Shoppers Stop consolidated net down 44%

Thursday, 02 February 2012

Shoppers Stop has registered a 44 per cent drop in its consolidated net profit in the quarter ended December 2011. The negative result is attributed to rapid stores expansion and loss-making hyper market subsidiary, HyperCity. During the quarter under review, SSL opened six new Shoppers Stop stores, two new Homestores and two new Hypercity. While Shoppers Stop is a chain of department stores, Hypercity is a hypermarket and Homestores are into retailing of household items like furnitures. Its consolidated net profit stood at Rs 9.33 crore compared with Rs 16.54 crores a year ago. Consolidated sales rose 15 per cent to Rs 744.67 crores from Rs 647.52 crore. For the first time since March 2009, Shoppers Stop has witnessed its net profit fall by 30 per cent to Rs 19.29 crore on a stand-alone basis. Stand-alone revenue rose 10 per cent to Rs 501.68 crores.

As per the company release, Shoppers Stop chain recorded a like-to-like decline in growth of 1.3 per cent, as price hike of 15-18 per cent in apparel due to excise duty affected sales and consumer demand. It also witnessed a decline in operating profit margin (OPM), a measure that indicates how effective a firm is at controlling costs. Employee costs rose 100 basis points (bps), while lease and rental costs by 80 bps. As a result, OPM shrunk by 2.68 percentage points to 7.35 per cent from 10.03 per cent a year ago. "We expect the quarter four of this fiscal and the first half of the next fiscal to be a little slow, but fast growth should come back in the second half of next financial year," says Managing Director Govind Shrikhande.

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