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Retail
ƒ Revenue growth picks up pace with onset of festive season
We expect topline growth of 26% for our retail universe backed by a
combination of factors like space addition, festive season and
promotional offers. During the quarter, Pantaloon Retail had the ‘Sabse
Saste Paanch Din’ promotions. Shoppers Stop also conducted an
Exchange Mela and also hosted a sale during the quarter. Titan
Industries also had its ‘Watches exchange offer’ during the quarter.
ƒ Operating margins – a mixed bag
We expect Pantaloon Retail to report a 46 bps YoY expansion in EBITDA
margin to 8.7% as full price sales begin to kick on due to the onset of
the festive season. However, we expect Shoppers Stop to report a drop
in the EBITDA margin from 5.4% in Q2FY11 to 4.0% in Q2FY12E due to
the losses faced by HyperCity. Similarly, we expect Titan Industries’
Q2FY12E margins to slip from 11.3% in Q2FY11 to 9.6% as the share of
studded jewellery is likely to decline due to increased diamond prices.
ƒ Space addition continues…
During the July-September quarter, we expect Pantaloon Retail to add
1.0 million sq ft taking the operational retail space to 16.23 million sq ft.
Shoppers Stop has also announced the addition of 20 stores across
various formats this quarter. We expect its total operational space to
increase from 3.64 million sq ft in June 2011 to 3.74 million sq ft as on
September 2011. Revenue per sq ft is likely to remain flat as newer
stores will take some time to stabilise. We expect Pantaloon Retail to
report a revenue per sq ft of | 1,878 (| 1,931 – September 2010) and
Shoppers Stop to report a revenue per sq ft of | 2,196 (| 2,142 –
September 2010).
: Company specific view
Pantaloon Retail We expect PRIL to report sales of | 3,047.8 crore (up 18.1% YoY) led by 1 million sq ft
of space addition. Revenue per sq ft is likely to decline by 2.7% YoY to | 1,878.
EBITDA margin is likely to improve by 46 bps YoY to 8.7%. We expect muted PAT
growth of 7.6% (| 46.0 crore) due to higher interest costs
Shoppers Stop We expect a 34.5% YoY increase in revenues to | 821.9 crore on the back of 0.1
million sq ft of space added during the quarter. We expect revenue per sq ft to
increase from | 2,142 in Q2FY11 to | 2,196 in Q2FY12E. Operating margins are likely
to dip to 4.0% (5.4% in Q2FY11) due to the losses of HyperCity
Titan Industries Q2FY12E revenues are expected to increase by 34.6% YoY led by ~20% appreciation
in gold prices, launch of premium category watches and several promotional offers
conducted by the company. With increasing share of premium watches, we expect a
50 bps operating margin expansion QoQ to 9.6%
Source: Company, ICICIdirect.com Research
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