Avenue Supermarts Ltd, which owns and operates the retail chain D-Mart, on May 14 reported a 22 percent decline in its sequentially consolidated net profit to Rs 427 crore for the fourth quarter ended March 2022. However, the company posted a 3 percent rise in net profit on year.
Revenue fell 5 percent quarter-on-quarter to Rs 8,787 crore from Rs 9,218 crore. Year on year, revenue rose 19 percent.
“January 2022 started extremely well but then the Omicron wave of Covid‐19 reduced the momentum over the middle of the month. These waves typically hurt the high margin and discretionary items more. As is the trend of the past, recovery does take 40‐50 days after restrictions are removed or anxiety of a Covid wave recedes. Omicron was a milder wave and hence had a significantly lower negative impact,” said Neville Noronha, CEO & Managing Director, Avenue Supermarts Limited .
Profit after tax margin was hit by nearly 90 basis points to 4.8 percent in the quarter from 5.5 percent a year ago.
The firm said its store footprint continues to grow across the country. It opened 50 additional stores during the year, taking the total to 284 stores. It had a record opening this year primarily because of delayed openings in the previous year due to Covid.
Avenue Supermarts is currently present in 12 cities across the country. It commenced operations in seven new cities during the year – Bhopal, Indore, Kolhapur, Nagpur, Surat, Vadodara and Vizag and continued expansion during the year in Mumbai, Ahmedabad, Bangalore, Hyderabad and Pune.
“Our FMCG business is recovering well. The value proposition is being distinctly seen by our customers in this segment. In the discretionary non‐FMCG segment, as of now it is hard to estimate if the relative lower growth is due to a secular change over time due to Ecommerce shift or due to inflation or due to significantly higher Covid related negative economic impact for certain shoppers,” Noronha said.
“We would be able to give that qualitative interpretation only if there are no more Covid shutdowns/restrictions over at least 2 more quarters. High inflation environment is helping us manage our costs better and also deliver relatively better value to shoppers”, Noronha added.
At a fundamental level, the company believes that for grocery, Ecommerce is a channel of convenience while brick and mortar is still the channel of joy, except for the effort to reach the store and the time to wait at the checkout.
“Each has its own unique magic. We will operate both channels to the best of our abilities with a mindset to improve on these principles and ensure that the value to the shopper remains supreme,” it added.
For FY22, its total debt stood at Rs 416 crore against Rs 296 crore a year ago.
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