Company Update : Shoppers Stop by Motilal Oswal Financial Services Ltd
Revenue in line; better margins drive EBITDA beat (up 17% YoY)
* Shoppers Stop’s (SHOP) standalone revenue grew 6% YoY to INR10.9b (in line; vs. 9%/2% YoY in 3Q/4Q), supported by 5% LFL growth in department stores, driven by premiumization.
* Private brands’ revenue grew 3% YoY to INR1.56b.
* Beauty segment’s (excluding distribution) revenue grew 2% YoY, while including distribution, it grew 17% YoY.
* Revenue from Intune stood at INR680m (vs. INR540m QoQ, ~2X YoY), with presence expanding to 75 stores (vs. 71 QoQ).
* Store count remained flat, as the addition of four Intune stores was offset by the closure of Beauty stores. The respective store count stands at – Departmental: 112 (flat), Beauty: 82 (three closed), Intune: 75 (four opened), and HomeStop: 10 (one closed), taking the total store count to 299.
* Gross profit was up 7% YoY to INR4.5b (in line), as gross margins expanded ~35bp YoY to 40.9% (40bp beat), likely due to lower markdowns and rising premiumization (ASP up ~3% YoY to INR1,740).
* Employee cost increased 4% YoY, while other expenses were flat YoY (5% below our est).
* EBITDA rose sharply by 17% YoY to INR1.66b (11% beat), with margins expanding 145bp YoY to 15.2%. (~150bp beat).
* Pre Ind-AS EBITDA stood modest at INR40m, marking a significant improvement from ~INR80m loss YoY.
* Depreciation and interest cost were up 10%/19% YoY due to store additions.
* SHOP continued to report losses with a net loss of INR179m (vs. INR225m YoY and our est. loss of INR337m).
Management commentary
* Management indicated that footfalls improved sequentially, driven by weddings and lower inflation, while growth moderated in value retail.
* Growth was largely driven by premiumization trends, with premium categories contributing 67% of total sales (+8% YoY and 9% LFL vs 5% at the company level).
* Profitability showed improvement with margins recovering, driven by operating efficiency and a mix shift toward higher-margin categories.
* Private brands contributed 12% to overall revenue and 18% within apparel. Apparel volumes witnessed strong growth at 18%, led by robust performance in Kids (33%) and Women’s Western Wear (24%).
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