Half of all D-Mart stores are shut during coronavirus lockdown⁠— it shows that even the best in business are struggling

• India’s most-valued listed retail chain said there was a “significant decline'' in the footfalls due to lockdown.
  
• The food category division accounts for 51% of D-Mart’s product mix and the stock fell 5% after the revelation.
  
• D-Mart’s share price gained as much as 66% in the last nine months, making Radhakishan Damani the second-richest man in India.
  
  

D-Mart, the most-valued retail stock in India, has closed half of all its stores during the ongoing lockdown to contain the spread of Covid-19 novel coronavirus. “Nearly 50% of our stores remain closed for operations based on a directive by the local authorities. ” the company statement said.

D-Mart has said there was a “significant decline” in the footfalls due to lockdown. The chain of department stores has started using e-commerce to home deliver essentials from the first week of April but the volumes are “inconsequential”. The food category division accounts for 51% of D-Mart’s product mix.

Geojit BNP Paribas has cut the revenue estimate for the financial year March 2021 by 1.9%, and its estimate for profit after tax by 2.7%. The shares of Avenue Supermarts, which owns D-Mart, fell 5% on April 13 as investors expected a fall in volumes.


Whereas, according to Prabhudas Lilladher, there will be an estimated 25% sales decline between Jan and March 2020, and a 5% decline in the next three months ending June. The growth in profit after tax in March 2021 is likely to be just 12%, according to the report.


D-Mart’s earnings estimates have been cut

Even the best in the business are struggling

D-Mart is India’s most profitable retail chain based on a unique model where the company owns all the stores. The controlled costs allow the retailer to offer products cheap and the inventory moves so fast at D-Mart that the stores order fresh stock every 30 days, the shortest period among all Indian retailers.


Avenue Supermart’s share price gained as much as 66% in the last nine months, making Radhakishan Damani the second richest man in India.


Read: The impact of coronavirus carnage on Radhakishan Damani’s portfolio

However, the inevitable lockdown needed to curb the pandemic has taken a toll on everyone. There is hope for recovery for D-Mart, but only after normalcy returns. “We think the company is pulling consumers away from unorganised stores due to high discounting and now, delivery to home on the minimum charge would help the company grow in the next few years around those levels,” AK Prabhakar, Head, Research, IDBI Capital told Money Control.

See also: India’s second richest man added $2.7 billion to his wealth beating slowdown and coronacrisis