The third-quarter earnings of Avenue Supermarts Ltd.—the operator of retail chain DMart—missed analyst estimates due to higher costs on account of price cuts and extra working hours during the festive season.
“We also overspent a little to manage the festival season better through longer operating hours,” said Neville Noronha, chief executive officer of Avenue Supermarts.
The supermarket chain reported a 2 percent growth in its net profit—the slowest in at least last eight quarters—to Rs 257 crore for the December-ended quarter as compared to Rs 296 crore estimated by analysts.
The slower growth in the net profit could also be partially attributable to a 37 percent drop in its other income, the company said adding that the revenue for the quarter rose 33 percent year-on-year to Rs 5,451 crore.
The grocery retailer's earnings before interest, tax, depreciation and amortisation grew 7.5 percent to Rs 453 crore, while its margins slipped by close to 200 basis points to 8.3 percent due to higher operating costs, which, according to the company, inched upwards due to pre-loading of certain expenses primarily around capability building across infrastructure and people.
The company also added four stores during the quarter, taking the total store count to 164.
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