GST SALES AID Q1 EARNINGS
MUMBAI: Listed retailers saw a sharp spike in their sales for the quarter ended June 2017 as they advanced their end-of-season sales to the days leading up to the roll-out of the goods and services tax (GST) on 1 July.
Firms including Shoppers Stop, Aditya Birla Fashion and Retail Ltd or ABFRL (which includes India’s largest departmental store network Pantaloons) and Trent Ltd (Westside, Zara and Star Bazaar) saw their sales rise by 14-25% in the quarter gone by, led by a sharp surge in sales during June. This came as retailers liquidated stocks before the GST was implemented by enticing customers with advanced end-of-season sales.
Revenues of Shoppers Stop rose 14.6% year-on-year to ₹941.1 crore for the quarter, while liketo-like sales (sales of stores that have been in operation for at least five years) grew 19.8%, nearly double the regular growth the company sees during this time every year, according to MD Govind Shrikhande.
“The sales period got preponed by 5 days,” Shrikhande said in a phone interview. “The sales usually start on June 26 or 27, but this quarter it started on June 22. In the June quarter, we were growing at 10% like to like, but this was extended to 20%.”
Similarly, ABFRL reported a 25% increase in revenue for the quarter ended June 2017, led by a 27% rise in sales of the apparel retail chain Pantaloons to ₹731 crore with a like-to-like sales growth of 14%, primarily led by the “pre-GST Sale Momentum”, Ashish Dikshit, fashion business head at ABFRL, said in an earnings call on July 27.
Tata group-owned Trent’s revenues from operations rose nearly 25% to ₹499 crore for the quarter ended June, while the like-to-like sales growth for the period for Westside was 14%, up from the apparel retail chain’s consistent growth of 8-9%.
However, this growth has been a temporary boost for companies’ earnings that are expecting the early sale season to eat into their business for July, and even the quarter ending September. “5 extra days of sales will impact sales in July,” Shrikhande said. “But, with the Pooja festival coming earlier this year (in October rather than November), we should be able to recover sales after August 15.”