stock has declined 4.6% compared to the 9.5% rise in the S&P BSE 500 index.

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