Vishal Retail came out with the financial performance for the quarter ended December’08 and held a tele conference call on 21st December’08 to discuss the performance as well as future course of actions.
Highlights of the call
- Standalone net sales for the quarter ended December 2008 reported a growth of 24% to Rs 355.45 crore and net profit declined by 86% to Rs 2.15 crore. The EBIDTA margins stood at 12.3%.
- For the nine months ended December’08, the net sales rose by 68% to Rs 1090.34 crore and net profit decline by 33.1% to Rs 20.24 crore. EBITDA margin stood at 12.9%.
- Year to date, Vishal added 99 stores with retail space of 1.02 million sq. ft. taking the total to 2.88 million sq. ft.
- For the quarter ended December, apparel contributed 54%, non-apparel contributed 22.2% and FMCG contributed 22.6% and others 1.2% to the total revenue of the company.
- Private label contributed 18% of total revenues in the quarter under review. Break up is as follows: Apparel-4%, Non apparel-5% and FMCG – 9%.
- The fall in the sales growth is due to significant reduction in winter apparel sales witnessed during the quarter led by poor winter season in North India; this has resulted in overall decline of 12%-15% in the sales of the company.
- The average footfall per day of the company declined to 198000 in Q3 FY’09 from 213000 in Q2 FY’09.
- Company has added 27 stores and approximately 0.15 million sq. ft. of retail space during the quarter to reach 181 stores with a total space of 2.88 million sq. ft. on 31st December’08.
- Vishal currently operates in 148 Megamart, 12 Cornermart, 8 Fashionmart and 13 Franchisees.
- It has expanded to 11 new cities to reach 108 cities in 24 states and UT as on 31st December’08.
- 85% of total business comes from Tier II and Tier III cities.
- Till now no stores were closed but the area has reduced in 12 stores.
- To reduce warehouses cost, company closed regional warehouses and NCR warehouses are consolidated. Total space in warehouse is reduced to 400000 sq.ft.
- Rental cost per month in Q3 FY’09 on average of Rs 8.5-9 crore which is expected to decrease to Rs 7-7.5 crore.
- To decrease inventory, company coming up with aggressive offering of discounts, promotional schemes, customized at store level.
- Company is now concentrating on renting out excess space in multiple stores to independent vendors.
- Around 200000 sq.ft. of area is expected to be leased out on an average realization of Rs 200 sq. ft.
- The company had an inventory of Rs 813 crore on its books as on 31st December’08.
- Debt on the books as on 31st December’08 is Rs 765 crore and average interest cost is around 13.5%.
- Company conversion rate is around 44% to 45%
- Gross block of the company is Rs 353 crore
- Company reduced 9.5% of cost from Q2 FY’09 to Q3 of FY’09 and expects to further reduce by 8%-12% in the Q4FY’09.
- Any further expansion is only through franchise not directly.
- Debt of Rs 220 crore raised in YTD which is used for the expansion of 9000 sq. ft.
- Same store sales reported a double digit degrowth over corresponding pervious period.