India's Shoppers Stop drops 5% as profit tumbles on investments (updated)

Shoppers Stop

25/07/2023 11:13

(Updates share move in paragraph 1; Adds CEO comment, details
on expenses in paragraph 3-8)
       BENGALURU/CHENNAI, July 25 (Reuters) - Shares of
Shoppers Stop  SHOP.NS  fell as much as 5% on Tuesday, a day
after the Indian departmental store operator reported a more
than 34% slump in first-quarter profit as investments to beef up
its business and discounts weighed.
    Standalone net profit fell to 149.4 million rupees ($1.83
million) for the quarter ended June 30.
        The decline in earnings could be attributed to
discounting and Shoppers Stop's move to invest in its beauty,
footwear and affordable apparel businesses, CEO Venu Nair told
Reuters.
  
        Total expenses rose 5.8% for Shoppers Stop, which sells
products ranging from Vero Moda apparel to Michael Kors watches
at its stores.
  
    Revenue from operations still climbed 4.2% to 9.82 billion
rupees, with brokerage ICICI Securities attributing a bulk of it
to its move to raise product prices by 5%.
    Higher costs, including that of raw materials, labour and
utility, have forced several companies to raise the prices of
products and pass the burden of inflation onto customers.
        Shoppers Stop said the demand for apparel, which had
been muted after the festive season of Diwali, saw a partial
revival since mid-June.
  
        "This slowness in the apparel segment, we very strongly
believe, is temporary," Nair said.
  
        Shares closed up nearly 2%, taking their gains to over
9% this year.
  
        Rated "buy" on average by 11 analysts covering Shopper
Stop, the stock has a median price target of 850 rupees,
according to Refinitiv data.
  
    
 
 ($1 = 81.6980 Indian rupees)

 (Reporting by Rama Venkat in Bengaluru and Praveen Paramasivam
in Chennai; Editing by Dhanya Ann Thoppil and Sohini Goswami)
 ((ramavenkat.raman@thomsonreuters.com; https://twitter.com/ramavenkat0607;
 +91 8095218099;))