Shoppers Stop eyes around Rs 1,000 cr rev from Hypercity

K Raheja-promoted retail chain Shoppers Stop, that has a majority stake in the group's hypermarket format Hypercity, expects the latter to be profitable at the company level in FY 12 and a tripling of its revenues by then, a top company official said.

Shoppers Stop had increased its stake in Hypercity from 19 per cent to 51 per cent recently to squeeze maximum from consumers, whose spending on food items is around 65 per cent, he said.

"Now that we have acquired a majority stake in Hypercity, our main aim will be its expansion and making it profitable. We expect a break-even for Hypercity at the company level in FY 12. By then, we also expect our revenues to grow three-fold," Shoppers Stop's CEO and President, Govind Shrikhande, told PTI here.

Hypercity's revenues currently stand at Rs 330 crore and is likely to be around Rs 1,000 crore by FY 12.

On its strategy post-stake acquisition, Shrikhande said, "There will be no change in strategies or leadership. Our future plans for both Shoppers Stop and Hypercity will remain the same."
       
The Rs 1,500 crore lifestyle retailer now plans to focus on its food and grocery segment by opening eight more Hypercity outlets by next fiscal. However, its major earnings come from apparels and accessories due to higher margins.

Currently, it owns seven such stores of which four have achieved break-even at store level and the company expects the rest to be profitable by end-this fiscal.
       
"Though apparels yield more margin-wise, the sales of food and grocery is much higher in terms of volumes. We will continue to expand our hypermarket portfolio and by FY 12, we plan to have 15 Hypercity stores," Shrikhande said.
       
The new outlets will be coming up in Tier II cities like Bhopal, Siliguri, Durgapur, Patna, Ahmedabad and Pune.
       
On foraying into smaller towns, Shrikhande said the company normally opens its stores on the revenue-sharing model, which is beneficial to both, the company and landlord.
       
The company saves around 3.5 per cent of total earnings in such a model.
       
On Shoppers Stop's expansion plan, he said the company aims to scale-up its store-network to 45 in the next two-years from the present 30.
       
He also said that the company will focus more on international labels instead of private ones.