Retailers to report strong results for Q1FY23
Premium- Several retailers reported a sharp recovery in the months following April. Companies also initiated a round of price hikes to counter high inflation.
NEW DELHI : Retailers are expected to report strong results for Q1FY23 as consumers resumed spend on non-essential items during the quarter aiding demand for items such as apparel and jewellery, according to brokerage ICICI Securities.
“We expect companies in our retail coverage universe to deliver a strong show in Q1FY23 (the only non-disrupted quarter in the last two years)," analysts at the brokerage said in a note on the sector released 7 July.
Several retailers reported a sharp recovery in the months following April. Companies also initiated a round of price hikes to counter high inflation.
“As per our channel checks, fashion retailers, on a per store basis, have registered a recovery rate in the range of 110% of pre-Covid levels. The optimism was driven by improved consumer sentiments, wardrobe refresh and increased spend on discretionary purchases as consumer wallet share on non-essentials had remained subdued in the last two years," they said in their report.
Meanwhile, fashion lifestyle retailers built up healthy inventory for spring the summer-season in the fourth quarter of the last financial year after curtailing purchases for nearly two years. “On a favourable base of Q1FY22, we expect revenues to more than double for our companies in our coverage universe," they added.
Meanwhile, apparel retailers have taken price hikes in the range of 15-20%. As a result analysts at ICICI Expect EBITDA margins to improve 80 bps quarter-on-quarter to 12.3% in Q1FY23E.
During the quarter, top retailers also continued store expansion. Retailer D-Mart opened 10 stores, while Tanishq added 19 stores, Titan EyeCare added 56 stores, while Westside added three stores and V-Mart opened 11 stores.
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Earlier this week in its June quarter update—Titan Company Ltd., said that its Q1FY23 was a “near normal" first quarter after a gap of two years. “Sales in QIFY23 grew 205% year-on-year on a low base and clocked three-year CAGR of 20.5% over Q1FY20, the only non-disrupted first quarter in the last three years," the watch and jewellery retailer said in its earnings update on 6 July.