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Business News/ News / India/  Retail expected to report strong recovery in September quarter: report
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Retail expected to report strong recovery in September quarter: report

Retailers are expected to benefit from pent-up consumer demand and early signs of strong festive period shopping, according to a report by Edelweiss Securities.

Companies are expected to announce September quarter earnings over the next few weeks.Premium
Companies are expected to announce September quarter earnings over the next few weeks.

Retailers across categories such as jewellery, grocery, and apparel are expected to report a strong recovery in the second quarter of the current fiscal year benefiting from pent-up consumer demand and early signs of strong festive period shopping, according to a report by Edelweiss Securities.

“Q2FY22 is expected to see sharp recovery across segments (revenues 108% of Q2FY20 excluding-Titan, apparel retail at 80%) and, provided no third covid wave, should set the base for strong growth in the upcoming festive period," the brokerage said in an earnings preview note on the retail sector.

It highlighted the performance of Titan Company’s jewellery segment—that in its September quarter update—reported a 78% growth year-on-year driven by pent-up demand.

Companies are expected to announce September quarter earnings over the next few weeks.

The brokerage pointed to a near recovery of the quick service restaurant market.

“Jubilant FoodWorks (JFL) achieved 94% system-wide sales recovery in Q1FY22. For Q2FY22 (expected), we build in implied recovery of 105–110%. Our implied 2-year SSSG CAGR expectation is 2%. Even other QSR players are close to achieving full sales recovery—Burger King India had touched a recovery of 92% by July-21 and Westlife Development clocked 100% recovery in all ‘drive thru’ and high-street stores in July," it said in its note.

Recovery in consumer demand has been swifter post the second wave of infections compared with the prior wave. A steady rollout of vaccinations has also helped build consumer confidence and to improve mobility.

Meanwhile, the brokerage said that sales at large format grocery stores—such as DMart—are likely to report a stable recovery of 90% of pre-covid levels.

Retailers are also hinging hopes on festive season demand that drives sales of everything from consumer electronics, to jewellery and clothing.

Within apparel—the segment most impacted by the lockdowns as consumers swapped fashion wear for casual clothing—recovery will be mixed.

“With easing of lockdown restrictions and most stores being operational, we expect apparel retailers to clock overall recovery of 80% with Trent again expected to clock industry-leading 90% recovery driven by traction from Zudio," it said.

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Published: 10 Oct 2021, 10:57 AM IST
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