(Reuters) - Shoppers Stop reported a 60% jump in its second-quarter revenue on rebounding demand for clothes and shoes even as its move to spend heavily on fresh stock ahead of the festive season pressured profit.
The Indian department store operator's shares, which more than doubled this year, fell nearly 5% to 765 rupees at 0423 GMT on Thursday.
"The stock is not cheap anymore as, in the past three to six months, it has significantly outperformed the market. So there could be some profitbooking," Gaurav Dua, head of capital market strategy at Sharekhan, said.
A jump in customer visits and an increase in customer spending drove Shoppers Stop's second-quarter revenue of 10.08 billion Indian rupees ($121.35 million).
The country's affluent urban population has had to refresh its wardrobe as it ventures out to social events and offices more.
Sales at Indian retail businesses climbed 21% above pre-pandemic levels last month, with Hindu festival Durga Puja setting a positive tone for the festive season, trade body Retailers Association of India said.
Indian retailers bring in a bulk of their sales during the Hindu festival period from late September to early November, as people typically splurge on clothes and gifts during Deepavali season.
"Customer sentiments remain upbeat," Chief Executive Venu Nair said on Wednesday.
To cash in on what is expected to be a busy festive season, Shoppers Stop doubled its purchase of inventory during the second quarter, with total expenses climbing 40%.
Shoppers Stop's net income was 181.4 million rupees, compared with a loss of 30.3 million rupees a year earlier, even though the profit came in below the average estimate of four analysts polled by Refinitiv.