Indian retailers' earnings to come under pressure: Macquarie

A stuttering GDP growth and high-base effect are likely to push same store sales (SSS) growth and profitability of Indian retailers in the red zone for the January-March 2009 quarter, research firm, Macquarie, said.

"Year-on-year trends in SSS growth and profitability are likely to remain under pressure due to a high base effect. Q1 09 (January-March 2009) results for the retail sector are, therefore, likely to be subdued," Macquarie said in a report.      

Indicating signs of a quick recovery for retailers, the research firm said its channel checks suggested that results may improve from the April-June quarter.      

"We expect Pantaloon to be able to survive this tough period given its high exposure to value retail and planned capital-raising. Shopper's Stop, on the other hand, is likely to remain under pressure for at least the next 3-4 quarters," Macquarie said.      

It said Titan's balance-sheet strength and emerging trends in gold demand are likely to help the company deliver resilient earnings growth.      

The fall in gold prices led to a rise in footfalls by 10-15% and consequently in the proportion of customers buying fresh gold, Macquarie noted.      

New Year's discount sales, which typically end in January, were extended until March as retailers tried to off-load inventory, it said.