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http://www.icicidirect.com/mailimages/ICICIdirect_ConsolidatedResultPreview_Q4FY12E.pdf
Retail
ƒ Sales remain subdued barring promotional offers
Our retail coverage universe is expected to report a YoY topline growth
of 13.3% during Q4FY12E. Despite heavy promotional offers and a
preponed discount season, sales remained subdued other than in
January (when promotional offers were made). Pantaloon Retail (PRIL)
also witnessed a lukewarm response to the Exchange Mela during
February 18 – April 8, 2012.
ƒ Operating margins to be affected due to heavy discounts
We expect margin pressure on the back of high discounts offered. While
PRIL has crawled back to the 9% operating margin level in the preceding
quarter, we expect margins to retrace back to 8.5% levels. Similarly,
Shoppers Stop is also expected to report an operating margin of ~4.5%
due to the prevailing losses of HyperCity and also due to the discounts
offered. However, Titan Industries is likely to witnesses a YoY expansion
in operating margin to 8.8% (6.0% in Q4FY11) as the company had
taken a one-time hit due to the bonus provision made for employees.
ƒ Space addition takes a breather
With the slowdown in demand, retailers have also slowed down the
space addition marginally. PRIL is expected to add 0.35 million sq ft of
space taking the total operational space to 16.6 million sq ft. Shoppers
Stop is expected to add 0.13 million sq ft thereby taking the total space
to 4.4 million sq ft. Revenue per sq ft is likely to remain subdued as
newer stores will take time to stabilise. We expect revenue per sq ft of |
1,785 and | 1,619 for PRIL and Shoppers Stop, respectively.
: Company specific view
Company Remarks
Pantaloon
Retail
We expect PRIL's Q3FY12E revenues to grow 5.7% YoY to | 2,972.1 crore. Despite
space addition of 0.35 million sq ft and promotions, revenue growth is expected to be
muted as sales beyond the promotional period were not encouraging. Operating margin
is likely to slip back to 8.5% (from 9.0% in Q2FY12) due to hefty discounts given
Shoppers
Stop
Shoppers Stop's Q4FY12E revenues are likely to grow 10.4% YoY to | 709.6 crore. While
same store sales growth is likely to remain flat, we expect the company to add 0.13
million sq ft of space taking the total operational space to 4.4 million sq ft. We expect
operating margins to remain subdued at 4.5% due to both losses of HyperCity and
extended promotional offers given by the company
Titan
Industries
Titan's Q4FY12E revenues are likely to grow 23.8% YoY to | 2,201.3 crore led by 20.4%
and 31.4% in the watches and jewellery segment, respectively. Operating margins are
likely to improve from 6.0% reported in Q4FY11, which were impacted due to one-time
bonus provision made. We expect Titan to report an EBITDA margin of 8.8%
Source: Company, ICICIdirect.com Research
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