Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shoppers Stop Ltd (BOM:532638, Financial) reported a 12% sales increase in September, with a 9% like-for-like growth, indicating a positive trend after a challenging start to the quarter.
- The company's beauty business continues to outperform, contributing significantly to the bottom line with a 19% growth in consolidated beauty sales.
- Shoppers Stop Ltd (BOM:532638) opened 25 new stores, including 19 INTUNE stores, expanding its footprint and reaching its 50th INTUNE store milestone.
- The premiumization strategy is yielding results, with premium brand sales increasing from 60% to 64% and premium categories growing by 6% like-for-like in Q2.
- The loyalty program, First Citizen, achieved its highest ever contribution to sales at 81%, with a strong repeat sales rate of 67%.
Negative Points
- The company faced a decline in customer entry by 8% during Q2, primarily in July and August, impacting overall sales performance.
- Shoppers Stop Ltd (BOM:532638) experienced lower EBITDA due to fixed costs in new business and incremental technology investments.
- The online and omnichannel business performance was not highlighted in the presentation, raising concerns about its growth and contribution.
- INTUNE, while expanding, is expected to have a lower EBITDA margin impact on the overall company margins in the near term.
- Gross margins remained largely flat compared to FY24, indicating challenges in improving profitability despite sales growth.
Q & A Highlights
Q: Why was the revenue from the online or omnichannel business not included in the presentation?
A: Karunakaran Mohanasundaram, CFO, explained that the net revenue from the online business is around INR30 crore net of GST. There was no specific reason for its exclusion from the presentation, as the focus was on other growing verticals.
Q: How will INTUNE impact the overall margin for the company in the next few years?
A: Karunakaran Mohanasundaram, CFO, stated that while INTUNE's store-level margins should be positive by the end of the fiscal year, it may not contribute at the same level as the overall company. However, it is expected to contribute a mid-single digit in the next two years.
Q: What are the future plans for the beauty business, and what growth can be expected?
A: Biju Kassim, Chief of Beauty, mentioned that the focus will be on expansion, engagement, and education. The launch of a private label, Geologie, and the growth of the distribution business are expected to drive momentum. While specific growth rates were not provided, the business is expected to perform as well or better than current levels.
Q: What are the key operational parameters being tracked for INTUNE, and what are the rollout plans for the next few years?
A: Kavindra Mishra, CEO, highlighted that IPT (Items Per Transaction) and conversion rates are critical metrics. INTUNE is expected to reach 100 stores by the end of the fiscal year, with plans to open 120-125 stores in FY26, and potentially more in FY27.
Q: How is Shoppers Stop differentiating its department store experience amidst growing competition from EBOs?
A: Kavindra Mishra, CEO, emphasized the importance of offering a wide range of options, cross-category shopping, and personalized service. The focus is on providing a superior customer experience through engagement and service, which differentiates Shoppers Stop from standalone brand stores.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
