While the gold prices have gone up by nearly 50% in India in last one year, why hasnt it reflected in top line of jewelers in general? most increase in topline are attributed to volume increase or SSG or additional store foot print, shouldn’t the gold price increase be pushing the topline without any additional volume or additional stores?
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I don’t think you can expect a gold price increase proportionately reflected in the top line. Jewelers revenue is essentially making charges cut.
But this margin is not fixed at all rates. It depends on customer elasticity with some margin. Keeping this aside, the jewelry sector is doing pretty well with the unorganized to organized story panning out. PNG had 25% SSG growth. Very few retailers are able to have 25% SSG growth outside of the jewelry space. Coupled with new expansion, the growth reaches 40+ %.
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Got a question. The gold leasing rates have increased and hence the margins of jewellers are likely to be hit in this quarter. Is this one off thing or this marks a permanent shift ? What would normalize the situation? Can someone elaborate here?