Retail Sector Q3 Earnings Preview - Pent Up Demand To Spur Revenues To Pre-Covid-19 Level: ICICI Direct
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ICICI Direct Report
As per our channel checks, apparel retail players have witnessed one of their best festive season sales on the back of healthy pent-up demand and strong wedding season. In the pre-festive quarter (Q2 FY22), the revenue recovery rate had already inched up to 80-100% of pre-Covid-19 levels.
On a favourable base of Q3 FY21, we expect our coverage universe to report revenue growth of 28% YoY in Q3 FY22. In a bid to negate inflationary pressure (all-time high yarn prices), apparel retailers are expected to have taken price hikes in the range of 15-20%.
Positive operating leverage and certain rationalisation of fixed overheads are expected to mostly negate inflationary pressure on margins YoY.
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