Vijay Sales expects to achieve a 10 per cent uptick in sales during the festival season. For FY23, the electronics retail chain is aiming at a 30 per cent hike in gross sales, taking it to Rs 7,000 crore from Rs 5,300 crore in FY22, said a top official, while adding that it is bullish and on track to pre-achieve its 2025 sales target of Rs 10,000 crore.
Speaking to BusinessLine , Nilesh Gupta, Director at Vijay Sales, said taking a hint from spends during the August 15 weekend, he is bullish that customers are likely to loosen their purse strings in this festive season.
“Customer sentiment is extremely high. After two years, we have a stress-free festival season, with no fear of Covid. I personally expect this would be a good Diwali. Luckily, the supply chain issue, too, has largely been resolved, and we are amping the inventory.”
The company generated sales of up to Rs 3,000 crore in the first five months of FY23. “We are looking at Rs 7,000 crore in FY23,” he said. In FY22, the company generated sales of Rs 5,300 crore.
Last year, Gupta had said the company aimed to double sales to Rs 8,000–Rs 10,000 crore by 2025, said a top official. “If this trend (of sales) continues, we’ll be able to achieve this goal before the end of FY 24,” he said.
A Crisil report recently said after a significant contraction of 180-200 bps last fiscal, the operating margin is likely to decline marginally this fiscal on the back of high commodities prices and rupee depreciation, which could not be fully passed on to the end-consumer.
It pointed out that the industry had crossed the pre-pandemic mark in value terms last fiscal; “this fiscal it will scale the pre-pandemic volume mark by ~3 per cent. The consumer durables sector will see 15-18 per cent revenue growth to Rs 1 lakh crore this fiscal, led by a 10-13 per cent increase in volume.”
Gupta said the increase in the Average Selling Price (ASP) of products, has led to a 30 per cent increase in the value price. However, volume growth has been on the lower side.
Hence, “The real test this Diwali will be if we can achieve volume growth. We expect volume growth of six to 10 per cent, compared to the pre-Covid period.”
On the categories that are likely to do well, Gupta said he expects sales to go up across the spectrum, except in the ACs segment. “We believe the smartwatches, mobile phones, and television categories will do well this year. Approximately 25 per cent of our sales comes from the premium segment of smartwatches and laptops.”
The Mumbai-based consumer electronics retail chain is facing competition from giant retail players, including Reliance Digital and Tata group’s Croma in the offline segment. On the other hand, it faces head-on competition from Amazon and Flipkart, which are set to offer big discounts during their flagship sales towards the month-end.
“Margins have dropped, but that’s how the market functions. There is no point in not being a part the market. In order to get in on the volume game, we will offer discounts, but not below the cost point. We are very clear they are giants, and they can afford to lose money, while we will continue to focus on profitability as well,” he said.
The retail chain currently has 120 stores across India, this fiscal it has added 12 stores and plans to take the total number to 127 stores in FY23. It aims to generate Rs 200 crore from online sales in FY22. However, he said the company was unable to achieve that goal post the reopening of the stores.
However, in FY23, “we hope to generate sales of up to Rs 125 crore throughonline platforms,” he said.