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

Retailers see strong top-line growth during the January-March quarter (Q4) due to the sales impact in the base quarter because of Omicron coupled with strong store openings. Aditya Birla Fashion and Retail (ABFRL), Trent, Shoppers Stop, Titan and Avenue Supermarts saw strong revenue growth during the quarter.

In an earnings release, Noel N Tata, chairman at Trent, said, “Our lifestyle offerings across concepts, categories and channels are witnessing strong momentum. We see growing relevance for our offerings, resilience of our business model choices and attractiveness of our differentiated platform.” 

He added, “In the foregoing backdrop, we are continuing to expand the reach of all our concepts with the aim of being ever-more proximate and convenient to our customers. We are in the initial laps of our growth. I see much potential, led by our passionate teams, to address the significant opportunities that lie ahead.”

The company’s fashion and lifestyle chain Westside witnessed a like-for-like growth of 23 per cent compared to the same quarter last year. But the company also said that last year’s quarter was impacted due to Covid. 

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

Jagdish Bajaj, chief financial officer (CFO), told investors after the results, that “The quarter saw the highest-ever Q4 revenue for the company at both stand-alone and consolidated levels. This was driven by strong retail like-to-like, omnichannel play, and network expansion.” 

He added that the company saw this growth in the quarter even as the overall industry continued to face subdued demand post-festive period, especially in value and masstige segments. 

Also, in FY23, the retailer launched more than 500 stores and also added 1.6 million square feet of retail space to the network. However, Kotak Institutional Equities has trimmed its margin estimates due to higher investments in new business and higher marketing spends.

The brokerage also said, “We do not see the company emerging from its investment phase anytime soon, a risky strategy given its inflated debt situation.” 

Bata India also saw its revenue increase in double digit — by 17 per cent — in Q4 to Rs 779 crore. Motilal Oswal said in its report that it witnessed a top-line growth due to a weak base coupled with price increases as well as footprint expansion. 

The brokerage also noted that Bata India witnessed soft volume growth as the below-Rs 1,000 segment is still witnessing weakness. 

“Weakness in volumes, pressure from the value segment (below Rs 1,000 average selling price category), and limited price hike possibilities in FY24 estimate may put pressure on performance. However, the moderation in raw material prices and inflation could drive gradual recovery,” the brokerage said. 

Avenue Supermarts, which runs supermarket chain DMART, also saw a 20.6 per cent increase in net sales. It also added the highest number of stores in FY23 since FY18. The company added 324 stores in the previous financial year.

ICICI Securities said that Avenue Supermarts same store (>2-year-old stores) revenue growth in H2 of FY23 at 11 per cent is underwhelming.

“This was largely impacted by continued underperformance in general merchandise and apparel, which also negatively impacted the margin mix,” ICICI Securities said in its report.

It also said that according to its channel checks, in the apparel segment (50 per cent share of retail area in general merchandise and apparel), the company is facing strong competition from specialist retailers like Zudio and Max.

Even Centrum pointed out that DMART’s general merchandise and apparel segment continues to underperform other segments. Its sales contribution at 23 per cent is well below FY19 levels of 28.3 per cent. 

Titan Company also saw its revenue rise 26.8 per cent to Rs 9,215 crore and also witnessed one of the best Akshay Tritiya sales this year. 

However, Ajay Chawla, chief executive officer (CEO) of the jewellery division said due to volatility in gold prices, demand was impacted in March, which continued into the first half of April.