Avenue Supermarts Q4 Results: Profit Growth Lowest In Three Quarters; Warns Of Significant Covid-19 Impact
DMart warned that challenges are likely to continue in current financial year as the economy gradually opens after the lockdown.
Avenue Supermarts Ltd., owner and operator of the supermarket chain DMart in India, reported its slowest net profit growth in the last three quarters, while its operating profit grew the least in last five quarters.
The nationwide lockdown which began on March 25 affected the grocer’s earnings for the January to March quarter in its first nine days, according to the company’s exchange filing. While this impacted the bottomline, it was offset by lower taxes and higher other income.
Here are the key standalone earnings highlights:
- Revenue up 23.1% to Rs 6,194 crore, year-on-year
- Net profit up 41% to Rs 287 crore
- Ebitda up 11% to Rs 418 crore
- Ebitda margin contracted 80 basis points to 6.7%
- Net profit growth higher due to higher other income and lower taxes
Though revenue growth for the entire quarter was 23 percent, during the month of March it grew by just 11 percent. Moreover, for the month of April – when the lockdown was in existence for the entire month – sales were down more than 45 percent compared to last year, the company said.
However, as relaxations came in, for the first 14 days of May 2020 sales were higher by 17 percent compared to the first 14 days of April 2020.
The company is also expecting a significant decline in its operating profit and margins due to lower sales and higher cost of operations. Margins will deteriorate as the company was not able to sell high-margin products such as apparels and general merchandise. Cost of operations were higher on account of hardship allowance paid to frontline staff during lockdown and higher personal hygiene and store sanitation costs.
Avenue Supermarts warned that the challenges are likely to continue in the current financial year as the economy gradually opens after the lockdown.
Social distancing practices and changing consumer preferences are two key trends that the firm will carefully watch out for. A lag in construction activity and the onset of monsoon from mid-June in most parts of the country will impact new store openings, it said, adding that it will impact revenue going ahead.