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The festive mood
Our proprietary survey of 70 retailers, across 8 cities covering major
discretionary categories, points to a visible slowdown in festive demand.
The worst impacted seems to be the jewellery segment where volume
sales have dropped sharply against the last festive season while value
sales are flattish. Other high ticket products like electronics and home
products have also suffered. Apparels and footwear seem to be have held
up well though, with increased value sales figures following the
slowdown earlier in the year. Promotions have been more aggressive this
year to drive demand. We see risks of disappointments on the top and
bottom line for retailers from soft demand and high promotions. We
remain cautious on the sector.
Gold price volatility hurting jewellery sales, durables also slow
q Jewellery is seeing softening demand, with most stores talking about lower volume
sales (some of them as low as half compared to same period last year)
q Value sales constant or slightly lower than last year despite higher prices
q Aggressive promotions such as no labour/making charges in vogue to drive
volumes, which have nearly halved even in gold savvy cities such as Chennai
q Consumer durables such as refrigerators and television sets have seen demand
soften, as consumers are willing to purchase only “if needed”
q Demand in smaller ticket electronics like mobile phones has held up although
growth is still limited on a YoY basis
Footwear and apparel sales holding up well
q Sales have increased across all the 8 cities surveyed for the footwear category,
which has seen aggressive promotions/discounts. Also, increased shelf space has
been allocated to lifestyle wear, to take advantage of the festive season.
q Apparels have seen growth in value sales compared to the same period last year.
This follows the slowdown seen earlier in the year
Higher promotions visible in print advertising
q Print ads for consumer categories on key dates (eg. Dussehra) seem to have
increased by >20% over last year. However, the trend across categories is different
q Relatively high ticket segments like jewellery, electronics and home furnishings
have seen sharp increases in quantum of advertising as well as higher promotions
q Low ticket items like apparels have seen similar advertising as last year
Demand softening, we remain cautious
q While demand has held up well in the apparel/footwear and other small ticket
segments segment, the overall mood seems somewhat pessimistic with big ticket
categories seeing muted demand, high promotions and footfalls remaining modest
q At a company level, the survey points to a healthy festive season for Shoppers
Stop, mixed performance at Pantaloon with home remaining a drag and risks of a
disappointment for Titan. We remain cautious on the retail sector and with negative
recommendations on Titan (SELL), Shoppers Stop (SELL) and Pantaloon (U-PF)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The festive mood
Our proprietary survey of 70 retailers, across 8 cities covering major
discretionary categories, points to a visible slowdown in festive demand.
The worst impacted seems to be the jewellery segment where volume
sales have dropped sharply against the last festive season while value
sales are flattish. Other high ticket products like electronics and home
products have also suffered. Apparels and footwear seem to be have held
up well though, with increased value sales figures following the
slowdown earlier in the year. Promotions have been more aggressive this
year to drive demand. We see risks of disappointments on the top and
bottom line for retailers from soft demand and high promotions. We
remain cautious on the sector.
Gold price volatility hurting jewellery sales, durables also slow
q Jewellery is seeing softening demand, with most stores talking about lower volume
sales (some of them as low as half compared to same period last year)
q Value sales constant or slightly lower than last year despite higher prices
q Aggressive promotions such as no labour/making charges in vogue to drive
volumes, which have nearly halved even in gold savvy cities such as Chennai
q Consumer durables such as refrigerators and television sets have seen demand
soften, as consumers are willing to purchase only “if needed”
q Demand in smaller ticket electronics like mobile phones has held up although
growth is still limited on a YoY basis
Footwear and apparel sales holding up well
q Sales have increased across all the 8 cities surveyed for the footwear category,
which has seen aggressive promotions/discounts. Also, increased shelf space has
been allocated to lifestyle wear, to take advantage of the festive season.
q Apparels have seen growth in value sales compared to the same period last year.
This follows the slowdown seen earlier in the year
Higher promotions visible in print advertising
q Print ads for consumer categories on key dates (eg. Dussehra) seem to have
increased by >20% over last year. However, the trend across categories is different
q Relatively high ticket segments like jewellery, electronics and home furnishings
have seen sharp increases in quantum of advertising as well as higher promotions
q Low ticket items like apparels have seen similar advertising as last year
Demand softening, we remain cautious
q While demand has held up well in the apparel/footwear and other small ticket
segments segment, the overall mood seems somewhat pessimistic with big ticket
categories seeing muted demand, high promotions and footfalls remaining modest
q At a company level, the survey points to a healthy festive season for Shoppers
Stop, mixed performance at Pantaloon with home remaining a drag and risks of a
disappointment for Titan. We remain cautious on the retail sector and with negative
recommendations on Titan (SELL), Shoppers Stop (SELL) and Pantaloon (U-PF)
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