Short Winter May Dampen December Sales, Says V-Mart Retail's Lalit Agarwal
Agarwal said job creation and a conscious effort to control inflation through various measures could reverse the consumption slowdown.
Winters are shrinking, threatening to dampen December sales of apparel retailers, even as they try to convince reluctant shoppers to spend with flashy deals.
A delayed and shrinking winter is "a concern", said Lalit Agarwal, founder and managing director at V-Mart Retail Ltd. "It is a good winter now, and as holiday season kicks in, we should see sales come back," he told NDTV Profit.
Even though the mercury is dropping, cold wave conditions are yet to hit Delhi as day temperatures remain high, according to Mahesh Palawat, vice president at Skymet Weather. This year will witness a delayed and short winter, the weatherman said, blaming climate change and global warming for shrinking winters and also possibly cutting short the spring next year.
Palawat said the winter is likely to start from the second week of December and last till the second week of January.
This follows a lackluster festive season as consumer sentiment remains muted. "India has not been consuming in the last two years and so this festive season we expected consumers to spend," said Agarwal. However, the festive season sales were "much below our expectations", he said, adding that the third quarter would look optically better due to a soft base.
Agarwal said job creation and a conscious effort to control inflation through various measures could reverse the consumption slowdown.
V-Mart has reported a weak earnings trajectory over the last few years, primarily due to factors such as weakness in the core business, sluggish performance in the unlimited format and losses within Limeroad.
For V-Mart, Agarwal said some stores are yet to cross pre-Covid figures in terms of same-store sales growth. "We expect FY25 to be better."
The retailer will be focusing on its "core business" and is not considering acquisitions at the moment, according to Agarwal.
On the profitability front, Motilal Oswal expects V-Mart's operating margin for Q3 FY24 to take a hit by the clean-up in inventory and low same-store sales growth.
The company, however, could see uptick in volume as it plans to pass on the benefit of falling raw material prices to protect market share amid stiff competition from regional players who are operating at 20% gross margin levels.
