V2 Retail has splendid Q4, but Q1 ‘lost’

V2 Retail, the North India-focused general goods and garments retail chain, reported one of its best quarterly performances ever in the form of the Jan-Mar quarter, but said the subsequent three months have been ‘lost’ due to the second wave of COVID-19.

“We were witnessing continuous improvement in demand till the lockdowns were announced due to second wave of Covid by end March / start of April…Due to the lockdown and related restrictions, operations at majority of our stores are impacted during Q1 FY22. Further our targeted store additions for Q1 FY22 are also delayed due to sudden lockdown,” the company said in its latest comments.

The company had been struggling to attract customers back to its air conditioned showrooms throughout much of FY21 due to COVID, but had a break-out quarter towards the end of the year (Jan-Mar).

Overall revenue jumped 47% compared to Jan-Mar 2020 to Rs 189 cr from Rs 129 cr.

Out of this, new stores accounted for a delta of 22%, while 25% of the growth was organic. The company went from 76 stores as of March 2020 to 95 stores this year.

Nevertheless, the strong growth towards the tail end of the year was not enough to avoid reporting a 23% revenue decline for the full year to Rs 539 cr.


Moreover, the sales spurt came at a high cost to profitability. Profit from operations, as measured by EBITDA, was just 12 crore, or 6.5% of sales, during Q4. During the full year before COVID-19 entered the scene, the company’s EBITDA margin had been a healthy 11.2%.

As a result, quarter four saw a loss of Rs 10.7 cr before tax, thus pushing the company into the red by Rs 13.1 cr for the full year (before tax).

Offering some consolation, the previous year too had seen a sharp fall in profitability during the fourth quarter, when losses had spiked to Rs 15.5 cr. The company had started feeling the impact of COVID-19 during the last quarter of FY20 itself.

However, due to the relatively healthy profits of the previous three quarters of the year, full year loss for FY20 had been contained at Rs 2.1 cr, compared to Rs 15.5 cr for the latest year.

Chairman and Managing Director Ram Chandra Agarwal described the Apr-Jun quarter as “lost”.

However, he said V2 Retail was seeing “robust demand trends” across stores and “steadily improving consumer confidence” before the second wave broke out.

“Despite the challenging environment, we saw increasing acceptance for our products via our omni channel presence. With the prediction of normal monsoon and resultant improvement in agricultural incomes, we believe that there would be significant improvement in demand from second half of the financial year 2022. Our entire team is geared up to accomplish our targeted improvements in store performance, increasing our private label contribution, further penetration of our omni-channel presence.

“We believe that momentum should pick up significantly post monsoon and is expected to gain further traction in the upcoming festive & wedding season starting from end September. In light of the above, the Company is confident of growing well ahead of medium term aspirations in the next few quarters,” he said.

He also added that V2 Retail was focusing on both offline and online growth.

“Continuing with our philosophy of deleveraged growth, we have expanded our store network from 76 stores as at March 31, 2020 to 95 stores as at March 31, 2021. We will keep on exploring new stores opportunities. The Company has invested in start of art warehousing infrastructure to keep pace with the growing stores opportunities as well as cater to increased focus on omni channel.“