Avenue Supermarts Ltd, the operator of the DMart supermarket chain, has reported a significant decrease in its financial performance for Q4 FY25. The company's consolidated net profit experienced a substantial decline of 23.4 percent, falling to Rs 550.79 crore compared to Rs 719.28 crore in Q4 FY24. This downturn in profitability can be attributed to a confluence of factors, including increased expenses and heightened competition in the fast-moving consumer goods (FMCG) sector.

The company's total expenses saw a notable increase of 18.2 percent, reaching Rs 14,176.61 crore in Q4 FY25, up from Rs 12,001.22 crore in the same quarter of the previous year. On a quarter-on-quarter basis, Avenue Supermarts also experienced a 7 percent dip in total income, which decreased to Rs 14,896.91 crore in Q4 FY25 from Rs 15,996.69 crore in Q3 FY24.

According to Neville Noronha, the CEO of Avenue Supermarts, the profit after tax (PAT) before prior period adjustments for the DMart (brick and mortar) business declined by 3.4 percent year-on-year. Despite this decline in profitability, DMart stores demonstrated growth of 8.1 percent in Q4 FY25. However, this growth rate was slower compared to the 10.3 percent growth recorded in the same period last year.

The company's EBITDA (earnings before interest, tax, depreciation, and amortization) saw a marginal improvement of 1.2 percent, rising to Rs 955 crore in Q4 FY25 from Rs 944 crore in Q4 FY24. However, the EBITDA margin experienced a decline, falling to 6.4 percent from 7.4 percent in the same quarter of the previous year.

CEO Neville Noronha identified three primary factors contributing to the drop in profits during the quarter. These include increased competition in the FMCG segment, which has affected margins, higher wages for entry-level staff driven by a shortage of skilled workers, and continued investments aimed at improving service, such as quicker checkouts and better product availability. The company's decision to open more stores during the quarter also added to its costs.

Noronha also mentioned that Anshul Asawa, who joined the company as CEO Designate in mid-March 2025, is currently undergoing a period of learning the business. Asawa is expected to assume operations in the next 4-5 months, which will allow Noronha to dedicate more time to store expansion, e-commerce initiatives, and other growth areas for the company.