D-Mart Q1 Results: PAT up mere 2.3% YoY to Rs 695 crore despite higher sales

economictimes.indiatimes.com:

Avenue Supermarts Ltd reported a mere 2.3% year-on-year (YoY) rise in net profit for the quarter ended June to Rs 695.36 crore, despite a double-digit growth in revenue. The hypermarket chain operator reported an 18% YoY growth in revenue for the quarter to Rs 11,584.40 crore. The board has also given consent to offer employee stock options, subject to the approval of shareholders at the ensuing annual general meeting.

Under the ESOP scheme 2023, the company plans to offer up to 1,500,000 options, which on exercise would entitle an equal number of equity shares of Rs 10 each of the company. “Options shall be granted to eligible employees who are in General Management “G” Grade and who are in employment of the company as on the date of grant,” the D-Mart chain operator said. Avenue Supermarts’ net profit growth was restrained by a muted operational performance.

Operating profit, calculated as earnings before interest, taxes, depreciation and amortisation (EBITDA) grew just 2.8% on year to Rs1,036 crore. Operating margin shrunk by a sharp 133 basis points on year to 8.95%, due to lower gross margins. “Overall, gross margins are lower compared to the same period in the previous year, primarily due to lower sales contribution of apparel and general merchandise,” said Neville Noronha, CEO & Managing Director.

However, general merchandise contribution is recovering and trending towards pre-pandemic levels, Noronha said. During the quarter, the company opened 3 stores, taking the total store count to 327. In the reporting quarter, total expenses surged 20% on year to Rs 10,700 crore.