Retail Q3 Results Preview - Mixed-Bag, Bottoming-Out: Dolat Capital

Dolat Capital Report

We expect the retail cos under our coverage (Aditya Birla Fashion and Retail Ltd. / Avenue Supermarts Ltd. / Nykaa / Trent/ V-Mart) to report healthy revenue/Ebitda/adjusted profit after tax growth of 20.3/28.9/27.4% YoY on favorable base and festivity.

Trent to report strongest operating performance followed by DMart/Nykaa and Aditya Birla Fashion /V-Mart would be weak. TCNS Clothing consolidation to further suppress Aditya Birla Fashion’s performance. 

Growth is largely driven by new store additions with same-store sales growth being mixed bag. Festive season had been soft with lower than expected SSSG for most companies versus their own internal expectations.

These in turn may impact inventory levels, lead to early end-of-season sale and thus may impact gross margin in future quarters in our view for the apparel companies.

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