Why Did DMart Operator Avenue Supermarts Experience a Profit Decline in Q4 FY25?
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Synopsis
Avenue Supermarts, the parent company of DMart, reported a decline in net profit during Q4 FY25. This article explores the financial challenges faced by the supermarket chain and how increased competition and rising expenses have impacted its bottom line.
Key Takeaways
- Net profit decline: Avenue Supermarts reported a drop in net profit to Rs 550.79 crore in Q4 FY25.
- Rising expenses: Total expenses surged to Rs 14,176.61 crore in the same quarter.
- Competitive pressure: Increased competition in the FMCG sector affected gross margins.
- Store growth: DMart stores experienced an 8.1% growth in Q4, driven by higher footfalls.
- Leadership transition: New CEO Designate Anshul Asawa is expected to take charge soon.
New Delhi, May 3 (NationPress) Founded by Radhakishan Damani, Avenue Supermarts Ltd, the parent company of the supermarket chain DMart, announced a notable decrease in its consolidated net profit, which fell to Rs 550.79 crore in Q4 of FY25, down from Rs 719.28 crore in the same quarter the previous year (Q4 FY24).
Additionally, total expenses surged to Rs 14,176.61 crore in Q4 of the last financial year, compared to Rs 12,001.22 crore in Q4 FY24.
As per its stock exchange disclosure, the company's total income also declined on a quarterly basis, landing at Rs 14,896.91 crore (QoQ), from Rs 15,996.69 crore (unaudited) in the preceding quarter (Q3 FY24).
Neville Noronha, CEO and Managing Director of Avenue Supermarts Limited, stated that in the DMart (brick-and-mortar) segment, “profit after tax (PAT) before prior period adjustments decreased by 3.4 percent compared to the previous year, which did not align with sales growth.”
He noted that DMart's stores recorded an 8.1 percent growth in Q4 FY25, down from 10.3 percent in Q4 FY24, primarily due to rising customer footfalls.
Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA) for Q4 FY25 reached Rs 955 crore, slightly higher than Rs 944 crore in the same quarter last year. The EBITDA margin was at 6.4 percent in Q4, a drop from 7.4 percent in the year-ago quarter.
Noronha explained that three key factors influenced the quarter's performance: an increase in competitive pressure within the FMCG sector affecting gross margins; a rise in entry-level wages due to a demand/supply imbalance in skilled labor; and ongoing investments aimed at enhancing service levels, including quicker availability, checkout processes, and future store openings.
“We also opened a larger number of stores during this quarter,” he added.
Furthermore, Noronha mentioned that Anshul Asawa, the new CEO Designate, joined in mid-March 2025 and is currently undergoing a thorough orientation process with the organization.
“He is expected to take charge of all operational aspects of the retail business in the next 4-5 months. This transition will allow me to focus more on accelerating store openings, enhancing e-commerce capabilities, and addressing other non-retail business areas,” Noronha informed.
Point of View
It is crucial to analyze Avenue Supermarts' recent financial downturn objectively. Despite the challenges, such as increased competition and rising operational costs, the company remains a significant player in the retail sector. Their commitment to enhancing service levels and strategic leadership transitions may position them for recovery and growth in the coming months.
NationPress
24/05/2025
Frequently Asked Questions
What caused Avenue Supermarts' profit decline?
Avenue Supermarts faced increased competition in the FMCG sector, rising expenses, and wage inflation, which collectively impacted its profit margins.
How much did the net profit drop in Q4 FY25?
The consolidated net profit dropped to Rs 550.79 crore in Q4 FY25, down from Rs 719.28 crore in Q4 FY24.
What is the EBITDA for Q4 FY25?
The EBITDA for Q4 FY25 stood at Rs 955 crore, slightly higher than Rs 944 crore in the corresponding quarter last year.
What strategies is DMart implementing to improve its performance?
DMart is focusing on enhancing service levels, accelerating store openings, and building e-commerce capacities to improve its overall performance.
Who is the new CEO Designate of Avenue Supermarts?
Anshul Asawa is the new CEO Designate, who joined in mid-March 2025.
