GST makes June quarter a bumper one for retailers

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Sales at India’s listed brick-and-mortar retailers expanded between 18% and 40% during the June quarter as the introduction of the single producer levy caused the end of season sale to be advanced, leading to purchases during a period that normally witnesses muted buying.

Same-store sales growth (SSG) at Shoppers Stop rose to its highest in nearly five years while Future, Aditya Birla Fashion & Retail (ABFRL) and Arvind Brands posted 12-21% increases, underpinned by aggressive promotions and steep discounts.

Same-store sales compare growth at outlets that have been open for over a year and are an important indicator of consumer demand.

“The performance is more demand or volume led, which indicates positive sentiment of consumers. Also, competitive element is less and overall market conditions are better,” said Future Group CEO Kishore Biyani. “We expect to have even higher sales in the coming months backed by efforts in terms of merchandising and pricing.”

To be sure, most retailers saw demand rise during the January-March quarter due to fresh inventory and fewer discounted merchandise of big brands on online portals. But the growth last quarter was robust due to deep discounting.

Most retailers slashed prices to liquidate merchandise, advancing their usual end-of-season sales, a move triggered after the GST Council decided that man-made apparel above Rs 1,000 will attract a 12% levy, higher than the existing 7%.

“The month of April and May witnessed increase off-take, driven by the wedding calendar. June sales were driven by an early end of season sale, which was advanced by 15 days. This quarter, therefore, captures some of the EOSS sales that would normally accrue in Q2,” S Visvanathan, CFO at ABFRL, told investors in an earnings call.

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