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McClatchy-Tribune  07/18/2014 3:48 AM ET
Mint, New Delhi Pallavi Pengonda column [Mint, New Delhi :: ]

July 18--Retail companies will have to wait a bit longer for same-store sales growth to increase substantially. This means that the June quarter financial performance of Shoppers Stop Ltd and Future Retail Ltd will not do much to spur investor confidence.

Same-store sales growth is expected to be in single digits for the quarter. In the March quarter, too, both companies reported single digit same-store growth. For Future Retail "same store growth in the value segment would be 3% for the June quarter. In the base quarter (June 2013 quarter), same store growth in the value segment was 10.4%," said Motilal Oswal Securities Ltd in its June quarter earnings preview. On the other hand, for Shoppers Stop,"in departmental format, we expect 3-4% same store growth (on base of 12%; in the March quarter same store growth was 8.4% on base of 10%)," said Edelweiss Securities Ltd.

While those numbers are far from exciting, there are other factors to watch out for as well. For instance, HyperCity's performance will be critical for Shoppers Stop's consolidated numbers. The subsidiary has been posting losses and the June quarter is unlikely to be different. However, investors would do well to follow commentary on the timelines for HyperCity's break-even. Of course, for Future Retail, its debt numbers and the resultant interest burden are going to be important to track. Finance costs ate into Future Retail's profit considerably for the quarter and year ending March. Progress on debt reduction and inventory optimization will be key issues to watch out for in case of Future Retail, according to Motilal Oswal Securities.

Meanwhile, during the June quarter, Future Retail's shares performed comparatively better than Shoppers Stop's stock. Analysts expect the outcome of better consumer sentiment, whenever it happens, to take some time to translate into numbers.


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