LTL sales growth means sales growth from stores that are in the business for a year or more. Some retailers call it same-stores sales growth.
“In the second quarter, there was a nine per cent increase in volumes and 6.5 per cent rise in average selling price, which helped LTL sales growth,” said Govind Shrikhande, managing director at Shoppers Stop.
In the second quarter, discounted sales period was extended by 10 days, which helped volume growth without impacting margins, Shrikhande said. The apparel segment, which grew by 20 per cent during the quarter compared to 15 per cent in the year-ago period, helped the volumes apart from improving margins, he added.
Shoppers Stop’s gross margins went up 30 basis points during the quarter.
Analysts say pent-up demand in apparel has helped retailers across the board in the past three quarters. “Last year, apparel growth was slow but it has picked up in the past two to three quarters. If you have not bought any new clothes for a year, you will refurbish your wardrobe next year,” said Abneesh Roy, associate director at Edelweiss Securities.
He added that good growth in private labels and refurbished stores are also helping retailers in good sales growth. “Retailers are doing activations to boost sales. Besides, price points have become affordable in apparel,” he said.
Kishore Biyani’s Future Retail posted the best same store sales (SSS) growth in the June 2013 quarter in value and home retail segments in the past five quarters. Future Value Retail, a wholly-owned subsidiary of Pantaloon Retail (India), posted SSS growth of 10.4 per cent in the June 2013 quarter, compared to 0.4 per cent in the year-ago period.
According to Shoppers Stop’s Shrikhande, the company is likely to see LTL growth of seven to eight per cent in the third quarter.
“We have grown 15.5 per cent on a growth of five per cent in the second quarter last year. It would be tough to grow 15 per cent on a base of 12.5 per cent unless economy does well,” said Shrikhande.
However, according to Edelweiss’s Roy, retailers will do well in the third quarter thanks to festivals such as Diwali and Christmas. “Ultimately, it depends on how prices move due to rupee fluctuations,” he added.