Shoppers Stop's private labels see marginal dip

Shoppers Stop, the retail chain major, has seen a marginal dip in the sales of its private labels this year. The reduction, according to the company, has come about owing to the recession. It will, however, go ahead with its plans to set up more stores across the country.

The company has around 10 private labels of which the prominent ones are Stop for western wear, Life which is the men’s casual wear, Vettorio Fratini — premium men’s wear and Kashish for ethnic wear. Contribution of private labels to sales was 19 per cent last year which fell to 17 per cent i.e. around Rs 200 crore of The total department sales of Rs 1,200 crore.

“We knew the recession would cause some slowdown in sales. The share of private labels has gone down a little this year. However, unlike other companies, our focus is on our brands rather than just private labels,” said Govind Shrikhande, customer care associate, president and CEO of Shoppers Stop.

The company has cut its inventory by 25 per cent of which some part consists of private labels. It expects the next financial year to be a more attractive one for its private labels and will ramp up operations when required. No plans have been made so far on introducing new labels.

Shoppers Stop has 28 stores at present and three more will come up before March 2010. The company has a target of doubling its store count in the next three years. The average investment into a store comes to about Rs 8-10 crore. For its new stores and renovation expenses, around Rs 80 crore will be invested for the financial year 2010-11.

Despite a reduction in footfalls across retail establishments, Shrikhande said this was a good opportunity for the company to expand its store network since rentals were down by 30-35 per cent this year. The company’s Home Stop brand providing home solutions has also been getting a lot of revenue sharing offers for setting up new stores, which the company will evaluate, added Shrikhande. Home Stop runs four stores at present.

The company is planning to raise around Rs 220-250 crore, proceeds of which could go into increasing stake in its hypermarket chain, Hypercity. Currently Shoppers Stop has a 19 per cent stake in Hypercity which could go upto 51 per cent by June next year. The company will issue 4 million shares to institutional investors and 4 million convertible warrants to promoters. It will seek shareholder approval through postal ballot in the coming few months.