Retailers see top line growth on low base in January-March quarter

Retailers see strong earnings growth in the first quarter from January to March because sales in the primary quarter were affected by Omicron’s wave combined with strong store openings.

Aditya Birla Fashion and Retail (ABFRL), Trent, Shoppers Stop, Titan and Avenue Supermarts saw strong revenue growth in the quarter.

“Our lifestyle offerings across concepts, categories and channels are seeing strong momentum. We see the increasing relevance of our offerings, the flexibility of our business model choices and the attractiveness of our premium platform,” Noel N. Tata, Chairman of Trent, said in its earnings release.

He added, “On the previous background, we continue to expand the reach of all our concepts with the aim of being even closer and more convenient to our customers. We are in the early stages of our growth. I see a lot of potential, led by our enthusiastic teams, to tackle the important opportunities that lie ahead.”

The company’s fashion and lifestyle chain, Westside, saw like-for-like growth of 23 percent year-over-year, but the company also said last year’s quarter was impacted by Covid.

ABFRL also saw net sales rise by 26 per cent at Rs.2,880 crore in the January-March quarter as it focused on expanding its store network.

Jagdish Bajaj, Chief Financial Officer, stated to investors after announcing its results, “The first quarter witnessed the highest ever revenue in the fourth quarter for the company both individually and consolidated, which was driven by retail strengths such as retail, multi-channel operation, and network expansion.”

He added that the company witnessed this growth in the quarter despite the public sector continuing to face weak demand after the festive period, particularly in the value and assortment sectors.

Also in fiscal ’23, the retailer added more than 500 stores and also added 1.6 million square feet of retail space to the network.

However, Kotak Institutional Equities has lowered its margin estimates due to increased investments in new business and increased marketing spending. The brokerage also said, “We don’t see the company exiting its investment phase anytime soon, which is a risky strategy given its ballooning debt situation.”

Footwear retailer Bata India saw its revenue increase 17 per cent in the fourth quarter to Rs 779 crore and Motilal Oswal said in its report that it saw growth mainly due to weak base coupled with price increase as well as footprint. expansion.

The brokerage also noted that Bata India saw weak volume growth with the sub-Rs 1,000 segment still seeing weakness.

“Weakness in volumes, pressure from the value segment (below Rs 1,000 average selling price category), and limited incremental price appreciation potential in FY24 estimate may put pressure on performance, but moderation in raw material prices and inflation could lead to recovery. progressive,” said the brokerage.

Avenue Supermarts, which operates the DMART supermarket chain, also saw a 20.6 percent increase in net sales and also added the largest number of stores in fiscal 23 since fiscal 2018.

It added 324 stores in the previous fiscal year. ICICI Securities said in its report that Avenue Supermarts same-store (>2-year-old stores) revenue performance in

The second half of fiscal ’23 was a disappointing 11 percent. “This was largely affected by the continued underperformance in general goods and apparel, which negatively affected the margin mix,” ICICI Securities said in its report on the company.

She also indicated that as per the examination of its channels, in the apparel segment (around 50 percent of the retail space in general merchandise and apparel), the company is facing strong competition from specialty retailers such as Zudio, Max, etc.

Even Centrum noted that DMART’s apparel and general merchandise segment still underperformed other segments. Its contribution to sales of 23 percent remains well below fiscal 2019 levels of 28.3 percent.

Titan also saw its revenue increase by 26.8 per cent to ₹9,215 crore and also saw one of Akshay Tritia’s best sales of the year.

However, Ajay Chawla, CEO of the jewelery division, noted that due to fluctuations in gold prices, demand was affected in March and continued in the first half of April as well.