Retail Sector Check – Solid Q1 Print; Geared Up For Strong Festive Season: ICICI Direct


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Buoyed by strong wedding/festive season and a normalised quarter after a gap of two years, lifestyle retailers displayed a strong show with robust topline growth.

Revenue recovery rate for most apparel players was the highest in Q1 FY23 (115- 140%). On a favorable base, our retail coverage universe reported revenue growth of 146% YoY with impressive three-year compound annual growth rate of 17% in Q1 FY23.

Most companies undertook a price hike in the range of 12-15% (YoY) to offset a spike in raw material inflation. While price hikes did have an impact on price sensitive audience (average selling price less than Rs 400, V-Mart Retail Ltd. and Relaxo Footwears Ltd. witnessed volume de-growth), mid-premium to premium segments (Aditya Birla Fashion and Retail Ltd., Shoppers Stop Ltd.) were more or less insulated.

Despite inflationary pressures, our retail coverage universe maintained Ebitda margins at pre-Covid levels of 14%.

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