HUL, ITC Report Good Numbers but Retail Sector is Still Weak

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HUL, ITC Report Good Numbers but Retail Sector is Still Weak
Credit: © Reuters.

By Aditya Raghunath -- Hindustan Unilever Ltd. (NS: HLL ) and ITC Ltd (NS: ITC ) reported good numbers for their Q1 FY22 last week but markets haven't rewarded the share prices. 

HUL reported a net profit of Rs 2,061 crore, an increase of 9.5% from Rs 1,881 crore during the corresponding quarter last year. Total income came in at Rs 11,982 crore, compared to Rs 10,716 crore in FY21.

ITC on July 24 reported a 28.6% increase in standalone profit at Rs 3,013.5 crore for the quarter ended June 2021, compared to Rs 2,342.76 crore in the corresponding period last fiscal. The June 2021 quarter was severely impacted by the second pandemic wave. 

However, the retail sector, as a whole, is a long way from pre-pandemic levels. Data from a business survey by the Retailers Association of India (RAI), said that pan-India retail sales are down 50% in June 2021 compared to pre-pandemic levels in June 2019.

"Retail businesses continue to be stressed and are finding it difficult to sustain due to restricted timing of operations and weekend closures," Kumar Rajagopalan, CEO, Retailers Association of India (RAI) said.

Consumer durable sales have fallen 46% while sport goods have fallen 66%, followed by jewellery at 64% and footwear at 61%. Beauty, wellness & personal care sales fell 57% in June, while apparel & clothing sales were down 52%.

Another major challenge for retail right now is the rising cost of raw materials. Appliance makers have increased prices of their products, and say that further increases of 3-4% should be expected.

HUL is down 4.6% since the last month while ITC is up 4.52% in the same period.

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