V Mart reported 32.6% yoy revenue growth. By 30 Jun’13 the number of its stores had increased to 76, from 58 at end-Jun’12. Same-store sales growth was 8% for the fashion segment. The same-store sales growth (by volumes) was 1.5%. The company has improved its sales mix. Apparel contributed 75% of 1QFY14 revenue, against 68% in 1QFY13. Footfalls have increased 26% whereas the size of transactions (in rupees) has gone up 1.9% yoy. The average selling price has shot up 34%. However, the early monsoon has slightly impacted revenue growth.
The company has indicated that it would continue to focus on tier-2 and tier-3 cities. As competitive pressures are lower in such cities and V Mart enjoys the first-mover advantage there, it is able to grow at healthy rates and also retain healthy profit margins. Also the focus continues to be on apparel, which commands higher profit margins. The company does not have any aggressive capex plans to set up any private-label manufacturing units. It does not intend any major investment in its supply chain. We believe this would help it
generate strong cash flows ahead.
