Pantaloon, Shoppers Stop see bright year ahead

Riding on improved consumer sentiment, Pantaloon Retail and Shoppers Stop, the country’s biggest listed retalers, see 10-12 per cent and five-seven per cent growth, respectively, in same-store sales (SSS) in 2010-11.

While Shoppers Stop had SSS growth of three per cent in FY2010, Pantaloon Retail is likely to have growth of 11-12 per cent. Its financial year ends on June 30.

While Shoppers Stop was struggling with either negative or zero SSS growth in the first three quarters of FY2010, Pantaloon saw 6-7 per cent growth in the first two quarters.

Same-store sales compares the sales of stores that have been in the business for a year or more. This measure allows investors to determine what portion of new sales has come from sales growth and what portion from opening new stores.

After the lacklustre growth in initial quarters, the SSS growth of both retailers in the March quarter was the highest in the past five, mainly aided by the offers launched by them and improvement in consumer spending.

While Shoppers Stop saw SSS growth of 16 per cent in the March quarter, Pantaloon posted an SSS growth of 13.9 per cent in the value segment and 13.2 per cent in the lifestyle segment in the quarter.

The ‘Sable Sasta 4 Din’ offer of Future Group, which houses formats such as Big Bazaar and Pantaloon, among others, saw 10 million customers in its stores.

Future Group executives said: “We have posted good numbers since the second half of this fiscal. We expect to post similar numbers in the next fiscal.’’

Says Govind Shrikhande, chief executive of Shoppers Stop: “Customers are back to shopping. Along with same store growth, cost control and margin growth has given very good profitability.”

While Pantaloon Retail’s ebitda (earnings before interest, taxes, depreciation and amortisation) margins went down by 0.1 per cent at 10.5 per cent in the March quarter, Shopper’s Stop’s margins went up to 6.5 per cent, compared to 3.9 per cent in the corresponding quarter last year.

Shoppers Stop’s Shrikhande expects another 400 basis points growth in margins in the current financial year, while analysts expect Pantaloon’s margins to be 10-11 per cent.

Analysts are hopeful about the prospects of retailers in the coming quarters. “There will be pick-up in demand in urban centres in this fiscal (year). However, same-store sales holds the key,’’ says an analyst with a multinational brokerage who did not want to be named.