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Motilal Oswal Report
Avenue Supermarts Ltd. hosted an analyst meet to discussing the ongoing market conditions, its new larger store strategy, remodeling of ecommerce business and the growth outlook.
Avenue Supermarts's revenue/square feet has been sluggish (down 8% compound annual growth rate) over the last three years. The management sees little cause for concern as the mass discretionary segment (27% of revenue) is yet to fully recover.
It appeared optimistic that high bill s have partly compensated for the lower footfalls and cut in bill sizes. The higher store size has pulled down revenue productivity, but it gives DMart an opportunity to increase product offerings to the mass customer, thus increasing its wallet share. It also offers a longer term growth visibility.
Being on an ownership model, the lower revenue/sqft in the initial period is less concerning as the benefits of long-term high return on invested capital far outpace the lower throughput.
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