Retailers to benefit from festive sales

Wednesday, 19 October 2011

Debt ridden Pantaloon may breathe a sigh a relief with the company expecting improvement in growth rates by 20 per cent in the quarter ending September as against 15 per cent in the June quarter. This is because same-store sales are witnessing double digit growth. With Diwali around the corner an extended mid-year sale may boost same-store sales of major retailers like Shoppers Stop and Pantaloon for the quarter ended September changing the weak sales scenario because of the increase in apparel prices.

According to IDFC Securities Research, same-store sales in Pantaloon’s home retailing business, which saw a 4.5 per cent decline in the June quarter, are something investors are likely to track closely. The report further points out that Shoppers Stop clocked in same-store sales growth in the mid-teens. Analysts expect Shoppers Stop’s consolidated performance to be hurt by the poor performance of HyperCity. Motilal Oswal Securities expects Shoppers Stop’s same-store sales to increase by 14 per cent during the September quarter. At the same time the operating profit margin of Pantaloon’s core retail business is expected to remain flat.

While the September quarter results of both the companies may show an improvement, it is their performance in the December quarter that will be the deciding factor. Since major festivals fall in the coming three months, this usually is a good time in terms of sales for retailers. While they are bullish the coming quarter, some analysts are sceptical.

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