A stuttering GDP growth and high-base effect are likely to push same store sales (SSS) growth and profitability of Indian retailers in the red zone for the January-March 2009 quarter, research firm, Macquarie, said.
“Year-on-year trends in SSS growth and profitability are likely to remain under pressure due to a high base effect.
1Q 09 (January-March 2009) results for the retail sector are, therefore, likely to be subdued,” Macquarie said in a report.
Indicating signs of a quick recovery for retailers, the research firm said its channel checks suggested that results may improve from the April-June quarter.
“We expect Pantaloon to be able to survive this tough period given its high exposure to value retail and planned capital-raising. Shopper’s Stop, on the other hand, is likely to remain under pressure for at least the next 3-4 quarters,” Macquarie said.
It said Titan’s balance-sheet strength and emerging trends in gold demand are likely to help the company deliver resilient earnings growth.
The fall in gold prices led to a rise in footfalls by 10-15 per cent and consequently in the proportion of customers buying fresh gold, Macquarie noted.
New Year’s discount sales, which typically end in January, were extended until March as retailers tried to off-load inventory, it said.