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Informist, Friday, Jul. 11, 2025

 

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--Avenue Supermarts Apr-Jun net profit INR 8.30 bln
--Analysts saw Avenue Supermarts Apr-Jun net profit INR 8.56 bln
--Avenue Supermarts Apr-Jun net profit INR 8.30 bln vs INR 8.12 bln yr ago
--Avenue Supermarts Apr-Jun revenue INR 159.32 bln vs INR 137.12 bln yr ago
--Avenue Supermarts Apr-Jun EBITDA INR 13.13 bln, up 7.6% on year
--Avenue Supermarts Apr-Jun EBITDA margin 8.2% vs 8.9% year ago
--Avenue Supermarts: Added 9 stores in Apr-Jun
--Avenue Supermarts: Q1 gross margins dn on yr on competition in FMCG space
--Avenue Supermarts: Q1 operating costs up on investments to build capacity
--Avenue Supermarts: Q1 operating costs up on inflation at entry level wages
--Avenue Supermarts: Total stores 424 as on Jun 30
--Avenue Supermarts: Q1 food ops 55.6% of total revenue vs 54.8% year ago
--Avenue Supermarts: Q1 non-food ops 19.7% of total revenue vs 20.3% year ago
--Avenue Supermarts: Q1 general merchandise, apparel 24.7% of sales vs 24.9%

 

By Avishek Rakshit

 

KOLKATA – An increase in wages of entry-level employees, together with the company's initiatives to improve service levels and build capacity, led retailer Avenue Supermarts Ltd. to report its lowest year-on-year net profit growth in seven quarters.

 

Avenue Supermarts, which operates the DMart brand of retail stores, reported a 2.1% year-on-year growth in its net profit for the June quarter at INR 8.3 billion, missing the Street view of INR 8.6 billion. The revenue grew 16.2% year-on-year to INR 159.3 billion, a tad below the Street's estimate of INR 160.4 billion.

 

The company's initiatives for improving service and capacity led to a cost surge. Total expenses rose 17.2% on year in line with the past two quarters to INR 148.6 billion. Finance costs surged by a whopping 101.8% on year to INR 266.2 million, and employee costs increased by 30.6% on year to INR 3.0 billion. The company added nine new stores to end the quarter with a total of 424 stores.

 

"Two years and older DMart stores grew by 7.1% during Q1 FY26 (Apr-Jun) as compared to Q1 FY25. Revenue growth impact of approximately 100-150 basis points was primarily due to high deflation in many staples and non-food products," the company's Chief Executive Officer and Managing Director Neville Noronha said in a statement.

 

The share of revenue from sales in the food category increased to 55.6% during the quarter compared with 54.8% a year ago, and the share of revenue from non-food consumer goods products fell to 19.7% from 20.3% a year ago. The company's revenue contribution from general merchandise sales remained mostly stable at 24.7% in the June quarter as compared to 24.9% in the year-ago period.

 

The trend in costs is in line with the past few quarters. During Jan-Mar as well, when the company reported a net profit of INR 6 billion on revenues of nearly INR 145 billion, Avenue Supermarts faced operating challenges on three fronts. In the first place, it faced increased competitive intensity in the consumer goods industry, primarily from quick commerce and e-commerce which hit its gross margins, secondly, wages of the entry-level workforce rose on account of a mismatch between demand and supply of skilled workers and and thirdly, the company continued to scale up its business expansion plans despite a decline in margins.
 

Avenue Supermarts' earnings before interest, tax, depreciation, and amortisation rose 7.6% on year to INR 13.1 billion, but the EBITDA margin declined to 8.2% from 8.9% in the year-ago period.

 

"Gross margins are lower as compared to the same period in the previous year, due to continued competitive intensity within the FMCG space. Operating costs are higher due to our efforts on improving service levels, capacity building and inflation at entry-level wages," Noronha said. 

 

Friday, shares of Avenue Supermarts closed 2.5% lower at INR 4,064.20 on the National Stock Exchange. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

 

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