Retail sales to stay soft this quarter

Chennai: Retail chains have reported muted same store sales growth (SSSG) in the June quarter and the SSSG in the September quarter too is expected to remain soft due to the ongoing macroeconomic slowdown.

Softer SSSG was visible across categories — apparel, grocery, jewellery and quick service restaurants. Most of the retailers saw growth softening sequentially.

Despite the elongated sales season, apparel retailers clocked soft SSSG. Aditya Birla Fashion and Retail's Madura Garments clocked a growth of 3.2 per cent against 6 per cent in Q4.

Pantaloons saw SSSG coming down to 4.1 per cent, from a high of 17 per cent reported for Q3 FY19. Future Lifestyle Fashion saw growth dipping to 5.2 per cent from 8.6 per cent in Q4 of FY19. It had a growth of 15.1 per cent in Q3. The ongoing consumption slowdown ate into growth at Big Bazaar, down to a multi-quarter low SSSG of 8.1 per cent YoY. This is the lowest SSSG in the past nine quarters for the company.

Titan's SSSG has been coming down steadily, from 32 per cent in Q2, 27 per cent in Q3, 14 per cent in Q4 of FY19 to now 10 per cent in Q1 FY20. According to Reliance Securities, the overall demand for jewellery was also hit due to higher gold prices.

At 4.1 per cent in Q1 FY20, Jubilant Foodworks saw the lowest SSG in nine quarters and the growth was 25.9 per cent in the year-ago quarter.

Yum Brands' system sales growth too has fallen to single-digits from double-digits in previous quarters.

"While the threat from the high SSSG base remains for only one more quarter now, the impact of cannibalisation that was not at play earlier due to net store addition of only 50 in 18 months ended 1HFY19 is now affecting both SSSG/margins," found Motilal Oswal Financial Services.

According to Edelweiss Securities, footfalls for retailers were impacted by the IPL and the cricket world cup matches. The end of season sales did not help apparel retailers either. Moreover, the general slowdown did not spare retail.

However, store expansion supported better revenue growth of most of the retailers.

'The ongoing macroeconomic slowdown has impacted SSSG and we expect Q2FY20 to be soft as well. Festive season will optically help Q3FY20 owing to festive mismatch vis-a-vis base quarter,' added Edelweiss.