According to the post-festive season channel checks to understand the demand environment in Mumbai shows that demand in this festive season has been largely in line or better than expectations unlike the last few years. Key takeaways:
– Jockey’s exclusive brand outlets (EBOs) are performing well, unlike the festive season last year.
– Tanishq – jewelry demand has been healthy.
– Domino’s SSSG has been healthy.
– Infrastructure work continues plaguing access to retail outlets and malls at various places, affecting footfall. In fact, with metro work being extended to other parts of Mumbai, the trend in dine-in – particularly at standalone stores – has weakened.
– The findings concur with our recently changed view that stocks with a discretionary consumption play offer a better scope for earnings growth and stock price returns compared to staples.
– Sales for Tanishq have been largely healthy in the festive season.
– Niche stores of smaller jewelry businesses of Titan (Mia and Caratlane) are delivering lower-than-expected sales.
– Taneira – a young brand in the Titan portfolio with a few stores in India – opened the first store in Mumbai last week at Ghatkopar (a suburb in eastern part of the city). We liked the ambience, range, pricing and service at this store.
– Demand has been healthy particularly for Domino’s. Despite competition from aggregators and pressure on dine-in, festive season demand there has been healthy and growing in high-single-digits or double-digits.
– However, dine-in focused QSR peers have seen a more moderate festive season with low-single-digit SSSG.
– There was no festive season-specific range, but some offers were introduced by QSRs.
– The impact on dine-in has been exacerbated by slower growth at highway/drive-through stores of QSRs due to reduced traffic.
– Infrastructure work (mainly metro construction) around the stores has also played a big part in slowing down dine-in demand. The lack of parking space has been a major hindrance.
– After a disappointing festive season last year, sales appear to be bouncing back with high-single-digits or double-digit growth at stores that we covered. Sustenance of this momentum is the key.
– Athleisure, men’s innerwear (off a weak base) and the recently launched kids’ innerwear are contributing to growth. Kids’ innerwear is contributing 3-5% of sales compared to a near zero last year.
– The perception among store employees is that marketing of kidswear and its visibility in stores need to improve.
– At the EBO level, Van Heusen is still not performing well on innerwear offtake. The sales trend for accessories including innerwear remains similar to last year (less than 5% of sales), with innerwear contributing 2% of sales. Van Heusen may be doing well in the MBO channel, but the traction does not appear very strong at the EBO level. Innerwear rack at some stores was not prominently visible. We note that both women’s innerwear and outerwear have been launched at Van Heusen stores – the former was rolled out much ahead of expectations.
– Most electronic stores were delivering poor growth and even a decline in festive season sales YoY.
– Delayed monsoon meant lesser purchases of white goods during the Dussehra-Diwali season.
– Small appliances achieved or were close to targets, but sales of large appliances missed targets.
– Weak consumer sentiment and the lack of attractive financing schemes unlike previous years also impacted demand.
– Offline stores were able to match online prices in some categories; however, online channels continued impacting the offline offtake.
(Analysis by Motilal Oswal Institutional Equities)