Shoppers Stop has announced its financial results for the
quarter ended June 2012. Despite a 15 per cent increase in sales, its net profit declined 95.69 per cent to Rs 0.5 crore owing to higher rents, power rates and slowing consumption. The retailer saw its turnover surge 15 per cent to Rs 501 crores as the company says it managed to maintain like-to-like volumes during the quarter. “Overall costs have gone up unexpectedly by almost 27 per cent,” informed Govind Shrikhande, managing director, Shoppers Stop.
The company saw its lease rent expenses during the quarter surge 21 per cent to Rs 49.3 crores and electricity expenses surge 39 per cent to Rs 15 crores. “There is definitely a concern with the same store sales being 1 per cent. Although the like to like sales increased 1 per cent, we have seen regional differences between zones this quarter. While the North and East continued to grow double-digits, the West is negative. There is a softness on spending but not a complete pull down. While the overall consumption scenario is negative we expect to maintain 5 per cent like-to-like growth,” Shrikhande added.
The company had witnessed its net profit dwindle by 87.6 per cent in Q4 ending March 2011 because of slowing economic growth, high inflation and weak consumer sentiment. Its net profit fell to Rs 96 lakh in the three months ended 31 March from Rs 7.72 crore in the year earlier. Fourth quarter stand-alone net profit of Shoppers Stop, which is of the departmental store chain Shoppers Stop, also dropped by 31 per cent because of large discounting, increasing power tariffs and service tax, besides expansion, managing director Govind Shrikhande had said.
Currently, it operates 52 Shoppers Stop stores, 11 HomeStop stores, 81 Crossword book stores, 12 HyperCity stores, 22 MAC cosmetic stores, 12 Clinique outlets and 39 Mothercare stores. Hypercity has been the biggest drag. The large-format retailer, which started operations in 2006, has taken longer than average hypermarkets to turn cash-positive. Shrikhande said he expects Hypercity to break even in the next three years as it has been able to improve its Ebidta during the quarter.