BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Avenue Supermarts Ltd.’s Q4 revenue performance has been decent (20% YoY versus 17% retail area expansion). However, same store (more than two-year-old stores) revenue performance in H2 FY23 at 11% is underwhelming.
This was largely impacted by continued underperformance in general merchandise and apparel which also negatively impacted the margin mix. As per our channel checks, in apparel segment (~50% share of retail area in general merchandise and apparel), DMart is facing strong competition from specialist retailers like Zudio, Max etc.
Consequently, revenue per square feet remains ~9% below pre-Covid (versus Q4 FY19). However, we believe other than weak sales mix, large size stores also had an impact on lower sales per sqft calculation.
Now ~60% of total retail area represent large size stores (45,000-50,000 sqft stores versus 30,000-35,000 sqft pre-Covid).
Outperformance in food and non-food is comforting. Geographical expansion in brick and mortar business has been conservative given ~58% store addition was concentrated in top-three states only (versus 42% during FY18-22) while in e-commerce business it has been aggressive: ventured into 22 cites (versus 11 cities in FY22).
Profitability remained subdued due to weak mix and retail expansion during the quarter (added 18 stores in Q4 compared to 40 stores in FY23).
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
