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    Aditya Birla Nuvo plans 150 new stores at city centres

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    , a part of the Aditya Birla Group, plans to rejig its apparel business by opening 150 new stores at city centres, where footfall is higher, after closing 30 unviable stores, a top company official has said.

    Aditya Birla Group all set to invest Rs 7,000 crore in Andhra Pradesh
    The conglomerate already has investments of Rs 10,000 crore in the state across sectors including in retail

    The company’s move comes after its net loss widened to Rs 141.2 crore in the March-ended quarter, owing to mounting losses in apparels. The loss was Rs 82.2 crore in the apparel business, against a loss of Rs 4.44 crore in the corresponding quarter of the previous financial year. Revenue from sale of garments fell 1 per cent to Rs 273.3 crore during the period, when consumers responded to the financial downturn by tightening their purse strings.

    “In the current quarter, we plan to close 30 stores where sales per square feet have dropped significantly. We expect to save Rs 10 crore annually with the closure of these unprofitable stores,” said , whole-time director of Aditya Birla Nuvo and chief executive of the textile and apparel business, Aditya Birla Group.

    The apparel business arm of the company, which has Lifestyle & Retail and Fashions & Retail, runs 340 stores in the country. Madura Garments has brands such as , and Allen Solly and a tie-up with fashion brand Esprit.

    The company is also taking other cost cutting measures in apparels which are expected to save it Rs 100 crore in fiscal year 2010, he says. “We will align all growing businesses and close the loss-making stores. Moreover, we have a plan to reduce the store area in some cases,” he added.

    The company also plans to revive the Allen Solly brand to boost revenues and improve visibility. “Van Heusen, Louise Phillippe and Peter England were doing very well when Allen Solly sales was falling,” he said.

    Aditya Birla Retail, another group company which runs supermarkets and hypermarkets, has closed 70 unviable stores of its More chain to improve profitability. Almost all retailers, such as the , and others, have scaled down expansion as shoppers defer purchases and downtrade to beat the slowing economy.

    Analysts cited high leverage positions and rising debt to equity ratios as reasons for the slower expansion of retailers. “Across the board, expansion plans are being relooked, due to capital scarcity and catchment reassessment. Given high debt levels and an almost dormant equity market, the capital for growth has become scarce,” says a report from Edelweiss Securities.

    Source: Business Standard