Company Update : Shoppers Stop Ltd By Motilal Oswal Financial Services Ltd
In-line results; slight pick-up in growth
Shoppers Stop standalone revenue grew 9% YoY to INR13.1b (in-line, 4% YoY in 2Q) driven by 4% LFL growth, while net store additions remained muted for the quarter.
* Private Brands revenue declined ~2% YoY to INR1.9b (vs. 15% YoY decline in 2Q), while the Beauty segment reported 3% YoY growth in revenue to INR2.7b (excl. the distribution channel) and 6% YoY growth (incl the distribution channel).
* Revenue from Intune stood at INR630m (vs. INR410m QoQ), with its presence expanding to 59 stores (vs. 50 QoQ). The company expects to open 26 Intune stores in 4Q.
* The company added 1 Department store (closed 4), 6 Beauty stores (closed 8), and 9 new Intune stores. The respective store counts stand at 109, 85, and 59 for the total store count of 284 (net addition of 4 stores QoQ).
* Gross profit was up 11% YoY to INR5.3b (in-line) as gross margins expanded ~90bp YoY to 40.7%, likely due to higher intake margins in private brands, lower write-offs, and optimized markdowns.
* Employee cost/other expenses increased 10%/11% YoY.
* EBITDA rose 11% YoY to INR2.4b (in-line) as EBITDA margins expanded 45bp YoY to 18.3%. This was driven by gross margin expansion, which was partly offset by other expenses.
* The company generated INR1.1b EBITDA (Pre Ind-AS) for 3QFY25, with pre IndAS margin expanding 100bp YoY to 7.8%.
* Depreciation and interest costs were up 16%/12% YoY.
* Reported PAT came in at INR488m (vs. est. of INR408m), driven primarily by higher other income.
* Net debt declined INR0.8b QoQ to INR0.9b.
Management commentary:
* Q3 ended on a fairly positive note, with the growth trajectory heading in the right direction. The company delivered volume-led revenue growth of 9% YoY and 4% LFL growth, despite higher inflation and lower consumer spending.
* Private brands generated healthy margin growth, driven by lower markdowns and reduced obsolescence. Management is focused on making private brands’ portfolio profitable.
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