Avenue Supermarts Q2 profit rises 62.7% y-o-y to Rs 730.5 cr | The Financial Express

Avenue Supermarts Q2 profit rises 62.7% y-o-y to Rs 730.5 cr

The FMCG and staples segment of the business performed better during the quarter than general merchandise and apparel segments, the company said.

Avenue Supermarts Q2 profit rises 62.7% y-o-y to Rs 730.5 cr
The inflationary stress is more acute at lower price points in discretionary non-FMCG categories.

Avenue Supermarts, operator of DMart stores, on Saturday reported a 62.7% year-on-year jump in net profit at Rs 730.5 crore for the quarter ended September on the back of improved sales.

The company’s revenue from operations improved 36% yoy to Rs 10,384.7 crore. The company’s earnings before interest, tax, depreciation and amortization rose 33.5% year-on-year to Rs 895 crore; however, margin dipped 20 basis points to 8.6%.

The FMCG and staples segment of the business performed better during the quarter than general merchandise and apparel segments, the company said.

However, Neville Noronha, CEO and managing director, Avenue Supermarts, said that discretionary items in the non-FMCG segment while recovering have still not come back to pre-pandemic levels. The inflationary stress is more acute at lower price points in discretionary non-FMCG categories.

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Average basket values continue to be elevated and footfalls continue to be lower than pre-pandemic levels. Reduction of footfalls coupled with increased basket values make FMCG shopping more productive and profitable, however, it has a direct negative impact on the more profitable non-FMCG categories. “As and when footfalls increase, we assume we should be inching towards our pre-pandemic contributions for apparel and general merchandise sales,” Noronha said.

Company’s like-for-like growth for all stores that are 5 years or older as of the end of September 2022 was at 6.5% annualized and Noronha said that the company is seeing lesser like-for-like growth in older stores which have significantly higher turnover per square feet than the company average.

On store revenue, newer stores have revenues per store significantly lower than the older stores, he said.

DMart Ready commenced operations in six more cities during the quarter — Anand, Belgaum, Bhilai, Jaipur, Raipur and Vijayawada . DMart Ready is now present in 18 cities across India.

While the expansion in 18 cities looks like a big leap, in most of the newer cities these are just experiments with capital allocations commensurate with outcomes. More than 90% of our revenues still continue to come from Mumbai (MMR), Pune, Bangalore, Hyderabad and Ahmedabad, the company said.

For half year FY23, the company’s net profit stood at Rs 1,410 crore as compared to Rs 564 crore the previous year.

Revenue from operations were up 59% year-on-year to Rs 20,192 crore while earnings before interest, tax, depreciation and amortization stood at Rs 1,903 crore, as compared to Rs 891 crore during the period. Operating margin stood at 9.4% in H1FY23 as compared to 7.0% in H1FY22.

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First published on: 16-10-2022 at 03:00 IST