Shoppers Stop's Beauty Business Is Defying Inflation
Shoppers Stop's beauty segment achieved its highest-ever quarterly sales of Rs 262 crore, growing by 10% in the quarter ended December.
Consumers are still willing to pay up to look and smell good, setting Shoppers Stop Ltd.'s beauty category apart from its apparel business dealing with declining demand from inflation-weary shoppers.
"Currently, we are at an inflection point with beauty spending becoming more consistent," said Chief Executive Officer of Beauty, Biju Kassim. He cited factors like expanding middle class, greater aspiration of consumers to indulgence in prestige brands, and the easy availability of brands through multiple channels as key reasons fuelling the growth.
"Consumers are spoilt for choice and looking for more," said Kassim.
Buoyed by demand, the K Raheja Corp.-owned department store chain plans to expand its offline footprint, adding 15 large-format stores in the beauty segment this year. Currently, the retailer operates 13 SS Beauty stores. Over FY24-26, it plans to add 70 beauty stores.
Shoppers Stop's beauty segment achieved its highest-ever quarterly sales of Rs 262 crore, growing by 10% in the quarter ended December. This growth was higher than the company's 7% revenue growth and 6% sales decline in private brands, which contribute 19% to apparel business.
"Post Diwali, we have witnessed a seesaw situation," the management of the company told analysts, during a post-earnings conference call. "There has been a delay in winter this year. The temperatures were significantly higher than normal, which impacted our winter wear sales. Post-Christmas, we have seen a recovery, but it's still not consistent. There are green shoots. But overall, apparel continues to see muted growth."
Meanwhile, the same doesn't hold for the company's beauty business, which contributes 18% to sales. "For beauty, there has been a steady revise in the share of wallet, therefore we have seen four quarters of robust growth... and the trend is here to stay," Kassim said, adding that the premium and premium-plus goods are outselling in terms of demand.
The luxury segment currently contributes 25-30% to sales, but Kassim expects this segment to contribute 45-50% going ahead.
Kassim was in New Delhi to launch the maiden boutique store of NARS Cosmetics in the country. Last year in March, Japan's Shiseido Asia Pacific signed a distribution partnership with Global SS Beauty Brands Ltd., a subsidiary of Shoppers Stop, to officially launch the make-up brand in the country.
"We will be super-selective in terms of offline distribution, but we will ensure than we reach the length and breadth of the country by virtue of being an omnichannel retailer," said Kassim. The plan is to open four 'NARS' boutiques a year between Delhi and Mumbai, and 3-5 shop-in-shops.
Shoppers Stop already operates standalone beauty stores for brands such as Mac, Bobby Brown, Estee Lauder, Clinique, Jo Malone, and Too Faced.
Shoppers Stop's beauty distribution business has also achieved its highest-ever sales during the December quarter, turning profitable at Ebitda level in the first year of operation itself, said Kassim.
"The global distribution business will have a disproportionate growth next year," according to the company. This is because of the massive expansion. The business is expected to generate Rs 300-400 crore revenue.
"We expect to clock similar growth in Q4 like Q3," said Kassim. "So far the numbers are looking good. I think we will achieve mid-single digit growth for sure."
