V2 Retail Limited, a retailer that specializes in affordably priced garments and grocery, reported a 56% jump in its third quarter revenue, boosted primarily by a strong performance by its existing chain of stores. This marks a sharp turnaround for a company that had never really managed to shake-off the COVID lockdown blues.
The company witnessed healthy same store sales growth of 47% in Q3 FY24 and 29% for the nine months period.
As of December 31, 2023, V2 Retail operates 107 stores with total retail space of around 11.4 lakh sq. ft. During the April-December 2023 period, V2 Retail opened 14 new stores and closed 9 unviable stores as part of improving overall store productivity metrics.
Part of the reason for the strong performance is the weak year-ago performance. The company had been seeing poor growth in recent years due to weak demand in rural and semi-urban India. It has been trying various strategies, including discounting, to lure customers back to its stores.
The company said its in-house designing and manufacturing capabilities have provided competitive differentiation in product offerings across price points.
Going forward, V2 Retail remains committed to expanding its stores network with the aim of being ever more proximate and easily accessible to its growing customer base across India's value retail consumption market.
Rising Profitability
The company has seen an improvement in its profitability during the quarter, despite pricing pressures that seemed to have dented its gross margin.
Gross margins fell to 31.4% during the quarter from 35.9% a year earlier.
However, thanks to strict quality control, the company was able to improve operating and net profit margins.
Operating profit jumped 60% to Rs 60.9 crores from Rs 38.1 crores last year, with margin rising to 16.3% from 15.9%.
Net profit zoomed 153% to Rs 23.6 crores.
For the nine months period ended December 2023, V2 Retail's consolidated revenue grew by 35% to Rs 868.7 crores, operating profit rose by 67% and the company swung to a profit of Rs 24.1 crores from a loss of Rs 5.1 crores last year.