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Avenue Supermarts net profit down 2.2% in Q4 due to lower operating margins

Avenue Supermarts consolidated net profit fell 2.2 per cent in the fourth quarter of the financial year 2024-25 (Q4FY25) to Rs 551 crore due to lower operating margins. The company, which runs DMart chain of supermarkets and hypermarkets, recorded a 16.8 per cent increase in its total revenue to Rs 14,872 crore from Rs 12,727 crore in the year-ago period. Earnings before interest, tax, depreciation and amortisation (Ebitda) in the quarter ended March stood at Rs 955 crore, as compared to Rs 944 crore in the corresponding quarter of last year. Ebitda margin stood at 6.4 per cent in Q4FY25 as compared to 7.4 per cent in Q4FY24. In FY25, its total revenue stood at Rs 59,358 crore, as compared to Rs 50,789 crore in FY24. Commenting on the performance of the company, Neville Noronha, chief executive officer and managing director, Avenue Supermarts said in a release on its brick and mortar business, 'Our revenue in Q4FY25 grew by 16.7 per cent over the previous year. Profit after tax (PAT) before prior period adjustments declined by 3.4 per cent over the previous year and was not in line with sales growth. Two years and older DMart stores grew by 8.1 per cent during Q4FY25 as compared to 10.3 per cent in Q4FY24. The growth is primarily driven by increased footfalls.' He explained that the January-March quarter saw increased competitive intensity in the FMCG space that impacted its gross margins, surge in wages of entry level positions due to demand / supply mismatch of skilled workforce, and continued investments in improving its service levels with respect to faster turnarounds on availability, checkouts and future store openings. He also said that it had a large number of store openings during the quarter. 'Anshul Asawa, our CEO Designate, has joined us in mid-March, 2025 and is going through a detailed familiarisation and understanding of the organisation. He should be taking charge of all operational aspects of the retail business in another 4-5 months. This will allow me to dedicate more time on store-opening acceleration, e-commerce capacity build-up and other non-retail aspects of the business,' Noronha said. He also said that the company's overall business continues to be resilient in metro towns. 'However, we are doing significantly better in non- metro towns. We are also having relatively better like-for-like growth in metro towns which have significantly lesser DMart Stores density. While overall gross margins in the matured metro towns will remain soft for a certain period of time, our value positioning is well anchored in the minds of the shoppers of DMart Stores,' he added. On its e-commerce business DMart Ready, Noronha said that it is growing extremely well in key metro towns. 'We have shut down several pick-up points (PUPs), however, our Home Delivery channel is growing strongly and has more than compensated for any loss of sale of the PUPs. This year was a year of reset and review. However, it is also giving us confidence that our model is scalable and relevant to the Metro City shopper who appreciates DMart Ready for its value positioning and assortment profile,' he said. 'With the DMart Store business supplemented by our refocused DMart Ready presence in select towns, we believe our ability to serve the discerning value shoppers will only strengthen over time, though profitability for the standalone online segment could be some time away,' Noronha added.