Shoppers Stop sinks 8% as Venugopal Nair tenders resignation as MD & CEO

The Board has approved the appointment of Kavindra Mishra as executive director & CEO of the company for a period of three years

Shares of Shoppers Stop sank 8 per cent to Rs 747 per share on the BSE in Friday's intraday trade after its Managing Director and Chief Executive Officer Venugopal G. Nair resigned from the post. 

At 9:20 AM, the shares were quoting 7.6 per cent down at Rs 750 apiece as against 0.5 per cent decline in the benchmark S&P BSE Sensex at 64,912 level. 

"Venu Nair, managing director and chief executive officer of the company, has tendered his resignation, effective from the close of business hours of August 31, 2023, due to personal reasons, to enable him to spend more time with his family and explore other options. The Board of Directors of the company at its meeting has accepted his resignation," the company said in an exchange filing.

 

Further, the Board has approved the appointment of Kavindra Mishra as an additional director of the company w.e.f. September 1, 2023. He has also been promoted from his position as chief commercial officer and CEO – Homestop to executive director & CEO of the company for a period of three years effective September 1, 2023.

To ensure a seamless transition, Nair will continue to guide and advice Mishra over the next 6 months, in his capacity as a company official, the company added.

Before joining Shoppers Stop as chief commercial officer and CEO - Homestop, Kavindra Mishra was the MD and CEO of House of Anita Dongre. Prior to that, he served as the MD at Pepe Jeans India for a period of six years and managed the transition of company from a JV to a 100 per cent subsidiary of Pepe Jeans Global. 

Mishra was a co-founder in Zovi.Com, a start-up funded by Tiger Global & Saif Partners.

The transition comes at a time when the retail and apparel sector is facing inflation related headwinds. 

That said, notwithstanding the uncertainty over the short term, India is expected to deliver a strong growth trajectory in the apparel and retail sector in coming years. Further, the domestic casual wear market has evolved significantly over the years and categories such as denim, active wear, casual shirts, and fashionable skirts are outpacing the growth of formal wear in India reflecting the changing consumer trend and increasing usage of casual wear in offices as well as home. 

"With this positive impetus, the Indian apparel market, which was at $80 billion in 2022, is expected to reach $160 billion by 2027 with an expected growth rate of 15 per cent CAGR," said analysts at Phillip Capital in a recent report.

Meanwhile, financially, the retail chain reported a 36.5 per cent decline in consolidated net profit to Rs 14.49 crore in the June quarter (Q1-FY24). The company had posted a net profit of Rs 22.83 crore in the April-June period a year ago.

Revenue from operations in the first quarter of this fiscal was at Rs 993.61 crore, up 4.76 per cent as against Rs 948.44 crore in the year-ago period. Further, Shoppers Stop’s Q1-FY24 same store sales growth (SSSG) was at 1 per cent. 

Its performance was majorly driven by non-apparel and beauty segments as the apparel segment continued to witness moderation. Management highlighted that moderation is expected to continue in the coming quarter as well due to spill over of festivities in to Q3-FY24.

"We understand that SHOP has now successfully fine-tuned its business model and is well placed to capture growth from its four strategic pillars. We expect revenue/ Ebitda to grow at 12 per cent/ 15 per cent CAGR over FY23–25. We broadly maintain our Ebitda estimates for FY24/25. We maintain BUY recommendation on the stock with a target of Rs 960," said analysts at Antique Stock Broking.

Those at HDFC Securities, however, maintained their 'Sell' view on Soppers Stop as it missed expectations—both on top line and margin. Gross margin was largely in-line at 42.3 per cent (up 11bps YoY), while Ebitda margin came in at 17.6 per cent (up 31bps).

"STOP’s scale recovery and focus on store expansion are certainly encouraging; inventory management needs work though. Long-term risks of business relevance/longevity remain as the company directly contends with deep-pocketed e-tailers. We revise our FY25/26 Ebitda estimates downwards by 2.6/2.5 per cent, respectively, to account for higher spending on new forays and maintain our SELL recommendation, with an unchanged tagret of Rs 560," the brokerage said.