Shoppers Stop (SHOPERSTOP) Q4 06/07 earnings summary

Executive summary

• FY07 gross retail turnover rose 33% to Rs 8,996m; like-to-like growth was 21%, with 2 new department stores opened during the year.

• Operating profit increased 39% to Rs 787m, while reported standalone PAT fell to Rs 262m after a higher depreciation charge; excluding the Rs 101m additional charge, PAT would have been Rs 363m.

• Expansion broadened across airport retail, home, family entertainment, food and beverage, and value retail, with management expecting new formats to support future footfalls and profits as they stabilize.

Financial highlights

• Standalone retail turnover was Rs 8,996m versus Rs 6,780m in FY06; total revenue was Rs 8,721m versus Rs 6,544m.

• Standalone EBITDA was Rs 787m versus Rs 566m; PBT was Rs 487m versus Rs 402m, and PAT was Rs 262m versus Rs 271m.

• Consolidated turnover reached Rs 9,283m versus Rs 7,243m; consolidated net profit was Rs 242m versus Rs 243m.

• Standalone operating cash flow was Rs 10m versus Rs 347m, reflecting working-capital investment; consolidated operating cash flow was negative Rs 164m.

Outlook and guidance

• Strategic vision: sustain the No. 1 department-store position in India while developing a broader retail presence and delivering premium merchandise and service.

• Planned expansion included new stores in Kolkata, Lucknow and Delhi under consideration, and Argos-format catalogue and internet retailing targeted for a first store in Q3 FY08.

• Management expected new formats and joint ventures to take time to stabilize and reach optimal profitability, but anticipated larger customer footfalls and profits over time.