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Mint
30-07-2025
- Business
- Mint
V2 Retail reports sharp jump in revenue and profit, powered by store expansion
Bengaluru: Value apparel retailer V2 Retail Ltd's net profit jumped in the April-June quarter, driven by sales growth and continued store expansion, even as consumption in India's small towns remained uneven amid weak demand. The company's net profit surged 51% from a year earlier to ₹ 24.7 crore in the three months through June, as expenses rose at a slower pace of 21%, it said in an exchange filing on Wednesday. The higher profit was attributed to revenue growth significantly outpacing costs, helping the company expand margins. The company reported a consolidated revenue of ₹ 632 crore for the April-June period, up 52% year-on-year, marking its highest quarterly revenue since being set up as Vishal Megamart Ltd in 2001. The company sold the 'Vishal' brand in 2011 and rebranded as V2 Retail Ltd. The performance slightly exceeded a Bloomberg analysts' estimate of ₹ 628 crore, as per projections tracked on the terminal. Shares of V2 Retail settled 1.2% higher at ₹ 1,959.55 apiece on the BSE on Wednesday. In a separate filing, V2 Retail said its board has approved a plan to raise up to ₹ 400 crore through the issuance of equity shares or other eligible securities. The funds may be raised via qualified institutional placement (QIP), preferential allotment, or other permissible modes, subject to shareholder and regulatory approvals. Chief executive Akash Agarwal had indicated in a July interview with Mint that the company was exploring fundraising options to support its ongoing store expansion and strengthen its supply chain and backend infrastructure. The company did not disclose growth from existing stores for the quarter. However, it added 26 new outlets during the period across 215 cities in the country, indicating that overall revenue growth was driven largely by network expansion rather than same-store performance. V2 Retail's expansion comes amid intensifying competition in the value fashion segment, particularly across tier-2 and 3 towns. The company is evaluating an upward revision to its FY26 expansion target of 100 stores. It has a strong presence in eastern India, especially in Bihar, Uttar Pradesh and Odisha where rivals like V-Mart are also expanding aggressively. This simultaneous push by major players underscores the rising battle for wallet share among price-sensitive consumers in India's smaller cities. 'Store expansion has clearly driven a large part of V2's topline growth, this quarter around 35% of it is from new stores alone,' said Pratik Prajapati, equity research analyst at Ambit Capital. 'Compared to peers like V-Mart, which added 15 stores and DMart, which added 12, V2 has significantly outpaced them. You'll likely see the full impact of this expansion reflected in the coming quarters, with V2 potentially outperforming its competitors.' Founded by Ram Chandra Agarwal, V2 Retail is one of India's oldest value fashion retailers, catering primarily to middle- and lower-income households in India's small towns. With a strong footprint in North and East India, the company operates a chain of affordable fashion and lifestyle stores offering apparel, footwear, and accessories for the entire family. Over the years, V2 has built a loyal customer base in small towns by focusing on deep discounting, festival-driven promotions, and a wide range of private-label offerings tailored to regional preferences. In an earlier interview with Mint in early July, Akash Agarwal, chief executive officer (CEO) of V2 Retail, had said the company may revise its FY26 expansion guidance upwards from the initial target of 100 stores. 'We are well on track and we've already opened 26 stores this first quarter,' he said, adding that the company is evaluating whether to increase that number based on ongoing performance. Despite the rapid rollout, Agarwal emphasized in the interview that profitability remains central to the company's growth strategy. He said all V2 stores are Ebitda positive. The company has also tightened inventory controls over the past two years, reducing the share of unsold stock older than 12 months from 25% to below 5%. Same-store sales have grown nearly 30% annually over the last two years, said Agarwal, and the company is now targeting annual revenue growth of 40-50%, supported by better throughput and backend improvements. V2 has also been scaling its in-house manufacturing arm, V2 Smart Manufacturing Pvt. Ltd, which contributed ₹ 13.6 crore in revenue during the June quarter. However, the unit posted a net loss of ₹ 1.9 crore due to initial set-up costs.
Mint
24-07-2025
- Business
- Mint
V-Mart posts strong profit jump in June quarter even as small town demand lags
Bengaluru: V-Mart Retail Ltd's net profit nearly tripled year-on-year in the April-June quarter, lifted by cost cuts and improved operational efficiency, even as slow sales at existing stores and weak demand in small cities reflected a broader pressure on consumer spending. The Kolkata-based value fashion retailer's revenue rose 13% year-on-year to ₹ 885 crore in the three months through June, its highest quarterly revenue in over two decades. The performance slightly exceeded Motilal Oswal's analyst estimate of a 12% growth. V-Mart's net profit surged 177% to ₹ 34 crore in the April-June quarter of FY26, despite discretionary demand remaining patchy in the country's small towns. Sales at older stores grew just 1% from a year earlier, but the company said this number looks low mainly because the Eid festival shopping happened early this year. 'If you adjust for that shift, the real growth at existing stores was closer to 5%, with both the V-Mart and Unlimited store formats contributing equally,' the company said in an exchange filing on Thursday. 'The operating leverage has clearly kicked in, and these margins will sustain in the coming quarters as well,' said Pratik Prajapati, equity research analyst at Ambit Capital. 'The numbers are pretty strong, and the company has shown meaningful efficiency on the cost side.' The company's earnings before interest, taxes, depreciation and amortization rose 27% y-o-y to ₹ 126 core in the June quarter, up from ₹ 99 crore in the same period a year ago. Investors cheered V-Mart's quarterly results, as the company's shares settled 5.7% higher at ₹ 807.40 apiece on the BSE on Thursday. The subdued same-store sales growth mirrors a broader consumption slowdown in discretionary retail. Avenue Supermarts Ltd (DMart) posted a muted same-store sales growth (SSSG) of just 3.9% in Q1 FY26, while Shoppers Stop's same-store sales contracted 5.9% during the same period, reflecting similar softness in footfalls and demand across organized value and premium retail. Same store sales growth measures the year-on-year revenue growth from stores that have been operational for at least a year, and is a key metric of a company's operational efficiency and financial health. V-Mart added 15 new stores and shut two underperformers during the quarter, taking its total store count to 510 across 27 states and Union Territories. While store expansion continues, the company is also focusing on improving performance at existing locations. V-Mart's expansion comes at a time when competition in the value fashion segment is intensifying, particularly in smaller towns. Rivals like V2 Retail are scaling rapidly, which has added 26 new outlets in the June quarter alone and is considering revising its FY26 expansion guidance upwards from the earlier target of 100 stores. The company runs over 215 stores, with a stronghold in eastern markets like Bihar, Uttar Pradesh and Odisha where V-Mart also has a dominant presence. This parallel expansion signals growing competition for wallet share among price-sensitive consumers in India's smaller cities. However, V2 Retail and Vishal Mega Mart have yet to announce their June quarter earnings. Founded in 2002 by Lalit Agarwal, V-Mart Retail has grown into one of India's leading value fashion retailers, catering primarily to middle- and lower-income households in tier-2, tier-3, and tier-4 cities. With a stronghold in North and East India, the company operates a chain of affordable fashion and lifestyle stores offering apparel, footwear and accessories for the entire family. Over the years, V-Mart has built a reputation for serving price-sensitive consumers in small towns with a focus on efficient store operations, localized merchandising and private labels. A key part of V-Mart's broader expansion strategy has been the integration of Unlimited, the retail chain it acquired in 2021 from Arvind Lifestyle in a ₹ 150 crore deal. The acquisition added 74 large-format stores across South India, giving V-Mart a ready presence in urban and semi-urban markets in Tamil Nadu, Karnataka, Andhra Pradesh and Telangana—regions where it previously had little to no footprint. The company said the format has now turned profitable and, in the June quarter, performed on par with its legacy V-Mart outlets, with both contributing equally to adjusted same-store sales growth. Fashion continues to be the core category, with private labels making up 64% of apparel sales. V-Mart's latest collections, targeted at Gen Z consumers, included influencer-led designs and streetwear-inspired styles that performed well in newly-launched store formats. 'The rebound in profit and margin expansion is a direct outcome of the backend optimisation and sharper merchandise curation. We've focused on quality, fit, and trend alignment, particularly for Gen Z shoppers in Tier II and III towns,' said Lalit Agarwal, managing director of V-Mart Retail, in the company's FY25 annual report. 'Our renewed focus on product curation, customer insights and disciplined execution is helping us navigate the market challenges and deliver profitable growth,' the company said.
