The near-term outlook remains challenging given the uncertain scenario and various limitations on store operations due to strict lockdowns enforced by local authorities, which would significantly impact footfalls.
The month of July is being impacted by the second phase of lockdown, with nearly 20 per cent of stores being closed once again. The Non-Grocery category is operating at double-digit like to like (LTL) decline. Thus, there is risk of slow recovery, which could extend well beyond 1HFY21.
Meanwhile, the company’s revenue for the quarter de-grew 33 per cent year on year (YoY) to Rs 3,883 crore. High cost of operations and weak sales led EBITDA (earnings before interest, taxes, depreciation and amortization) margins to contract sharply by 740 bps YoY to 2.9 per cent. Profit after tax declined 87.6 per cent YoY to Rs 40.1 crore.
“Nationwide lockdown led to store closures and the restriction of sales to the Essentials category. As a result, revenue witnessed a 34 per cent drop and estimated same-store sales growth (SSSG) fell -55 per cent; the closure of the margin-accretive non-food section dragged down gross margins by ~220 bps, translating to 81 per cent YoY decline in EBITDA,” analysts at Motilal Oswal Securities said in result update.
“Given its resilient business model and healthy balance sheet, we anticipate the company will tide over the current unprecedented scenario. Of the total QIP proceeds of Rs 4,078 crore, the company has utilised Rs 1,213 crore mainly towards debt reduction”, brokerage firm ICICI Securities said.
At 11:28 am, Avenue Supermarts was trading 6 per cent lower at Rs 2,027 on the BSE, as compared to 0.54 per cent rise in the S&P BSE Sensex. The trading volumes on the counter more-than-doubled with a combined 1.2 million shares changing hands on the NSE and BSE so far.