The country’s oldest department store chain Shoppers Stop expects single-digit sales and Ebitda growth in Q4 as well as the full year of FY26 amid a slow retail revival. The cautious outlook comes after the retailer delivered weak Q3 earnings, with profit plunging 69% and revenue rising 3%, pushing the stock down almost 12% intra-day on the BSE on Wednesday. The stock closed trade down Rs 341.90 apiece on the BSE, down 6.14% versus the previous day’s close.
In an investor call on Wednesday, Kavindra Mishra, MD & CEO, Shoppers Stop said that the retailer did not see the “broader uplift” it was expecting following GST cuts in Q3. It also saw a sharp tapering off of demand post Diwali and a lack of sales conversions especially in private brands. The latter contributes around 11-13% in terms of sales, according to analysts. Shoppers Stop is the third major retailer to call out a weakness in retail demand in Q3 after Reliance Retail and Avenue Supermarts, which runs DMart stores, highlighted the same in their recent December quarter earnings.
Tale of Two Consumers
Also, non-apparel segments for Shoppers Stop such as beauty, led by fragrances, and accessories, led by handbags and watches, saw a 12-14% year-on-year growth in terms of sales in Q3. The apparel segment, on the other hand, was led by premium brands, which saw a 6% like-for-like sales growth in the December quarter as the retailer saw a clear “bifurcation” in consumer spending with a stronger response coming from premium categories versus mass segments. Premium brands’ contribution to sales increased to 69% of total sales in Q3, a 370-basis-point improvement versus last year, the retailer said.
“Consumer sentiment throughout the quarter remained muted. One key issue especially in North India was the high pollution levels which kept customers indoors. This had a direct impact on footfalls and discretionary spending. We had also expected a stronger demand pickup due to GST reduction. While there was a visible spike immediately after the reduction, that momentum did not sustain beyond the initial period,” Mishra said.
The company operates around 110 department stores, about 35% of which are located in North India. The company also has a strong presence in New Delhi and Uttar Pradesh, two states which grappled with high pollution levels during the third quarter, experts said.
Strategic Lean
The roadmap for the future will include keeping capital allocation down, maintaining tight control over working capital needs and a reduction in inventory levels across verticals over the next few quarters. Net debt levels, Mishra said, will likely be capped at Rs 150-160 crore at the end of FY26, almost Rs 100 crore lower than last year as it focuses on financial discipline and a leaner balance sheet.
The retailer also plans to open around five department stores, three Intune (value retail) stores, and two beauty stores in Q4, taking the total number of new department stores added in FY26 to nine. The retailer had added three department stores in Q3 and just 1 department store in H1FY26.