jubilant foodworks: Analysts call out Jubilant Foodworks for not disclosing SSSG data


NEW DELHI: Besides missing analysts’ estimates on the earnings front, non-disclosure of same store sales growth (SSSG) data by Jubilant Foodworks was heavily criticised by brokerages.

As per analysts tracking the company, Jubilant would now only disclose Like-for-Like (LFL) growth and not SSSG as it believes that LFL (i.e., same store growth for non-split stores) is a far more accurate indicator of their underlying growth.

The company will be implementing ‘fortressing’, something that Domino’s itself has implemented in the US. The strategy aims to shrink delivery radiuses, and thus delivery time, putting stores as close as possible to as many customers as possible.

“Leaders like Jubilant have to set gold standards for its peers, not just on operating performance but also on disclosures. While the fortressing strategy (which we like given the long runway it creates) may lead to noise in the SSG metric, supplementing (and not reducing) disclosures will be helpful,” said Manoj Menon of ICICI Securities.

Menon said he would’ve been at peace with this (lack of disclosure), provided this is an acceptable global industry practice in retail, restaurant businesses, but he wondered what were the reasons behind it.

Analysts at Nirmal Bang said even the newly introduced LFL was about 5 percentage points lower than estimates. Based on the disclosed numbers, they estimate SSSG in the range of 5-10 per cent, about half of the expectation.

Thanks to the disappointing numbers and negative commentary, shares of Jubilant Foodworks slid further 3 per cent on Thursday, extending losses to the second straight day. The stock fell over 4 per cent on Wednesday.

Analysts agreed that it was a weak quarter for the company, which is yet to recover dine-in revenue, though delivery growth was strong. Management highlighted that the growth momentum was strong in the months of October and November but operating restrictions had a negative impact in the second fortnight of December.

“We note that the benefit of price hikes (from mid-December) will be seen in 4Q2FY22,” said analysts at ICICI Securities.

Both Nirmal Bang and ICICI Securities pegged the stock’s fair value at Rs 3,600.


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