Pizzas, watches and apparels are joining the real estate and automobile sector in showing signs of slowdown.
Listed retailers across categories have reported sluggishness as consumers have cut back on discretionary spends.
For retailers, expenses, including wage costs, debt servicing and inflationary pressures, are adding to the woes. But, they re-iterate that marketing budgets will not be cut.
K Raheja-owned Shoppers Stop posted a 96 per cent dip in net profit, despite a 15 per cent increase in sales.
“Costs have gone up unexpectedly by almost 27 per cent and there is some softness on spending. While the overall consumption scenario is negative, we expect to maintain 5 per cent like-to-like growth,” said Govind Shrikhande, Managing Director, Shoppers Stop.
The same-store sales — stores that have been opened for over a year — for Shoppers Stop grew by a mere one per cent in first quarter of the current fiscal.
The company is understood to be pruning the number of stores. “We are also right-sizing the number of stores. We have seen some closures in airport stores where the contract ended. While we opened four stores, we closed seven this quarter,” he added.
Jubilant Foodworks, which runs Domino’s Pizza, also admitted that “early warning signals” were visible in the food industry and margins were expected to remain under pressure in the coming quarters, too.
“Early warning signals are visible. The rate at which we were adding new customers have come down this quarter,” said Ajay Kaul, CEO, Jubilant Foodworks. He, however, stressed that marketing budgets will not be pruned. “We will be investing further to woo consumers and ad spends have been increased by five per cent from last year,” he said, without giving any numbers.
Harminder Sahni, Managing Director, Wazir Advisors, pointed out, “First quarter results are not positive for many retailers and this could be indicative of the things to come in the coming quarters. Opening of new stores may be delayed if the existing ones do not perform up to expectations. Companies, however, may not immediately react to the marketing budgets.”
Bindu.menon@thehindu.co.in