Retailers grow sales but battle with profits in June quarter

Listed retailers have struggled with their bottom line in the first quarter despite rising sales, as discounts were advanced to clear stocks before the goods and services tax (GST) was introduced.

Revenues of top retail firms grew an average 23 per cent, year-on-year, in April-June. But except for Future Retail, Avenue Supermarts and Trent, other retail companies posted losses during the quarter.

Aditya Birla Fashion & Retail posted revenue growth of 25 per cent during the quarter but a loss of ~20 crore. Shoppers Stop posted sales growth of 22 per cent but a loss of ~4 crore.

Abneesh Roy, senior vicepresident, institutional equities, Edelweiss Securities, said sales might decline in the second quarter due to the advancing of discounts. A K Prabhakar, head of research, IDBI Capital, said, “Retailers have cleared stocks with discounts before the GST, which seems to have affected their bottom line.”

Profit before interest, tax and depreciation margins of retailers showed a mixed trend. Future Retail, Avenue and Trent posted improvements but Shoppers Stop and Aditya Birla Fashion posted declines.

Same-store sales growth of the top retail companies grew by an average 16.2 per cent during the quarter, one of the best performances in the last several quarters. Shoppers Stop posted 19.8 per cent same-store sales growth during the quarter while Future Retail’s Big Bazaar posted 15.9 per cent, one of the best for the chain.

Future Retail’s net profit more than doubled to ~147.85 crore while its revenue rose 18.22 per cent to ~4,704.93 crore during the quarter.