DMart Q1 Results: Revenue Hit, Profit Dives Amid Covid-19 Restrictions
DMart’s net profit fell by nearly 90% in April-June quarter.
Avenue Supermarkets Ltd., which runs hypermarket chain DMart, reported an over 30% decline in revenue, hurt by the Covid-19 pandemic and consequent lockdown.
Consolidated revenue declined 33.2% year-on-year to Rs 3,883.2 crore in the quarter-ended June due to movement restrictions across the country to limit the spread of Covid-19, according to the company’s exchange filing.
The retail chain’s Q1 FY21 net profit fell 87.6% year-on-year to Rs 40.1 crore while earnings before interest, depreciation, tax and amortisation also declined by 81% to Rs 111.8 crore. DMart’s operating margin contracted sharply to 2.9% from 10.3% in the corresponding quarter last year.
The company attributed the weak results to the drop in footfalls amid the lockdown imposed by Prime minister Modi, first on March 24 and subsequently extended till June. “Unlike developed countries where organised retailers had a surge of customers walking into their stores, it has not happened with the same intensity at our stores,” Neville Noronha, managing director and Chief Executive Officer of Avenue Supermarts said in the statement accompanying the results.
Noronha said the strong enforcement of store shutdown, restricted movement of people and strict social distancing rules inside stores had a negative impact on footfalls and sales.
He pointed out that during this period the traditional channel of mom-and-pop stores saw faster recovery in sales. “They came roaring back after the first 2 or 3 weeks of lockdown serving the needs of an anxious customer the way the customer wanted it - quickly over the counter or through home deliveries,” Noronha said. Value wasn’t top of mind for shoppers during this time, he added, explaining away the business organised players like him lost to neighbourhood stores.
While business outlook continues to remain uncertain in this “second wave of the pandemic”, the company is “less anxious” than it was in beginning of April, the company said in its statement. Wherever DMart stores were allowed to operate without hindrance, it has recovered 80% of pre-Covid sales.
“Store operations and duration of operation per day continues to remain inconsistent across cities due to strict lockdowns enforced by local authorities from time to time. In addition, in certain cities authorities are once again insisting on selling only essential products,” Noronha said.
Dmart began home deliveries in Mumbai but discontinued them once the lockdown lifted and stores reopened.
The retailer has a total of 216 stores across Maharashtra, Gujarat, Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh, Rajasthan, NCR, Chhattisgarh and Punjab.