V2 Retail says 2021 festival sales above pre-COVID levels

Q2 performance

V2 Retail, one of India’s largest value retail chains specializing in fashion and items of daily use, reported strong sales growth for July-September, and said the festival season this year has so far been better than pre-pandemic levels.

Outside travel, tourism and entertainment sectors, the company had been one of the worst hit by the COVID-19 pandemic and had been under-performing the unorganized retail sector due to people’s fear about confined and air-conditioned stores.

The chain, which runs 96 stores mostly in the northern half of the country, said people’s reluctance to shop at modern retail outlets changed in August.

“..relaxed mobility restrictions and aggressive vaccination drive across the nation..sharply changed the consumer sentiment. Retail channel operations saw a rapid growth in demand as the national infection caseload came down.

“This led to a strong recovery in demand with sales moving swiftly close to pre-pandemic levels in August and September. All the stores are now fully operational with overall stores operation days at 86% for the quarter,” it said.

“As we speak today, our festive sales have been extremely reassuring. The trend so far indicates levels better than pre-Covid times,” it added.

The company is known for its extreme focus on efficiency and cost, and offers clothes and grocery items at prices that are often significantly lower than market rates.

For the July-September period, V2 Retail was able to report revenue of 150 cr, up around 80% from both last year and the preceding Apr-Jun period.

However, margins have remained under stress as the company ramped up operations, increasing operating and restocking costs. V2 Retail had aggressively liquidated its stocks, particularly garments, during the lockdown, preferring to go with low-inventory model until visibility improved.

For the latest, Jul-Sep period, the company continued to remain in loss, and reported net loss of Rs 5.2 cr, down from a loss of Rs 7.3 cr in the same period last year and Rs 10.2 cr in Apr-Jun.

It said it is confident of embarking on “a new wave of growth” in the coming months”.

“Our expansion plan on Stores is on track. Save delays due to pandemic, we are planning to open additional 5-6 stores in the second half,” it said.