Opened highest number of stores in Q3: Shoppers Stop

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Opened highest number of stores in Q3: Shoppers Stop

Shoppers Stop has declared its third quarter results. In an interview to CNBC-TV18, Govind Shrikhande, managing director of Shoppers Stop says, the company has had highest number of store openings in this quarter.

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Shoppers Stop has declared its third quarter results. In an interview to CNBC-TV18, Govind Shrikhande, managing director of Shoppers Stop says, the company has had highest number of store openings in this quarter. "We have opened six stores in this quarter, 11 till date in this financial year. It looks like we will beat 12. We will also hit our 50th store. That will be a historical position for us," he adds.

According to him, opex growth of about 300 basis points because of the new stores is impacting the company. However, in the long-term, he is extremely bullish that this high growth pattern will help the company to really make more profits in the long run.

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: Your same-store sales have actually declined in the quarter. Can you just take us through what is leading to this sluggishness?

A: I think there are some very good points for this quarter. Let me highlight those first and then I will come to the like to like growth. One, we have had the highest number of store openings in this quarter -we have opened six in this quarter, 11 till date in this financial year. It looks like we will beat 12. We will also hit our 50th store. That will be a historical position for us.

Second, definitely the like to like store model that we have is shaping up very well. The stress test of the slower economy rate, we are able to see. But at the same time, like to like stores profitability is intact and will maintain.

The new store, the higher growth is impacting the profitability to some extent. I would say opex growth of about 300 basis points because of the new stores is impacting it. In the long-term, I am extremely bullish that this high growth pattern will help us to really make more profits in the long run.

Q: Isn't it true though that that volumes have fallen about 9% on same store and on top of which margins as well have come under some pressure because of that capex you talked about? Going into the next quarter, on both those parameters, what do you expect to see in terms of same store volumes? How much margins can improve by?

A: Volumes, there is slightly different picture that has emerged between department store and hyper market. In the department store, we have seen a 9% volume drop fundamentally coming from apparel price increases. We expect apparel prices to soften quarter one and quarter two that will come up in the next financial year. So, it should start recovering back.

In Hyper City, we are seeing a slightly different picture. We are seeing 18% volume growth in that business which is very good. In fact the prices there have dropped by about 6%. So, like to like growth in the hyper business has been pretty good at 12% inspite of the slowdown in the economy. So, I am pretty happy about that. We have also seen a 70 basis point margin growth in the hyper business.

I think this quarter is a mixed bag to some extent. But fundamentally I think it is proving your model right and also proving the fact that the hyper business where we have been saying that the store level EBITDA is the first key goal for us has shown a positive trend. It has moved to Rs 79 lakh from minus Rs 134 lakh of last year. So, there are quite a number of good points during this quarter.

Q: Should your investors be worried that generally consumption is going down and the first worrying signs are showing up in footfalls?

A: I don't think investors should get worried because retail is a very long-term business. When you see some amount of slowdown in the economy, definitely the consumer's first item to push back is always apparel. So, for one or two quarters, definitely there would be more softness than what we are seeing right now. But in the long term, I am very bullish.