Avenue Supermarts Q1 Results: Profit Misses Estimates As Second Wave Hits
Avenue Supermarts Ltd.’s quarterly profit missed estimates due to a strong second wave of Covid infections, which led to restrictions across a number of states and impacted store operations.
Net profit of the operator of the DMart chain of hypermarkets fell 74% quarter-on-quarter to Rs 115.13 crore for the quarter ended June, according to an exchange filing. That compares with the Rs 159.7-crore consensus estimate of analysts tracked by Bloomberg.
Operating profit declined by 64% quarter-on-quarter to Rs 221.21 crore.
Operating margin stood at 4.4% compared to 8.4% in the March quarter.
Revenue declined 31% quarter-on-quarter to Rs 5,031.75 crore, compared to the consensus estimate of Rs 5032.7 crore.
On a year-on-year basis, net profit was 132% higher than the April-June quarter of FY21, when a nationwide lockdown was in place.
The company’s revenue rose by 31% over the corresponding quarter of last year because lockdowns were imposed at different times in different regions this time around, the company said in its statement. “Some cities announced early lockdowns and continue to have stringent measures in place even now while some cities eased the restrictions within 3-4 weeks after their early lockdown,” it added.
Despite lesser hours of operations, this time we had more customer footfalls than in the same period last year and this has translated into higher sales (year-on-year).Neville Noronha, CEO & MD, Avenue Supermarts Ltd.
The company said that there have not been any severe supply disruptions.
“We have not seen any significant impact on our supply chain during the quarter. Our inventory is also gradually moving towards normal levels. Construction activity has also commenced at all our sites,” Noronha said in a press release.
The hypermarket and supermarket chain said that a store needs at least 45 days of unhindered operations to get back to the pre-Covid sales momentum.
During the quarter, Avenue Supermarts added 22 new stores taking its total store count to 238 stores across Maharashtra, Gujarat, Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh, Rajasthan, NCR, Chhattisgarh and Punjab.
'DMart Ready', which includes online sales and the pick-up counter business, continued to expand across the Mumbai Metropolitan Region, Ahmedabad, Pune, Bangalore and Hyderabad. The second wave has given further impetus to the business, the release said.