Mumbai: Retail chain Shopper’s Stop Ltd on Thursday reported a Rs21.80 crore net loss for the September quarter against a Rs10.68 crore net profit a year ago, as sales fell and the company made exceptional losses.
Shopper’s Stop’s revenues from operations declined 12.24% year-on-year to Rs837.57 crore as the introduction of goods and services tax (GST) hit supplies, managing director Govind Shrikhande said in a press statement.
The company also reported exceptional loss close to Rs34 crore over the Rs655 crore sale of Hypercity to Kishore Biyani led Future group and its exit from Nuance Group India Pvt. Ltd that operated duty free stores.
“Q2 was relatively subdued owing to stock and supply challenges on account of GST implementation,” Shrikhande sad, adding, “However, the teething issues have been resolved and we are well on track for a strong festive quarter.”
The decline in revenues came as like-to-like sales growth for Shopper’s Stop decreased by 5.5%, according to the company’s investor presentation.
The chain also saw footfalls in like-to-like stores drop a sharp 17.5%.
“This came as we preponed sales before the GST, because of which we saw 8-9% extra like-to-like growth in sales in Q1 (quarter ended June 2017),” Shrikhande said in an interview with Mint.
“In July, we saw double digit negative growth and in August we saw negative growth,” he said, adding that during September, growth recovered to double digit rates with robust business during the Puja season in East India.
Shares of Shopper’s Stop closed at Rs517.95 per share, down 1.63% while the benchmark BSE Sensex closed 0.32% higher at 33,147.13 points.
“It will be a weaker quarter for apparel retailers, although for some retailers it will be better, such as for companies like Future Lifestyle and Fashion that has been focusing on its assortment and Trent Limited that had a second sale season (after June),” Abneesh Roy, senior vice-president of Edelweiss Financial Services said. “So, not everyone will see numbers as bad as Shopper’s Stop’s,” he said.
The company posted profit before tax and exceptional items of Rs19.50 crore, 14.7% higher than a year ago, thanks to lower expenses.
The company is betting on its private labels business in apparel to help fuel growth for the next fiscal year. “We will see 25-30% growth in the private labels next year,” Shrikhande said.
However, Shopper’s Stop was able to post growth of 70 basis points in Ebitda margin (earnings before interest, tax, depreciation, amortization), a measure of operating profit, as the company reduced operating expenses by 9% year-on-year.
The company is expecting to complete the sale of its Hypercity business to Future Group by the quarter ending March 2018, Shrikhande said.
Analysts say a dip in sales is expected for nearly all retailers as they pushed a part of their end of season sales in the previous quarter ended June 2017 before the GST was implemented.