Retail chain shoppers STOP (SHOP) reported revenue of Rs 10 bn (up 60% y-o-y, 7% q-o-q) and Ebitda of Rs 1.7 bn in Q2FY23, which were above consensus estimates. Ebitda margin at 16.6% was up 540bps y-o-y, but down 67bps sequentially. Revenue recovery rate from Q2FY20 (pre-covid levels) continued its upward trajectory with 119% recovery in Q2FY23 vs 113% q-o-q. SHOP added a single department store and a single beauty store, in net terms, during the quarter. This takes the total count to 91 department stores and 175 beauty stores, with plans to add 9 and 11 stores (net) in the respective categories in H2FY23. SHOP is also targeting ~9% area addition in the course of FY23. Under the new management, company is likely to improve its growth trajectory driven by accelerated small-size store expansions, growth in private-label mix, and increased focus on the high-growth beauty business, aided by improved consumer sentiment. We raise our pre Ind-AS 116 FY23e-FY24e Ebitda by 14-22% and DCF-based TP to Rs 850/sh (earlier: `530). Maintain ADD. Key risks: Lower discretionary spends, and execution challenges.
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n Revenue (Ind-AS) stood at Rs 10 bn, up 60% y-o-y, on a favourable base as covid-led restrictions were still in place in a few locations during Q2FY22. Management indicated that the demand trend was strong during the quarter and the momentum is continuing in Oct’22 as well. Company recorded 35% revenue growth during Pujo festival in the eastern region. Average transaction value (ATV) increased by 8% y-o-y in Q2FY23 while customer visits (online + offline) were at a record high of 40.8mn during the quarter.
SHOP aims to add 12 department stores and 15 beauty stores in FY23, of which 9 are expected to be opened in tiers-2 & 3 towns. SHOP added 2 stores during the quarter and currently has 6 department stores under fit-out, which are likely to open in Oct-Nov’22.
First Citizen (FC) customers accounted for 77% of sales, with new enrolments increasing by >16% y-o-y in Q2FY23, taking the total count to 9.2mn as of Sep’22-end.