Shoppers Stop

Shoppers Stop reported Q2 FY25 sales of INR1,296 crores, marking a 2% growth. The quarter saw muted demand in July and August due to external factors like early US impact and excess rains, with sales declining 7% in July and growing 5% in August. However, September showed strong recovery with sales increasing by 12% overall and 9% like-for-like. Gross margins remained widely flat compared to FY24, while key metrics like Average Selling Price (ASP), Items Per Transaction (IPT), and Average Transaction Value (ATV) grew by 7%, 2%, and 9% respectively.

The company's loyalty program, First Citizen, achieved its highest-ever contribution to sales at 81%, an increase of 240 basis points year-on-year, with repeat sales at 67%. The premiumization strategy is yielding results, with sales on premium brands increasing from 60% to 64% and premium categories growing 6% like-for-like in Q2. The recently renovated Malad store is experiencing a 70% increase in productivity, and the company plans to upgrade more top-performing stores to enhance customer experience.

Shoppers Stop opened 19 INTUNE stores in Q2, bringing the total to 50, and aims to reach 100 stores by the end of FY25, with plans for another 120-125 stores in FY26. Management expects INTUNE stores to achieve positive store-level profitability by the end of this fiscal and contribute mid-single-digit EBITDA margins in the next two years. The format is showing strong traction in IPT and conversions, with kids' wear as a category continuing to outperform.

The Beauty segment demonstrated robust performance, with revenue increasing by 10% to INR218 crores (excluding its subsidiary). Including the 100% subsidiary Global SS Beauty, consolidated sales reached INR257 crores, a 19% growth. Global SS Beauty alone delivered INR52 crores in sales, growing by 130%. The company is launching a new 100% makeup private label, JOYOLOGY, developed with Intercos, to further accelerate momentum in the beauty space across all retailers and e-tailers.

The company spent INR43 crores on capex for additions and renovations in Q2, with a full-year capex guidance of INR200-240 crores. Working capital was reduced by INR30 crores, primarily driven by a INR40 crores reduction in private brand inventory. Management expects net debt to be INR120-130 crores this year, aiming to reduce it to less than INR100 crores next year and become debt-free in year 2 (FY27), servicing expansion through internal accruals.

Management expressed confidence in a path to recovery, with October sales trending better than September, expecting mid-teen growth for the month (including new stores). They anticipate mid-single-digit like-for-like growth for the next six months (H2 FY25), driven by improving external factors and the upcoming wedding season, with 4.8 million weddings expected in the second half. Overall EBITDA margins (non-GAAP) are guided to be in mid-single digits for FY25, with an expected improvement of at least 100 basis points in FY26.