4 November 2019 After adopting an aggressive pricing strategy to tackle competitive pressure, VMART curtailed discounts in EOSS, which led to healthy revenue growth of 20% YoY to INR3.1b (in-line) and an improvement in the gross margin by 200bp YoY in 2QFY20. However, SSSG (+1% YoY) and volumes (-8% YoY) were muted in the quarter due to a 14% decline in footfall/sq.ft, even as ATP and transaction size improved by 16% YoY. Further, expenses related to new stores, marketing and logistics led to a net loss of INR106m, which was cushioned by tax credit from adoption of the new tax regime. For 1H, revenue/EBITDA stood at INR7.7b (+26% YoY)/INR316m (-24% YoY). (3) In 2QFY20, footfall per store declined by 4- 5% YoY and volumes were down 8% YoY due to weak consumer spending, potential competition from online and as new store are yet to realize full potential. V-Mart remains aggressive on store addition (+45/55 in FY20/21E), despite the slowdown in consumer spending.