30th April 2013
Shoppers stop
Q4FY13 Results: Above estimates
RETAIL :Quarterly Update
Shoppers Stop’s Q4FY13 results (standalone) were above our estimates largely on account better than expected EBITDA margins. The variance is mainly on account of higher than expected gross margins expansion.Hyper city’s performance was in line with our expectations; volume growth of 3% during the quarter after decline witnessed in last 4 consecutive quarters was encouraging.
Shoppers Stop
  • Standalone Revenues grew by 17% YoY led by Same Store Sales (SSS) of 10% as against 12.5% in Q3FY13 and 10% in Q4FY12. Volume growth at 1% remained muted during the quarter. LTL sales growth of stores < 5 years was impressive at 19%.
  • EBITDA margins at 5.7% decreased by 50 bps (YoY) despite improvement in gross margins (120 bps (YoY) (likely on account of higher apparel share) which were partially offset by significant increase in employee cost (growth of 29%YoY) and other operating expenses (up 80 bps YoY). We note that the lease charges remained flat on sequentially basis while the electricity expenses declined by 10% (QoQ).
  • Inventory /sqft increased to Rs 720 as against Rs668 in Q4FY12.
  • Apparels maintained healthy share of revenue mix at 60.3% as against 57.4% in Q4FY12.
  • ASP increased by 8% YoY contributing to growth.
  • Capex during the quarter was Rs337 mn.
Hypercity
  • Hypercity’s revenues grew by 7% YoY led by 11% SSS (adjusted for Ex-mobile) as against 6% SSS in Q4FY12 and 5% in Q3FY13. LTL volume was positive 3% after 4 consecutive quarters of decline. The business is realigned as the Mobile retiling business is now being run as the mobile store as a concessionaire.
  • We highlight that during the quarter the total area under operation reduced from 1.23mnsqft to 1.15mn sqft would likely be on account of downsizing of its existing stores (possibly Amritsar store)
  • Company has recorded Store level EBITDA positive from last 7 consecutive quarters at Rs 10.7mn and company level EBITDA loss stood at Rs85 mn driven by 9% (YoY) increase in Store operating expenses.
  • The company incurred a loss of Rs219 mn during the quarter and we estimate that Rs219 mn of fresh capital was infused in the company during the period. We note that Hypercity’s loans from Shareholders/group companies have remain flat QoQ at Rs835mn.
Store additions
The company opened 1 Home Stop, 1 MAC standalone, 1 Clinique and 1 Crossword stores during the quarter resulting in an addition of 0.05msf. During the quarter, company shifted 1 Jaipur shoppers stop store to new location Jaipur Trade Park. The total area under shoppers stop (standalone) is now at 3.39 msf and Hyper city at 1.15 msf.
Hypercity’s Performance
Particulars(Rs Mn) / Q4FY12 / Q3FY13 / Q4 FY13 / YoY / QoQ
Retail Sales (Net of VAT) / 1,637 / 1,996 / 1,757 / 7% / -12%
Gross Margin / 346 / 422 / 369 / 7% / -13%
Gross Margin% / 21.2% / 21.2% / 21.0%
DC Cost / 22 / 26 / 23 / 8% / -12%
Damages / Others / 14 / 10 / 9 / -38% / -14%
Net Margin / 311 / 386 / 337 / 9% / -13%
Net Margin% / 18.98% / 19.30% / 19.20% / 1% / -1%
Store Operating Expenses / 346 / 422 / 378 / 9% / -10%
Other Retail Operating Income / 36 / 57 / 52 / 42% / -9%
Store EBIDTA / 1 / 20 / 11 / 873% / -48%
Store EBIDTA % to Sales / 0.07% / 1.00% / 0.60% / -40.00%
SO Expenses / 95 / 93 / 96 / 1% / 4%
COMPANY EBIDTA / (94) / (72) / (85) / -9% / 18%
Exceptional Item
Depreciation / 43 / 82 / 53 / 23% / -35%
Finance Charges / 85 / 82 / 80 / -6% / -2%
PAT / (222) / (236) / (219) / -2% / -7%
Source: Company, PhillipCapital India Research
Standalone Performance
______Standalone ______
Rs Mn / Q4FY12 / Q4FY13 / YoY Growth / Comments
Income / 5,863 / 6,757 / 15% / Growth led by 10% LTL sales
Gross Profit / 1,928 / 2,303 / 19%
Gross Margin / 32.9% / 34.1%
EBITDA / 363 / 383 / 5%
EBITDA Margin / 6.2% / 5.7%
Depreciation / 115 / 125 / 9%
Interest / 74 / 79 / 6%
PBT / 218 / 214 / -2%
Tax / 81 / 62 / -23%
PAT / 137 / 152 / 10%
PAT Margin / 2.3% / 2.2%
Source: Company, PhillipCapital India Research
Balance sheet (Consolidated)(Rs Mn)
EQUITY AND LIABILITIES / Mar-12 / Mar-13 / YOY
SHAREHOLDERS' FUNDS
Share capital / 413 / 415 / 1%
Reserves and surplus / 4,748 / 4,594 / -3%
Net Worth / 5,160 / 5,009 / -3%
Minority Interest / 39 / 46 / 16%
NON CURRENT LIABILITIES
Long-term borrowings / 944 / 1,662 / 76%
Deferred tax liabilities(net) / 2 / 63 / 2568%
Other long-term liabilities / 8 / 0 / -98%
Total Non Current Liabilites / 955 / 1,725 / 81%
CURRENT LIABILITIES
Short-term borrowings / 2,883 / 3,044 / 6%
Trade payables / 3,198 / 3,814 / 19%
Other current liabilities / 1,729 / 1,619 / -6%
Short-term provisions / 100 / 113 / 13%
Total Current Liabilites / 7,909 / 8,591 / 9%
Total / 14,064 / 15,371 / 9%
ASSETS
NON CURRENT ASSETS
Total Fixed assets / 6,481 / 6,740 / 4%
Goodwill on consolidation / 987 / 987 / 0%
Non current investments / 0 / 0 / 0%
Deferred tax assets (net) / 0 / - / -100%
Long term loans and advances / 2,155 / 2,396 / 11%
Other non-current assets / 54 / 92 / 71%
Total Non Current Assets / 9,678 / 10,215 / 6%
CURRENT ASSETS
Inventories / 3,311 / 3,698 / 12%
Trade Receivables / 263 / 322 / 22%
Cash and cash equivalents / 150 / 268 / 78%
Short term Loans and advances / 587 / 757 / 29%
Other current assets / 74 / 111 / 49%
Total Current Assets / 4,386 / 5,156 / 18%
Total / 14,064 / 15,371 / 9%
Source: Company, PhillipCapital India Research
Balance sheet (Standalone)(Rs Mn)
EQUITY AND LIABILITIES / Mar-12 / Dec-12 / Mar-13 / YOY / QoQ
SHAREHOLDERS' FUNDS
Share capital / 413 / 414 / 415 / 1% / 0%
Reserves and surplus / 6,172 / 6,436 / 6,523 / 6% / 1%
Net Worth / 6,585 / 6,851 / 6,938 / 5% / 1%
NON CURRENT LIABILITIES
Long-term borrowings / 350 / 475 / 1,125 / 221% / 137%
Long-term provisions / 2 / 101 / 63 / 2564% / -38%
Total Non Current Liabilites / 352 / 576 / 1,188 / 237% / 106%
CURRENT LIABILITIES
Short-term borrowings / 1,841 / 1,698 / 1,943 / 6% / 14%
Trade payables / 2,361 / 3,297 / 2,847 / 21% / -14%
Other current liabilities / 1,423 / 1,670 / 1,361 / -4% / -18%
Short-term provisions / 93 / 4 / 103 / 11% / 2570%
Total Current Liabilites / 5,718 / 6,669 / 6,254 / 9% / -6%
Total / 12,655 / 14,096 / 14,380 / 14% / 2%
ASSETS
NON CURRENT ASSETS
Total Fixed assets / 4,466 / 4,729 / 4,834 / 8% / 2%
Non current investments / 2,842 / 3,182 / 3,309 / 16% / 4%
Long term loans and advances / 2,503 / 2,763 / 2,754 / 10% / 0%
Other non-current assets / 79
Total Non Current Assets / 9,811 / 10,674 / 10,976 / 12% / 3%
CURRENT ASSETS
Inventories / 2,120 / 2,445 / 2,438 / 15% / 0%
Trade Receivables / 192 / 241 / 204 / 6% / -15%
Cash and cash equivalents / 71 / 65 / 117 / 64% / 82%
Short term Loans and advances / 389 / 594 / 586 / 50% / -1%
Other current assets / 71 / 78 / 59 / -18% / -25%
Total Current Assets / 2,844 / 3,422 / 3,403 / 20% / -1%
Total / 12,655 / 14,096 / 14,380 / 14% / 2%
Source: Company, PhillipCapital India Research / Under Review
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Abhishek Ranganathan (+ 9122 66679952)

Neha Garg (+ 9122 6667 9996)

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Regards,
Abhishek Ranganathan, CFA
Vice President
Retail, Real Estate | Institutional Equity Research
PhillipCapital (India) Private Limited
No. 1, 2nd Floor, Modern Centre, 101 K.K. Marg,
Jacob Circle, Mahalaxmi, Mumbai 400 011
Tel: +9122 6667 9952 (D), +9198204 98743 (M)
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