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For 3QFY2011, Shoppers Stop (SSL) reported disappointing set of results on
account of high losses in HyperCity. On a consolidated basis, the company’s
top-line grew by 65% yoy to `725cr backed by robust growth in same-store sales
(SSS) and volume growth. EBITDA margin declined by 300bp to 4.5%
Consequently, PAT fell 44% to `8cr. We maintain our Neutral view on the stock.
Higher sales, lower rental help increase profit: During the quarter, SSL reported
65% yoy growth in net sales to `725cr. However, OPM declined by 300bp yoy to
4.5% and EBITDA remained flat at `32cr. High interest cost and tax outgo
resulted in PAT declining by 44% yoy during the quarter.
Outlook and valuation: We are bullish on the long-term growth prospects of the
retail sector. Considering the revival in demand for lifestyle category goods, SSL’s
store roll-out plans and the continuing cost rationalisation measures, we remain
positive on the company’s growth prospects. At `347, the stock is trading at 29.9x
FY2012E fully diluted earnings and 3.6x FY2012E P/BV. We maintain our Neutral
view on the stock.
Key business highlights
For 3QFY2011, SSL reported 65% yoy growth in total revenues to `725cr on a
consolidated basis. During the quarter, the company witnessed 22% growth in SSS,
with stores over five years of operations growing by 15% and those with less than
five years of operations growing by 39%. Overall, the transaction size and average
selling price increased by 7%. Customer footfall during the quarter improved by
53%.
At the end of 3QFY2011, SSL had total retail space of 2.3mn sq. ft. across 36
Shoppers Stop stores, 4 Home Stop stores, 29 Mother Care stores, 24 MAC and
Clinique stores, 3 Estee Lauders stores and 38 Crossword stores
PAT continues its downward journey: Consequent to the 300bp contraction in
EBITDA margin coupled with higher interest and tax outflow, PAT for the quarter
declined by 44% to `8cr. While interest cost for the quarter increased by 57% to
`7cr, the tax rate stood higher at 66%. However, depreciation decreased by 11%
to `14cr due to closure of few stores.
HyperCity update
During the quarter, while HyperCity’s total sales grew by 79% to `152cr, SSS saw a
22% rise in sales. The sales per sq. ft. stood at `1,942, with total customer footfall
increasing by 125%. Overall, HyperCity reported losses at EBITDA (`9cr) and net
(`18cr) level.
Outlook and valuation
We are bullish on the long-term growth prospects of the retail sector. We expect
organised retail, especially lifestyle retailing, to continue to post decent
performance going ahead. Considering SSL’s store roll-out plans, improved SSS
growth expectations and continuing cost rationalisation measures, we remain
positive on the company’s growth prospects. At `347, the stock is trading at 29.9x
FY2012E fully diluted earnings and 3.6x FY2012E P/BV. We maintain our Neutral
view on the stock.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Shoppers Stop– 3QFY2011 Result Update
Angel Broking maintains a Neutral view on Shoppers Stop.
For 3QFY2011, Shoppers Stop (SSL) reported disappointing set of results on
account of high losses in HyperCity. On a consolidated basis, the company’s
top-line grew by 65% yoy to `725cr backed by robust growth in same-store sales
(SSS) and volume growth. EBITDA margin declined by 300bp to 4.5%
Consequently, PAT fell 44% to `8cr. We maintain our Neutral view on the stock.
Higher sales, lower rental help increase profit: During the quarter, SSL reported
65% yoy growth in net sales to `725cr. However, OPM declined by 300bp yoy to
4.5% and EBITDA remained flat at `32cr. High interest cost and tax outgo
resulted in PAT declining by 44% yoy during the quarter.
Outlook and valuation: We are bullish on the long-term growth prospects of the
retail sector. Considering the revival in demand for lifestyle category goods, SSL’s
store roll-out plans and the continuing cost rationalisation measures, we remain
positive on the company’s growth prospects. At `347, the stock is trading at 29.9x
FY2012E fully diluted earnings and 3.6x FY2012E P/BV. We maintain our Neutral
view on the stock.
Key business highlights
For 3QFY2011, SSL reported 65% yoy growth in total revenues to `725cr on a
consolidated basis. During the quarter, the company witnessed 22% growth in SSS,
with stores over five years of operations growing by 15% and those with less than
five years of operations growing by 39%. Overall, the transaction size and average
selling price increased by 7%. Customer footfall during the quarter improved by
53%.
At the end of 3QFY2011, SSL had total retail space of 2.3mn sq. ft. across 36
Shoppers Stop stores, 4 Home Stop stores, 29 Mother Care stores, 24 MAC and
Clinique stores, 3 Estee Lauders stores and 38 Crossword stores
PAT continues its downward journey: Consequent to the 300bp contraction in
EBITDA margin coupled with higher interest and tax outflow, PAT for the quarter
declined by 44% to `8cr. While interest cost for the quarter increased by 57% to
`7cr, the tax rate stood higher at 66%. However, depreciation decreased by 11%
to `14cr due to closure of few stores.
HyperCity update
During the quarter, while HyperCity’s total sales grew by 79% to `152cr, SSS saw a
22% rise in sales. The sales per sq. ft. stood at `1,942, with total customer footfall
increasing by 125%. Overall, HyperCity reported losses at EBITDA (`9cr) and net
(`18cr) level.
Outlook and valuation
We are bullish on the long-term growth prospects of the retail sector. We expect
organised retail, especially lifestyle retailing, to continue to post decent
performance going ahead. Considering SSL’s store roll-out plans, improved SSS
growth expectations and continuing cost rationalisation measures, we remain
positive on the company’s growth prospects. At `347, the stock is trading at 29.9x
FY2012E fully diluted earnings and 3.6x FY2012E P/BV. We maintain our Neutral
view on the stock.
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