19 October 2023, Mumbai
Shoppers Stop's profit plunged 83.2% in the second quarter due to higher costs and lower demand, the company announced on Wednesday.
The department store faced a slump in sales as customers delayed buying clothes and other items for the holiday season.
Historic View
In India, the festive season, which started in September last year, usually contributes a large share of retailers' annual revenue as customers splurge on new outfits, accessories, and other products.
The 2023 festive season will kick off in late October.
Operating Leverage
Shoppers Stop said that its net profit for the quarter ended on September 30 was 27.3 million rupees, a sharp drop from the 162 million rupees it earned in the same quarter last year.
The company's revenue also declined by 3.5% to 9.34 billion rupees.
Shoppers Stop attributed the decline in profit to higher costs, including employee salaries and rent, as well as lower demand from customers.
The company said that it is expecting a rebound in sales in the third quarter as the holiday season begins.
State of affairs
Shoppers Stop's results are a reflection of the challenges facing the Indian retail industry.
The sector has been hit hard by the COVID-19 pandemic, which has led to a decline in consumer spending.
The rise of e-commerce has also put pressure on traditional retailers like Shoppers Stop.
The upcoming holiday & festive season is expected to provide a boost to sales, as the festive season is typically the busiest time of year for Indian retailers, as consumers spend heavily on new clothes, gifts, and other items.
The company's results are a reminder of the challenges facing the Indian retail industry.
