D-Mart operator Avenue Supermarts on May 23 has registered a 41.6 percent year-on-year growth in consolidated profit for quarter ended March 2020, driven by lower tax rate, other income and strong revenue growth.
The bottomline increased to Rs 271.29 crore during the quarter, from Rs 191.58 crore in same period last year.
Revenue from operations in Q4FY20 grew by 23.6 percent to Rs 6,255.93 crore compared to corresponding quarter of previous year. Company added 18 stores during the quarter.
"Overall revenue grew by 23 percent during March quarter, however during March month 2020 it grew by just 11 percent over March 2019 due to the lockdown effect of the last 9 days of March this year," Neville Noronha, CEO & Managing Director said.
"Margins have also seen erosion as regulations did not permit us to sell any apparel and general merchandise products," he added.
On the operating front, there was a mixed picture. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 12.1 percent year-on-year to Rs 417.33 crore in March quarter, but margin contracted to 6.67 percent in Q4FY20, against 7.35 percent reported in March quarter 2019.
Higher depreciation and employee costs hit margin performance. Other income during the quarter grew by 163.2 percent to Rs 34.85 crore YoY.
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Company expects the lockdown impact on earnings for April-June quarter.
"The trend rapidly deteriorated in April during which more than half of our stores remained closed for operations or operated for extremely restricted hours. Our revenue for April was down by more than 45 percent as compared to April 2019," Noronha said.
"As some of the restrictions continue, we are seeing reduced sales and lower than usual footfalls in our stores. Significantly large EBITDA declines are to be expected due to lower sales, lower gross margins, higher cost of operations on account of hardship allowance to front line staff during lockdown and higher personal hygiene/store sanitation costs," he added.
Post certain relaxations, Avenue has seen some improvements in May 2020 as company was able to open and operate more stores compared to April 2020.
"Those relaxations helped the first 14 days' revenue of May 2020 to increase by 17 percent over the first 14 days of April 2020," company said, adding discretionary sales may take good time to recover to pre-COVID times.
"Some of our stores which are functioning on a 24-hour basis for a very long time now have seen revenue trending closer to pre-COVID-19 levels despite not selling non-essentials and having restricted footfalls. We are not sure if this would replicate in all cities, nonetheless it is an encouraging sign in an otherwise uncertain near term outlook," Avenue said.
In the full year 20190-20, D-Mart's profit jumped 44.2 percent to Rs 1,301 crore and revenue rose 24.3 percent to Rs 24,870.2 crore compared to previous year.