Lengthy sale season adds to retailers coffers

Written by Vaishnavi Bala | Mumbai | Updated: Nov 3 2013, 09:20am hrs
An extended discount season and higher average selling prices led to solid same-sales growth numbers during the second quarter in the retail sector. K Rahejas Shoppers Stop reported its highest same-store sales growth in at least two years, while Kishore Biyanis Future Lifestyle Fashion reported a 15.2% growth in same-store sales.

Shoppers Stop recorded same-store sales growth at 15.5% during the July-September period, higher than the 12% that the company recorded in the preceding quarter. The same-store sales grew at 10% in the January-March period.

The end-of-season discounts, which began in July, continued till the first week of August for some retailers, while others continued with discounts till the second week of August, hoping to get consumers to loosen their purse strings.

The volume growth has been high as the discount period was extended by another 10 days during the quarter. Footfalls in like-to-like stores went up by 5% in the second quarter. Sales in north and east India have been strong, but there has been a slight dip in the western and southern regions, says Govind Shrikhande, managing director of Shoppers Stop. The like-to-like volume went up by 9% during the quarter, while average selling price rose 6.5%.

The high-margin apparel segment made up for 63.6% of Shoppers Stops total revenue during the second quarter, from 61.2% of total revenue during the same period last year.

Biyanis new company Future Lifestyle Fashion also posted healthy same-store sales growth. Among all the brands of the company, Central posted the highest same-store sales growth at 19.3%. Central has a high proportion of international brands and we keep space for newer fashion, which is becoming popular. Merchandise enhancement is the biggest focus now, says Jitendranath Patri, who heads marketing for Central & Brand Factory. The company has 23 Central stores at present.

The beginning of third quarter is a full-price quarter and typically the highest-sale quarter. The market continues to be buoyant, with both sales and margins expected to grow during the October-December quarter, the company said. Fashion and lifestyle have shown strong sales during the second quarter, according to joint MF of Future Group Rakesh Biyani.

Retailers have seen a good run in the last two quarters, especially in the apparel and fashion space. Although discretionary spending is low, consumers do not mind spending on clothes that much, says Abneesh Roy, associate director at Edelweiss Securities.

Sales have remained muted since last year as consumer sentiment remained weak. However, apparel retailers are seeing a pick up in demand as consumers defer bigger purchases, while going in for smaller items like apparel, accessories etc.

However, retailers are still cautious. We would still keep a target of 8% like-to-like sales growth this year due to uncertainties in the economy, says Shrikhande.

Other retailers, too, have had a decent run during the quarter.

Tatas retail arm Trent reported net sales of R267.1 crore in the quarter, a 24.8% rise from the previous years quarter.

Reason to cheer

* Future Lifestyle Fashion reported a 15.2% growth in same-store sales

* Shoppers Stop recorded same-store sales growth at 15.5% during July-Sept

* The high-margin apparel segment made up the bulk of the sales