Retailers report lowest same-store sales growth in Q4

During the October-December quarter, despite a rise in revenues, major retailers like Future Retail and Shoppers Stop reported their lowest same-store sales growth in five quarters. Reason: uncertain economic conditions and low consumer sentiment.

K Raheja-owned Shoppers Stop, for instance, witnessed same-store sales growth of 5.5 percent during the period, down from a whopping 15.5 percent growth in the last quarter. Same-store sales refers to sales of stores that are open for at least a year. It does not include growth coming in from new stores. However, the company's retail turnover rose 15 percent in the quarter, while net profit rose 17 percent to Rs 5 crore from the full-price period. The gross margins rose 100 basis points.

Low

sales reflect sign of the times

According to a report by India Ratings & Research, in FY13, CPI for industrial wage workers increased 16.4 percent year-on-year whereas nominal wage grew only 13.8 percent, thereby resulting in a decline in real incomes. In FY13, the net financial position of Indian households did not change, after having weakened in the previous two years.

Future Group’s Brand Factory and Planet Sports posted same-store sales growth of 7.3 percent, lower than the 15.2 percent growth it saw last quarter. The company said the Central chain of stores also saw growth slump to 8 percent. Total income from operations for the company rose 7 percent in the period. Companies are attributing the downward trend to ongoing economic uncertainties, which they expect to continue till FY15 coupled with muted consumer sentiment. India Ratings & Research report says, “Any further efforts by retailers to resort to aggressive discounting could adversely impact margins.”

And it’s not just lifestyle retailing even value retail saw slow sales. For example, Future Retail's value formats that include Big Bazaar and Food Bazaar saw a 3.3 percent rise in same-store sales, compared to 8 percent in the previous quarter.