Sales growth softens

Same store sales (SSS) growth has softened—expect marginal growth in Q3 (11% in Q2). With the depreciating rupee, prices of imported goods (30-35% of sales) are likely to increase by 15-20%, which could further impact sales growth. sales) and jewellery (8-9% of sales) sales being the most impacted. The 18% increase in apparel prices and a steep jump in gold prices (up 35% y-o-y) has impacted consumer demand.

Growth in non-apparel categories such as beauty (30% growth) and home has been healthy thus far, insulating the impact of lower offtake of apparel and jewellery. However, with 20% depreciation of the rupee, prices of imported goods (30-35% of sales) are likely to increase by 15-20%, which could further impact sales growth.

We expect marginal SSS growth in Q3FY12 (11% in Q2); same store volume growth would be negative.

West and North India are witnessing demand pressures while East and South India are better placed.

We expect demand pressure to continue over the next few quarters unless consumer sentiment improves or some excise relief comes to the industry in the next budget. We are reducing our revenue growth assumptions by 3-4% over FY12 and FY13 to factor in the demand pressures.

Shoppers Stop has opened 11 stores in 9M(month)FY12 and six stores in Q3FY12, taking its total department store count to 49. It is likely to

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