Retailer Avenue Supermarts that runs the DMart chain of hypermarkets has kicked off FY25 with a 17.5 per cent rise in net profit in the June quarter and 19 per cent rise in revenue driven mostly by groceries and staples and an improvement in general merchandise and apparel.
The company reported a consolidated net profit of ₹771.5 crore on revenue of ₹14069 crore.
The company said operating costs went up in the quarter due to its efforts to improve service levels and building up capabilities for the future. Its expenses went up 18.6 per cent to over ₹13,000 crore, with all components contributing to the general rise.
The higher contribution to the performance of the company from general merchandise and apparel was reflected in the higher gross margin though EBITDA margin at 8.7 per cent was the same as year before, while net profit margin was also flat at 5.5 per cent. EBITDA in the quarter was 18 per cent higher at ₹1221 crore.
During the quarter, the retailer opened six new stores, ending with a total store count of 371 at the end of June.
The quarter under review was marked by an increase in raw material prices that led to many FMCG companies increasing prices of many of their products. In such a scenario a discount retailer such as Avenue Supermarts would have to rely on the efficiency of its distribution to keep costs down as well as negotiate for better prices with manufacturers.
In a recent note on the retail sector Axis Securities noted that discretionary spending is still subdued. Avenue Supermarts, being in the value retail category, is seeing gradual recovery as its performance shows.
Sequentially the retailer’s net profit was higher by 37 per cent and the revenue was up 10.5 per cent.