V2 Retail (V2RETAIL) Q4 06/07 earnings summary

Executive summary

• FY07 sales rose 109% YoY to Rs 6,026.53m; PAT increased 102.36% to Rs 250.67m, supported by store expansion and a broader product mix.

• Value retailing focused on middle- and lower-income shoppers in Tier II and Tier III cities; 27 stores opened during the year.

• Private labels generated Rs 583.60m, or 9.68% of sales, supporting differentiation and margin improvement.

Financial highlights

• Sales were Rs 6,026.53m vs Rs 2,884.43m in FY06; total income was Rs 6,050.42m vs Rs 2,890.88m.

• Reported EBIDT rose 152.8% to Rs 694.28m; PBT was Rs 393.81m vs Rs 186.17m, and PAT was Rs 250.67m vs Rs 123.87m.

• Interest expense increased to Rs 147.54m from Rs 29.12m; depreciation rose to Rs 152.93m from Rs 53.61m.

• Staff costs rose to Rs 274.08m from Rs 135.44m, but fell to 4.55% of sales from 4.70%; manufacturing and administrative expenses were 5.01% of sales vs 6.24%.

Outlook and guidance

• Plan to add 30 stores by March 31, 2009; locations identified and discussions with landlords underway.

• Target turnover of Rs 5,000 crore by FY10; planned expansion into convenience and specialty formats, each spanning 5,000–10,000 sq ft.

• Planned to expand private labels and grow non-apparel and FMCG sales to reduce apparel concentration and seasonality exposure.