V-Mart Q2 Results Review – Corrective Measures Underway But Challenging Journey Ahead: Systematix

V-Mart Retail Ltd.’s Q2 FY24 results were in-line with our muted expectations, with margins under significant pressure given losses in LimeRoad exacerbated by higher discounting and price cuts in core business.

Revenue witnessed growth at 8.5% (same-store sales growth -6%; like-to-like sales volume grew 6%) given the shift in festive season. V-Mart’s core business grew 6% YoY (77% contribution to sales) whereas Unlimited revenue growth remained flat (19% contribution to sales).

LimeRoad business grew 26% QoQ contributing 4% to revenue. Average selling prices contracted on an overall level (- 12%YoY) and apparel (-13%YoY) due to focus on lower price points and are expected to remain around current levels going forward with the company targeting to attract value-conscious customers; while footfalls grew 13% YoY, with a conversion rate of 55% during the quarter.

Gross margin declined 169 basis points YoY to 34.6% due to lower Unlimited sales and higher discounting while Ebitda margin contracted sharply to 0.1% (-1,045 bps YoY) due to LimeRoad losses and 687 bps increase in other expenses.

V-Mart added eight new stores and closed two stores in Q2 FY24, taking the total store count to 437 (V-Mart: 353, Unlimited: 84). Total retail area grew 6% YoY to 3.8 million square feet (including Unlimited).

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