Covid-19 impact: DMart's Q1 consolidated net plummets 88% to ₹40 cr

Commenting on the financial performance of the company Neville Noronha, CEO & Managing Director, Avenue Supermarts Limited, said: "Covid-19 continued to spread across the country. The ensuing restrictions have had a significant impact on our operational and financial performance in the quarter. Our revenue, EBIDTA and PAT for the quarter were significantly lower as compared to the same quarter last year."

The company's consolidated total income fell 32% to ₹3,933 crore as against ₹5,826 crore in June 2019.

Basic Earnings per share (EPS) for Q1FY21 stood at ₹0.62, as compared to ₹5.18 for Q1FY20.

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in Q1 FY21 stood at ₹112 crore, as compared to ₹597 crore in the corresponding quarter of last year. EBITDA margin stood at 2.9% in Q1FY21 as compared to10.3% in Q1FY 20.

"Wherever stores were allowed to operate unhindered, we recovered to 80% or more of pre-Covid sales in most stores. Discretionary consumption continues to be under pressure, especially in the non-FMCG categories. This is impacting gross margins negatively," said Noronha.

On Friday, the Avenue Supermarts scrip on BSE closed 0.04% higher at ₹2,322.15.

At the end of Q1FY21, our review and analysis can be summed up into four key observations, said Noronha while delving into them:

"Essential Retailer – Being in the essential products business helped us in providing shoppers their basic needs, pay our employees their wages and our suppliers and other service providers their dues just like before. In the current circumstances, this is extremely satisfying to each and every DMartian.

"Organized Retail (India versus developed countries) – Unlike developed countries where organized retailers had a surge of customers walking into their stores, it has not happened with the same intensity at our stores.

"This was because of the strong enforcement of store shutdowns, restrictive movement of people in general and strict social distancing rules inside stores. While the overall lockdown rules have softened in general, they continue with the same or more severe intensity in certain cities and local municipalities from time to time. Its negative impact on footfalls and sales were significant. There is also a sales channel of traditional trade which is smart, agile and resourceful. India still has a strong and resilient network of small shops and neighbourhood stores. They came roaring back after the first 2 or 3 weeks of lockdown serving the needs of an anxious customer the way the customer wanted it - quickly over the counter or through home deliveries. Value wasn’t top of mind for shoppers during this time.

"The DMart Business Model – After the passage of three months we can say with further certainty that our business model of store ownership, steady incremental store additions over time and strong focus on cost efficiency during usual times has allowed the business to face the pandemic shocks with relatively less harm. While we are in the midst of the second wave of the pandemic and business outlook may continue to seem uncertain, we are less anxious than we were in the beginning of April 2020.

"Online Sales – DMart Ready sales in Mumbai have grown very well. We are making all attempts to scale it up in a meaningful manner. We started Home Deliveries (using DMart Ready App) through our stores across the rest of the cities, but discontinued it once the stringent lockdowns were withdrawn and our stores were allowed to open for business."