Future Retail lays out road map for Hypercity, to focus on fashion
Kishore Biyani-led Future Retail Limited on Tuesday detailed plans for newly acquired retail chain Hypercity, which it bought from K. Raheja Corp’s Shoppers Stop in October for ₹655 crore.
Future Retail, in an investor presentation, said it aims to improve Hypercity’s gross margin by 3.4% to 27%. It also plans to increase the contribution of fashion sales to the 19-store network’s revenues from the current 16.8% to over 35% within a year, primarily through Future Group’s repository of brands.
“Besides fashion, a much stronger own and strategic brands portfolio across food and GM will drive margins as well,” the company said in the presentation.
Future Retail is also looking to reduce back-end costs from the current 5% of sales to 0.5%, and halve the sales and distribution expenses to 0.9% of sales, the company said.
Hypercity stores will be rebranded as Big Bazaar NXT, Mint reported on 6 October.
“The Big Bazaar brand recall and existing spends would suffice,” the company said.
Future Retail has taken on ₹256 crore in debt on Hypercity’s books and acquired Hypercity’s private brands and trademark as part of the deal.
Future Retail also announced its results for the September 2017 quarter, posting a net profit of ₹153 crore--up 108% year-onyear. The firm’s revenues from operations rose 8% year-on-year to ₹4,506 crore for the quarter, while its total debt stood at ₹4,249 crore, down 2.1% year-on-year.
Future Retail said its year-onyear growth in revenues was impacted by the goods and services tax (GST) and the rationalizing of the eZone network of electronics stores. It has shut 71 eZone stores, bringing the count down to 19. It has 199 EasyDay stores, making it the largest retail format in the company’s network of 7 chains.
Same store sales growth for the entire network stood at 10.2% for the quarter, while it rose to 14.8% for Big Bazaar, Biyani’s flagship large format store chain.
Shares of Future Retail closed at Rs523.50 on Tuesday, down 0.5% while the benchmark Sensex closed at 33,370.76 points, down 1.07%.
MUMBAI: