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  • Avenue Supermarts announces Q4FY20 and FY20 Financial Results Q4FY20 Profit Surges 42% YoY To Rs. 271 Crore

    Published on May 23, 2020

    by Sachin Murdeshwar

    MUMBAI:  Avenue Supermarts Ltd, which runs retail stores under the brand D-MartAvenue Supermarts Ltd. (ASL), one of the largest food & grocery retailers in India, today declared its standalone and consolidated financial results for the quarter and year ended March 31, 2020, The Company in its March quarter results for FY20 reported a 41.60% jump in consolidated net profit to Rs. 271.28 crore. In the same quarter last year, the company’s profit came in at Rs. 191.57 crore.

    Standalone results
    Total Revenue for the quarter ended March 31, 2020 stood at Rs. 6,194 crore, as compared to Rs. 5,033 crore in
    the same period last year.

    Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in Q4 FY20 stood at Rs. 418 crore, as compared to Rs. 377 crore in the corresponding quarter of last year. EBITDA margin is at 6.7% in Q4 FY 20 as
    compared to 7.5% in Q4 FY19.
    Net Profit is at Rs. 287 crore for Q4 FY20, as compared to Rs. 203 crore in the same period last year. PAT margin
    improved from 4.0% in Q4 FY19 to 4.6% in Q4 FY20.
    Basic Earnings per share (EPS) for Q4 FY20 stood at Rs. 4.49, as compared with Rs.3.25 for Q4 FY19.
    Total Revenue for FY20 stood at Rs. 24,675 crore, as compared to Rs. 19,916 crore in the same period last year.
    Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in FY20 stood at Rs. 2,122 crore, as compared to Rs. 1,642 crore during FY19. EBITDA margin improved from 8.2% in FY19 to 8.6% in FY20.
    Net Profit is at Rs. 1,350 crore for FY20, as compared to Rs. 936 crore in FY19. PAT margin improved from 4.7%
    in FY19 to 5.5% in FY20.
    Basic Earnings per share (EPS) for FY20 stood at Rs. 21.49, as compared with Rs. 15.00 for FY19.
    Consolidated results
    Total Revenue for the quarter ended March 31, 2020 stood at Rs. 6,256 crore, as compared to Rs. 5,062 crore in
    the same period last year.
    Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in Q4 FY20 stood at Rs. 417 crore, as compared to Rs. 372 crore in the corresponding quarter of last year. EBITDA margin is at 6.7% in Q4 FY 20 as
    compared to 7.4% in Q4 FY 19.
    Net Profit is at Rs. 271 crore for Q4 FY20, as compared to Rs. 192 crore in the corresponding quarter of last year.
    PAT margin improved from 3.8% in Q4 FY19 to 4.3% in Q4 FY20.
    Basic Earnings per share (EPS) for Q4 FY20 stood at Rs. 4.25, as compared with Rs. 3.07 for Q4 FY19.
    Total Revenue for FY20 stood at Rs. 24,870 crore, as compared to Rs. 20,005 crore in FY 19.
    Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in FY20 stood at Rs. 2,128 crore, as compared to Rs. 1,633 crore during FY19. EBITDA margin improved from 8.2% in FY19 to 8.6% in FY20.
    Net Profit of Rs. 1,301 crore for FY20, as compared to Rs. 902 crore in FY19. PAT margin improved from 4.5% in
    FY19 to 5.2% in FY20.
    Basic Earnings per share (EPS) for FY20 stood at Rs. 20.71, as compared with Rs. 14.46 for FY19.

    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 Mr. Neville Noronha, CEO & Managing Director, Avenue
    Supermarts Limited, said:
    Overall, FY 2020 saw a healthy 24% revenue growth while PAT margins were in line with expectations. Our LFL
    growth for FY2020 was 10.9%. Two reasons for this. One is that stores that are more than 5 years old grew at a
    rate lower than the previous year and most of the stores that are younger are peaking faster, even before they
    qualify for the 24 months LFL measurement. We opened a record 38 new stores, 6-8 of those stores should have actually opened last year. We also completed a successful equity fund raise to make our balance sheet stronger, resilient and also help augment our future growth.

    Covid-19 Update: 

    AOperational Impact
    The outbreak of Covid-19 is subjecting India and the world to extreme stress and uncertainty. Amidst the tumult
    of this unprecedented period, our priority has been to safeguard the health and well-being of our employees,
    customers and communities at large while continuing our business operations with responsibility and care.
    The countrywide lockdown began towards the latter half of March 2020 during which most of our stores
    remained closed for operations and stores that were opened, operated for restricted hours as directed by local
    authorities. Customer footfalls were significantly lower than normal during those times. We sold only essential
    items and stopped the sale of all non-essential products (Apparel and General Merchandise). Staff attendance
    was significantly below par and our new store construction was abruptly halted. We also faced issues in the
    supply chain due to severe transport restrictions. The implementation of lockdown guidelines at the
    district/municipal jurisdiction levels has been far more stringent than suggested in the State Government and
    Central Government circulars released from time to time, thereby hampering smooth operations of the entire
    organisation across stores, warehouses, packing centres and administrative offices. Village elders and family
    members of employees restricted their members/wards from venturing out of home during the early days of the
    lockdown. Our suppliers faced similar problems and hence could not fulfill the orders we placed with them in full
    or in time.
    We anticipated a lot of these issues based on what we saw in the rest of the world as the pandemic lagged in its
    progress in India. Basis this early learning we quickly adopted newer work practices at our Head Office, Regional Offices, Distribution Centres, Packing Centres and Stores. We moved extremely critical non store employees to work from home setups, made back up teams for every office working team so that if one team had to be
    quarantined, the other could take over, we did the same for our Store, Distribution Centre and Packing Centre
    teams. We also ensured regular sanitisation of all our premises and adequate availability of sanitising material, masks, non-contact thermometers to ensure all the best safety practices were followed before entering the work place and at the work place.

    We have also popularized a catch phrase “1-2-3” across the firm. 1- Always wash your hands, as many times as possible. 2 – Do not touch your hand to your face. 3 – If you have fever, cold or dry cough, stay at home and
    rest, call your doctor. Hand sanitisers are abundantly available at all work places and everybody is mandated to
    wear a mask at all times at work place. In addition, all frequently touched surfaces are sanitised at regular
    intervals such as trolleys, shopping baskets, cash counters, office workstations etc.
    We also announced an additional Covid-19 leave policy which is available for Covid-19 positive employees and
    also for any other employees who show Covid-19 type symptoms. This ensured that employees do not hesitate
    to stay at home even if showing mild symptoms. The Covid-19 leave policy covers all direct and indirect
    employees working at Dmart. We also announced a hardship allowance for all frontline staff. Frontline employees who continued to work during the pandemic lockdown period up to 3rd May earned at least double or more of their usual wages. This benefit covered at least 95% of all direct and indirect store, distribution centre and packing centre personnel. It is at times like these that employees look up to the firm to reassure them that their jobs are safe and that we are there when they need us, especially during a medical emergency.
    We have activated a separate cell that monitors every single Covid-19 positive employee and is supported through our local teams so that the employee and his family can avail all benefits without any difficulties. We are making every attempt to ensure that they feel safe and secure during this time.
    We commenced servicing our customers through several new channels of delivery to provide them all essential goods such as Home Delivery (using DMart Ready Online App), DMart on Wheels (DOW) for large housing
    complexes, etc. Some of our stores also operated on a 24-hour basis wherever authorities permitted it. Scaling
    the Dmart Ready App to operate across more than 200 stores, ensuring all operating metrics of order picking,
    route planning, delivery, etc demonstrates the inherent capabilities of the team to ideate, activate and execute projects in short time frames. Similar is the case of the DOW project. Our local store teams would set up a mini store with a small assortment of essential products in a large housing complex for 6-8 hours. However as
    mentioned before, these are temporary activities and shall be withdrawn once the overall lockdown is relaxed
    and there are reasonable footfalls back to the store. Avenue Supermarts Limited would like to focus on what it is
    good at – running Brick and Mortar store business.

    BFinancial Impact
    Our overall revenue grew by 23% during the quarter ending March 2020, however during the month of March
    2020 it grew by just 11% over March 2019 due to the lockdown effect of the last 9 days of March this year. The
    trend rapidly deteriorated in April during which more than half of our stores remained closed for operations or operated for extremely restricted hours. Our revenue for April was down by more than 45% as compared to
    April 2019. Our margins have also seen erosion as regulations did not permit us to sell any Apparel and General
    Merchandise products. We have also seen substantial absenteeism of our staff with some stores seeing 70%
    absenteeism in the beginning but now recovering. We are however not yet near our normal employee attendance. As some of the restrictions continue, we are seeing reduced sales and lower than usual footfalls in our stores. Significantly large EBITDA declines are to be expected due to lower sales, lower gross margins, higher cost of operations on account of hardship allowance to front line staff during lockdown and higher personal hygiene/store sanitation costs.

    Post certain relaxations, the month of May has seen some improvement. We were able to open and operate more stores as compared to April 2020. Those relaxations helped the first 14 days’ revenue of May 2020 to increase by 17% over the first 14 days of April 2020. Supply chain has seen significant improvement as manufacturers also resumed operations and the transport of goods was allowed by all local authorities. The last seven days have seen further relaxation of lockdown rules and is allowing us to sell non essentials in approximately 35% of the stores. Initial trends indicate that non-essential sales are more need based and
    currently do not have a discretionary element to it. It is specific and targeted. This indicates that discretionary
    sales may take good time to recover to pre-Covid times. Some of our stores which are functioning on a 24-hour
    basis for a very long time now have seen revenue trending closer to pre-Covid-19 levels despite not selling non-
    essentials and having restricted footfalls. We are not sure if this would replicate in all cities, nonetheless it is an encouraging sign in an otherwise uncertain near term outlook.

    The challenges are likely to continue in the current financial year as the economy gradually opens after the
    lockdown. Social distancing practices and changing consumer preferences are two key trends that we need to be
    watching carefully. Inventory write-offs due to shelf life aging and obsolescence doesn’t seem to be a significant
    issue of worry yet, however it could become a meaningful problem if the lock down measures continue to be as
    stringent as before and for a further period exceeding 40-50 days from now. Our new store openings will be
    impacted as construction activity will commence with some lag due to availability of labour & material and the onset of monsoon from mid-June onwards in most parts of the country.
    The full extent to which the pandemic will impact our future financial results will depend upon upcoming
    developments, which are highly uncertain including any new information concerning the severity of the pandemic and the action to mitigate its spread as advised by local authorities.
    These are trying times and we are doing our best, first to keep our employees safe, then to assure our customers that shopping at DMart is 100% safe, to assure our vendors and partners that doing business with DMart is business as usual, to let the authorities know that we support them in all that they are trying to do and lastly to all our investors – we will continue to do everything else just like before. We believe that all of what we sell is essentials, even among the non-essentials….and there is no better time than now to sell essentials.