Shoppers Stop

Shoppers Stop reported Q1 FY25 sales of ₹1,260 crores, marking a 2% year-on-year growth. The quarter experienced muted sales growth, with April declining by 1% and May by 2%, though June saw a 7% growth partly due to an early EOSS. The company's EBITDA margin declined, primarily attributed to the gestation period of new stores. Gross margins remained largely flat compared to FY24, while like-for-like growth for departmental stores was -6%.

The premiumization drive continues to be a key focus, with the Premium Brands product portfolio growing by 10% like-for-like and 14% overall. The company is launching its Autumn/Winter '24 season in August, aiming for 70% full fresh stocks. Private Brand inventory was successfully reduced by ₹65 crores year-on-year, and a new merchandise planning system, Goldratt, is being implemented to improve inventory turnover and customer availability. Trading margins for Private Brands increased by one percentage point, though this was offset by the overall mix.

The INTUNE business demonstrated strong performance, with 9 new stores opened in Q1, bringing the total to 31. The sales per square foot for INTUNE stood at ₹11,000, and customer conversion was 33%. The full-price sell-through reached over 80% within a year, indicating strong brand acceptance. Due to its success, the company is accelerating its INTUNE expansion guidance from 60+ to 75+ stores for FY25, with plans to open 20+ stores in Q2.

The Beauty vertical remained EBITDA positive, with Fragrance outperforming with 19% growth year-on-year. The 100% subsidiary, Global SS Beauty, achieved ₹39 crores in sales, growing 2.5 times. The beauty distribution network expanded to 27 brands and 444 points of sale. The company targets ₹230 crores in Beauty sales for FY25, with an expected growth rate of 12-15% for the year, and plans to add three marquee brands in Q2.

Shoppers Stop opened 11 stores in Q1 (2 Departmental, 9 INTUNE). The guidance for departmental store openings for FY25 has been revised downwards from 15 to 11 stores due to regulatory delays and financial issues with local builders. Total capex for FY25 is projected to be ₹225-250 crores, including investments in a new warehouse in Bhiwandi and ₹20 crores for the renovation of the Malad flagship store, expected to open before Diwali. The company is also looking to rationalize 5-6 unviable stores.

Omnichannel sales remained largely flat. The company is enhancing its digital presence by updating its SS.com mobile app by the end of Q2, aiming for improved consumer experience and potential for services like same-day delivery. The First Citizen loyalty program reached 10 million members, with loyal members contributing 80% of sales. The Personal Shopper program is being expanded from 300 to 400 in Q1, with a target of 500, as personal shoppers drive 3x higher Average Transaction Value (ATV).

Management expressed cautious optimism for a gradual demand recovery, particularly in H2 FY25, driven by a larger festive season and increased wedding dates (50 days in H2 vs. 14 in H1). They anticipate Q2 to be better than Q1 and are confident in achieving mid-single digit EBITDA margins for the full year. The long-term outlook for Indian retail remains strong, with expectations of double-digit overall business growth over the next two years, fueled by premiumization and economic growth.