V-Mart Retail has witnessed a slowdown in demand in the last six months and the company expects a turn around after elections, said Lalit Agarwal, Chairman and Managing Director, V-Mart Retail.
In an interview to Moneycontrol, Agarwal said that money flowing into Tier 2 and Tier 3 cities during elections will help consumer spending and consumption.
Agarwal was speaking on the sidelines of India Fashion Forum 2019 held in Mumbai.
On the store expansion front, in FY20, the company expects to open more than 41 stores that it opened in FY19.
In this month, V-Mart opened two retail stores one in Uttar Pradesh and one in West Bengal.
This takes the total number of stores to 209, spread across 166 cities and 17 states.
Excerpts from the interview:
Q: What is the sense you are getting in terms of demand. Do you think that consumer demand has slowed down?
A: First half of FY19 and second half of FY19 we have seen soft demand. Only in the last two-three days we have seen some demand coming back. People are waiting ahead of elections to know who will be at the centre, what will be the economic scenario like.
Q: Is the demand slowdown in a particular area or is it across?
A: We are seeing overall slowdown in demand except Tier I. Tier I has not seen that kind of slowdown but most of the states in Tier II have witnessed a slowdown.
Q: What is your outlook for FY20?
A: Elections bring lot of money to small towns and that is where the money gets to the smaller consumers and these consumers are going to celebrate more and along with this a stable government will bring in more confidence in the terms of spending, in terms of consumption. So, I see a good FY20.
Q: What is the kind of growth you are looking at for FY20?
A: We don’t spell out guidance but we always aspire for 20 percent growth year-on-year. We have been doing that for the last 10 years.
Q: In terms of store expansion, what is the target you are working with?
A: We already opened 41 stores in this financial year. We want to exceed last year’s target.
Q: What is the kind of margins you are looking at?
A: We always work with 10 percent EBITDA level and we want to maintain that. We create a lot of value. If we have any margin surpluses we would want to pass it to the customers
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