Avenue Supermarts Reports 8.5% YoY Q2 Profit Growth Amid Network Expansion and Margin Squeeze

Avenue Supermarts Ltd. (NSE:DMART) reported an 8.5 percent year-on-year increase in consolidated net profit to 743.57 crore rupees for the September quarter, driven by a 17.8 percent rise in revenue to 19,644 crore rupees. The company expanded its retail store count nearly 20 percent over the past year to 518 outlets. However, on a sequential basis, net profit fell 13.6 percent and operating profit dropped 7.1 percent despite higher revenue.

Store productivity gains lagged rapid footprint expansion, with annualised sales per square foot edging up just 0.6 percent to 8,741 rupees. Although established stores operating for at least two years achieved 9.5 percent like-for-like sales growth, consolidated operating margins compressed to 7.1 percent due to entry-level wage inflation. Financial leverage also rose as total debt increased nearly 80 percent to 4,079 crore rupees from March levels, while statutory operating cash flow dropped 57 percent in the first half.

Investors will track whether the retailer can convert its newly added retail footprint into higher sales productivity and improved profitability in upcoming quarters. Key focus areas include managing operating costs, stabilizing inventory hold times, and improving performance in its online division, DMart Ready, which reduced its presence to 11 cities.