Same-store sales growth shows big dip at Pantaloon

Pantaloon Retail, the largest listed company in this segment, has posted one of the lowest same-store sales (SSS) growth in the value and lifestyle segments in about two years, indicating subdued consumer sentiment amid uncertain economic conditions.

SSS allows investors to determine what portion of new sales have come from sales growth, compared to the portion from opening new stores.

Pantaloon had 3.6 per cent growth in SSS in the value segment in the September quarter. And, 6.5 per cent growth in the lifestyle segment. However, the company improved SSS growth in the home segment, at 1.3 per cent in the quarter from a negative 4.5 per cent in the earlier, June, quarter. The value segment growth is the lowest in the past eight quarters; of lifestyle, in the past seven.

In the September quarter of last year, the value segment posted SSS growth of 12.5 per cent, lifestyle of 21.7 per cent and home of 15.1 per cent. In the December 2008 quarter, after the global economic slowdown had hit, the company saw four per cent drop in SSS in the value segment, the lifestyle segment dropped 14 per cent and home retail by 10 per cent. Afterwards, SSS growth started seeing some improvement.

The company’s financial year ends on June 30. Its stock ended the day at '171.40, nearly 8.2 per cent lower than yesteray’s close.

"Muted consumer sentiment impacted sales growth across all categories. In addition, political and social unrest in Andhra Pradesh had a substantial impact on sales, as stores in Hyderabad and other cities had to be closed on 12 different days during the quarter," the company said in its latest investor update.

Lower consumer spending due to increases in prices, especially in the fashion category, also resulted in most competitors extending their end-of-season sales by a week or two, the company added.

"There is slowdown in the retail environment due to lower consumer spending and competition is also increasing. Many retailers are now aggressively expanding presence, which is hurting same-store sales," said Sangeetha Tripathi, senior equity analyst with Sharekhan Ltd.

Added a vice-president of a retail consultancy: “It shows that retailers are losing customers.” However, a Pantaloon executive said their operating margins had grown from 28.7 per cent in September 2010 to 29.2 per cent in September 2011. "We are focusing more on efficiencies than growth," he said.

The company posted a 35 per cent drop in net profit in the September quarter, while its total income went up 15 per cent.