Shoppers Stop Q3 Results Review - Delivering On Growth Vectors: ICICI Securities
Foray into distribution of international beauty brands with L’Oreal, Clarins and Earthi is an incremental positive.
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ICICI Securities Report
Shoppers Stop Ltd. continues to deliver on all key growth vectors (private label, beauty, loyalty programme, retail expansion, re-innovation, technology). Achievement of highest-ever operating margin (at 9% - pre Ind-Accounting Standard 116) is encouraging. This has been possible due to-
mix improvement (revenue contribution from beauty and private label is now ~200 bps higher compared to pre-Covid quarters),
operating leverage and
efficient cost structure (adding smaller size store with better through-put; lower rent / sales).
Foray into distribution of international beauty brands with L’Oreal, Clarins and Earthi is an incremental positive as this will likely help Shoppers Stop to add strength in segment where it enjoys competitive moat.
Having said that, Shoppers Stop still continues to lag behind (on revenue growth) other retailers (Shoppers Stop’s three-year revenue compound annual growth rate at 3% versus 15-20% of competition). We expect the company to accelerate retail expansion in tier two-three-four cities, led by success in private label brands.
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