Avenue Supermarts (D-Mart)'s consolidated net profit surged 52.7% to Rs 414 crore on 18.4% rise in net sales to Rs 7412 crore in Q4 FY21 over Q4 FY20.Consolidated profit before tax surged 63.1% year on year to Rs 543.56 crore in Q4 FY21 from Rs 333.25 crore in Q4 FY20. Earnings before interest, tax, depreciation and amortization (EBITDA) in Q4FY21 grew by 47% year-on-year to Rs 613 crore in Q4 FY21. EBITDA margin stood at 8.3% in Q4 FY21 from 6.7% registered in Q4 FY20.
D-Mart reported a 15.53% fall in consolidated net profit to Rs 1,099 crore in year ended March 2021 (FY21) from Rs 1,301 crore posted in the year ended March 2020 (FY20). Total revenue for FY21 stood at Rs 24,143 crore, falling 3% from Rs 24,870 crore in FY20. EBITDA fell 18% to Rs 1,743 crore in FY21 compared with Rs 2,128 crore during FY20. EBITDA margin declined to 7.2% in FY21 from 8.6% in FY20.
D-Mart follows Everyday low cost - Everyday low price (EDLC-EDLP) strategy which aims at procuring goods at competitive price, using operational and distribution efficiency and thereby delivering value for money to customers by selling at competitive prices
Commenting on the performance of the company, Neville Noronha, CEO & MD of Avenue Supermarts said, "FY 2021 has been a challenging year for our business. The year began amidst a strict lockdown post the emergence of the Coronavirus (Covid-19) towards the end of the last financial year. The economy gradually opened post May 2020 and the second half of the year was progressing towards recovery. However, a much stronger second wave of Covid-19 infections hit the country towards the end of FY 2021 and has once again resulted in significant disruption to our business as several cities and towns have announced restrictions.
During FY 2021, the company saw a degrowth across key financial parameters of revenue, EBITDA and PAT. The company's sales mix also saw a shift towards Grocery and FMCG products. Sales from General Merchandise and Apparel formed 22.90% of company's total revenue for the year as compared to 27.31% in the previous year. This is a result of consumer preference of essential goods shopping for a significant period during the year, reduced discretionary spending and significant restrictions on selling non-essentials during the early part of the year. DMart said that it impacted company's margins during the year. However, Q4 margins did indicate revival of discretionary spends not seen in previous three quarters. The company's construction activity was impacted during the first half of the year. The hypermarket operator commenced store construction activity from the second half of the year and opened 22 new stores during the year.
Commenting further on DMart Ready, Neville Noronha said, We continued the expansion of our E-Commerce business and increased our presence across the MMR region. In addition, we commenced servicing 4 new cities during the last year - Ahmedabad, Pune, Bangalore and Hyderabad.
Commenting on company's store operations, Noronha said, Significant disruptions have been seen from March 2021 onwards for our store operations. The restrictions and local level enforcements have become much stricter. Restrictions vary from store closures on certain days or for extended periods, to restricted store operating hours and selling only essential goods in most cities and towns. In general, more than 80% of our stores are operating for significantly lower number of hours (not exceeding four hours per day) or are even shut for operations for one to weeks or shut on weekends. These shut downs are having an adverse and severe impact on our revenues.
Commenting on company's supply chain, Noronha further added, "We currently continue to receive regular supply of goods from our suppliers. However, this time we may have a problem of excess inventory. An issue larger than the first wave. The receding threat of the pandemic and consequent sales surge in Q3 and most of Q4, followed by the oncoming summer and back to school season made us plan more optimistically. This could have a longer-term impact on our inventory to sales ratio as we could take comparatively longer time to liquidate the excess inventory."
In its outlook, the company said that it expects more frequent lockdowns across cities and towns. This trend is likely to continue until a large part of the population is vaccinated and new infections reduce significantly and remain like that for a long period of time.
Avenue Supermarts owns and operates D-Mart stores. D-Mart is a national supermarket chain that offers customers a range of home and personal products under one roof. As of 31 March 2021, the company had 234 operating stores with retail business area of 8.82 million square feet (adjusted for space leased to AEL during the year) across Maharashtra, Gujarat, Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh, Rajasthan, NCR, Chhattisgarh and Punjab.
Shares of Avenue Supermarts rose 0.37% at Rs 2888.75 on Friday.
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