Avenue Supermarts Ltd Q4 FY25 Results

DMart (Brick and Mortar) Business Overview: Our revenue in Q4 FY25 grew by 16.7% over the previous year. Profit after tax (PAT) before prior period adjustments declined by 3.4% over the previous year and was not in line with sales growth. Two years and older DMart stores grew by 8.1% during Q4 FY25 as compared to 10.3% in Q4 FY24. The growth is primarily driven by increased footfalls. Three things have happened during this quarter — (I) increased competitive intensity in the FMCG space has impacted our gross margins; (II) surge in wages of entry level positions due to demand / supply mismatch of skilled workforce; and (Ill) continued investments in improving our service levels with respect to faster turnarounds on availability, checkouts and future store openings. We also had a larger number of store openings during this quarter. Anshul Asawa, our CEO Designate, has joined us in mid-March, 2025 and is going through a detailed familiarization and understanding of the organization. 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. 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. DMart Ready (E-Commerce) Business Overview: Our DMart Ready business 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. 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.