Af­ter To­day, To­mor­row Bright for Fu­ture Re­tail

The Economic Times - - Companies: Pursuit Of Profit -

ET In­tel­li­gence Group: Thingsseemto have started fall­ing in place for Kishore Biyani owned Fu­ture Re­tail as the com­pany is ex­pected to re­port a grad­ual turn­around in its per­for­mance af­ter a se­ries of dis­mal per­for­mance in the past few years. Earn­ings for the De­cem­ber quar­ter grew 37% com­pared with the Septem­berquar­ter,driven­by­high­er­foot­falls — 12.5% same store sales growth (SSG). This beat an­a­lysts’ ex­pec­ta­tions caus­ing its stock to gain 17% af­ter the re­sults an­nounce­ment on Tues­day. The com­pany ex­pects this mo­men­tum to con­tinue. Over­all sales will be fur­ther boost­ed­byad­di­tionof store­sand­con­sol­i­da­tion of re­tail stores of Her­itage Foods. “We ex­pect our sales to grow by 20% an­nu­ally,” said the com­pany spokesper­son.

Fu­ture Re­tail’s fi­nan­cials can­not be com­pared yearon-year as the cur­rent fis­cal num­bers in­clude fig­ures of Easy­day, a small for­mat re­tail chain it ac­quired last year and merged only in the be­gin­ning of the cur­rent fis­cal. This makes SSG an im­por­tant pa­ram­e­ter in eval­u­at­ing the per­for­mance of a

re­tailer. For FRL, SSG was 12.5% and for Big Bazaar, it was even higher at 15.5%, which is a large for­mat store.

Through the ac­qui­si­tion of Easy­day, Her­itage Re­tail and Nil­giri, the com­pany in­tends to cre­ate a neigh­bour­hood store con­cept. By end of FY18, FRL will have 250 Big Bazaar stores and over 750 neigh­bour­hood stores. Given smaller area, Easy­day earns ₹ 25,500 in revenue per square feet, as much as DMart. For Big Bazaar, it is ₹ 13,500. With in­creas­ing share of neigh­bour­hood stores, FRL’s mar­gin is ex­pect­ed­toim­prove.Rev­enues­from­neigh­bour­hood stores is around 10% of the De­cem­ber quar­ter’s revenue, which will touch around 25% in FY18.

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