Avenue Supermarts Ltd, which operates the popular DMart retail chain, reported a mixed performance for the July–September quarter of FY26. While the company saw solid revenue growth driven by store expansion and steady performance of older outlets, profitability was weighed down by rising employee and finance costs.
Topline Growth Amid Expanding Footprint
DMart’s consolidated net revenue rose 15.4% year-on-year to ₹16,676.3 crore, reflecting consistent consumer demand and network expansion. The retailer added eight new stores during the quarter, bringing its total store count to 432 across India. The company highlighted a 6.8% growth from stores that are two years or older, indicating a healthy revival in same-store sales performance.
CEO-designate Anshul Asawa noted that the growth was complemented by the government’s recent GST reforms. “We passed on the benefit of reduced GST rates to all our customers, wherever applicable,” he said.
Profit Growth Dampened by Higher Costs
Despite strong revenue momentum, net profit rose only 3.8% year-on-year to ₹684.85 crore. The modest profit growth was primarily due to escalating employee and finance costs. Staff expenses surged 32% to ₹376.83 crore, while finance costs nearly doubled to ₹34.96 crore during the quarter. Analysts view these rising costs as a structural challenge that could pressure margins if not managed effectively.
Product Mix and Sales Composition
Food and grocery products continued to anchor DMart’s sales mix, contributing 57% of total revenue. Non-food FMCG items accounted for 20.2%, while general merchandise and apparel made up 19.7%. The company reiterated its commitment to its “everyday low cost” strategy, emphasizing affordability and value for customers. However, DMart did not provide guidance on future store additions or growth forecasts for the upcoming quarters.
E-Commerce: Restructuring and Challenges Ahead
DMart’s e-commerce arm, DMart Ready, underwent a significant reshuffle. The company discontinued operations in five cities — Amritsar, Belgavi, Bhilai, Chandigarh, and Ghaziabad — as part of a consolidation strategy. At the same time, it added 10 new fulfilment centres in existing metro markets to improve proximity and operational efficiency.
Avenue E-Commerce CEO Vikram Dasu explained that proximity plays a crucial role in online order fulfilment. “The more fulfilment centres we open closer to the markets of delivery, the more we will grow,” he said. CEO Neville Noronha, who will hand over leadership to Anshul Asawa in January next year, echoed this sentiment in an earlier analyst call.
However, competition remains fierce. Equity analyst Pratik Prajapati from Ambit Capital pointed out that DMart Ready faces significant headwinds from quick commerce players like Swiggy and Blinkit, which have rapidly expanded their fulfilment networks. A Kotak Institutional Equities note highlighted that over 100 cities now have quick commerce presence without DMart stores, signaling intensifying rivalry in tier-2 and tier-3 markets.
Festive Trends and the Road Ahead
Market experts suggest that DMart’s second-half performance will offer clearer insights into growth trends. The second quarter’s performance may not be fully comparable year-on-year due to the festive calendar shift — Navratri fell in September this year versus October last year. Analysts believe the benefits of GST cuts, higher disposable income, and festive demand will be more visible in the upcoming quarter.
With stock markets closed on the day of the results, investor reaction to DMart’s Q2 performance will be reflected when trading resumes on Monday. As the retail landscape becomes increasingly competitive, especially with the surge in quick commerce, DMart’s focus on operational efficiency, cost control, and store expansion will determine its trajectory in the months ahead.
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