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Jul 08, 2011, 10.41 PM IST
Price hikes to negate higher raw material prices and excise duty on apparels is likely to boost revenues of retailers for April-June. Further, a consumer shift to low price private label products—known as down-trading—because of inflation, will benefit companies like Pantaloon Retail.
Price hikes to negate higher raw material prices and excise duty on apparels is likely to boost revenues of retailers for April-June. Further, a consumer shift to low price private label products—known as down-trading—because of inflation, will benefit companies like Pantaloon Retail .
However, the price hikes could adversely affect sales volume in the apparel segment, say analysts. Inventories are also likely to increase due to lower sales of branded apparels.
While high inflation may not impact food and grocery retailers much, players like Titan Industries will be hurt as consumers defer their discretionary spends.
They say opening up of multi-brand retail for foreign direct investment will give a big boost to the sector, with higher fund flows and faster growth.
Following is what investors can expect from the April-June quarter results:
EDELWEISS SECURITIES: "With better liquidity for developers, improving consumer sentiments, and consolidation of retailers, the next few quarters will continue to see strong profit growth for retailers. Also, the fall in cotton prices will have positive impact on margins. However, with rentals inching up, long-term profitability may be impacted."
ICICI SECURITIES: "We expect topline growth of 20% for our retail universe backed by a combination of factors like space addition, promotional offers, price hikes and revival in same-store sales growth...Expect operating margins for Pantaloon Retail and Shoppers Stop to be flattish on a sequential basis."
MOTILAL OSWAL: "End-of-season sales from July are expected to offer higher discounts as retailers have been piling up inventories...We believe the sales trend in the coming quarter will be a key determinant in building momentum for the festive season in Q3 FY12."
Shares of Jubilant Foodworks are up 55% since the beginning of April, Shoppers Stop is up 40% and Pantaloon Retail stock has risen 27%, while the broader NSE Nifty index has fallen 1.8% over the same period.
Motilal Oswal has a "buy" on Pantaloon Retail, while Edelweiss says Titan and Shoppers Stop are among its top picks.
Tags: retailers, retail, April-June, revenue, apparels, down-trading, Pantaloon Retail, Price hikes, volume, Titan Industries, watches, foreign direct investment, Same-store sales, Jubilant Foodworks, Dominos Pizza, margins, Shoppers Stop, Motilal Oswal, profit, Edelweiss, ICICI Securities
May 22 2013, 13:11
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May 22 2013, 10:44
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