Avenue Supermarts’ Revenue Rises But Same-Store Sales Fall In Q1

Avenue Supermarts Ltd.'s revenue rose but same-store sales declined for the quarter ended June 30.

Standalone revenue for the operator of DMart retail chain almost doubled over the year earlier to Rs 9,806.89 crore in April-June, according to the company's quarterly business update released on the bourses.

Both Q1 FY22 and Q1 FY21 were disrupted because of the Covid-19 pandemic. The revenue, the company said, rose 70% over the pre-pandemic levels or Q1 FY20.

Even as overall growth looks strong, the estimated same-store sales growth declined between April and June, continuing the trend in the last two to three quarters, Motilal Oswal said. It estimates the revenue/sq. ft. at Rs 33,521, which is 13% lower than the pre-pandemic levels and down 4% sequentially.

Citing channel checks, the brokerage attributed DMart's “soft” store performance to the high consumer traction on online platforms as its higher revenue contribution stores are largely based in metros and tier-I cities. Also, in the last two years, the average store size has increased 22% to 40,800 sq. ft., which may not have fully translated into revenue. The DMart management had previously indicated that higher-size stores take longer to reach a stable revenue/sq. ft.

Same-store sales measure the sales of a company's existing stores that have operated for more than one year, excluding sales of new stores. Avenue Supermarts, however, doesn't provide quarterly same-store sales growth.

DMart added 10 stores in Q1 FY23, taking its total store count to 294.

“We factor in 40 store additions, or 18% of total stores, in FY23. In the last three years, it has added 60% stores and 95% area despite the pandemic-led lockdowns,” Motital Oswal said.

Shares of Avenue Supermarts gained as much as 4.9% intraday—the most since May 31—and are trading 2.9% up as of 12:30 p.m. on Monday.

Of the 26 analysts tracking the company, 17 maintain a ‘buy', two suggest a ‘hold' and seven recommend a ‘sell', according to Bloomberg data. The 12-month consensus price target price target implies an upside of 5.5%.