Covid-19 impact: Avenue Supermarts Q2 consolidated net falls 38% to ₹199 cr2 min read . Updated: 17 Oct 2020, 03:08 PM IST
- Consolidated revenue decreased by 11% to ₹5,306 cr
- 'Footfalls continue to be significantly lower than pre-Covid levels but basket values are significantly higher than pre-Covid levels,' says MD & CEO, Neville Noronha
New Delhi: Avenue Supermarts, which runs popular grocery chain DMart, reported 38% decline in its consolidated net profit for the quarter ending 30 September at ₹199 crore as coronavirus pandemic continues to affect its operations. It was ₹323 crore in September 2019.
Consolidated revenue decreased by 11% to ₹5,306 crore as against ₹5,991 crore in the year-ago period.
Consolidated PAT margin stood at 3.7% in Q2FY21 as compared to 5.4% in Q2FY20.
Basic Earnings per share (EPS) for Q2FY21 stood at ₹3.07, as compared with ₹5.17 for Q2FY20.
"Lockdown restrictions due to Covid-19 were further eased during this quarter. Within the continued uncertainty from Covid-19, our business has seen improvement and it continues to gradually progress towards prepandemic levels. Month-on-Month sales have improved during this quarter – August was better than July and September was better than August. The highlight being that footfalls continue to be significantly lower than pre-Covid levels but basket values are significantly higher than pre-Covid levels. Both these data points are trending towards pre-Covid levels. Footfalls are getting better and basket values are reducing month over month," said Neville Noronha, CEO & Managing Director, Avenue Supermarts Limited.
"Two years and older DMart stores did 87.5% of September 2019 sales in the month of September 2020. We have a total of 158 stores which are 2 years or older. Since August, most of our stores are operating at pre-Covid operating hours and some stores are operating longer hours than before Covid-19. Longer hours are to improve social distancing and giving more options to our shoppers. FMCG and staples demand remains robust. September 2020 sales of all stores exceeded September 2019 sales for FMCG and Staples while General Merchandise and Garments did lesser sales in the same period.
"However, discretionary consumption has seen significant improvement over Q1FY21. We were at 22.7% revenue contribution from General Merchandise and Apparel business in Q2FY21 as compared to the usual 27.3% contribution for the year. We couldn’t sell this category of products for nearly 2 months of Q1FY21 due to regulatory restrictions and once permitted we did insignificant sales due to tightening of discretionary spend by consumers. Almost all of the shopping in Q1FY21 was need based and essential in nature. In light of that, Q2FY21 sales contribution from General Merchandise and Apparel is encouraging," added Noronha.
"The progress of the pandemic and its impact on consumer spending during the festival period will determine our financial performance for the next quarter. While large suppliers and FMCG business is trending better on sales as well as supplies, supply chains and manufacturing in the non FMCG SME sector will take some time to get back to pre-Covid levels. Longer lead times, a slower response to immediate demand and the biggest festivals so close on the anvil would be more complicated for the non FMCG SME sector. We are providing all necessary support and it’s a matter of time to get all back on schedule. We are glad to state that conversations are now moving from lack of demand to shortage of supplies in these categories," the company said in its stock exchange filing.
"We continue to focus on new store openings and have opened six new DMart stores during the quarter. We have closed two of our Mumbai stores for customers and converted them into fulfillment centers (FC) for our ECommerce business. One each in Mira Road and Kalyan. Both these locations have an alternate DMart store within 4 kms," the company added.
On Friday, the company's scrip on BSE closed 0.5% higher at ₹1,988.