Department store chain Shopper’s Stop Ltd has posted an impressive Q1 net profit, which rose to Rs.10 crore from the Rs.2.5 crore in the corresponding quarter a year ago. In an exclusive interaction with IndiaRetailing, Govind Shrikhande, customer care associate, president and CEO of the company, tells us what led to the growth and how the company plans to expand the brand.
What contributed to the 297 per cent jump in your net profit for Q1 2011?
A number of factors contributed to the growth. While the same-store sales jumped by 21 per cent, margins improved by 50 basis points; also, our operating cost went down by 110 basis points.
So, it’s a combination of sales growth, increase in margins and reduction in operating costs that led to the increase in PAT (profit after tax) from Rs.2.5 crore in Q1 2010 to Rs.10 crore in the just-concluded quarter.
How many stores did Shopper’s Stop Ltd open in the first quarter of the current fiscal? How many do you plan to launch in this fiscal?
We did not add any new stores in the quarter.
However, three stores were opened after June 30 – one each in Bangalore, Delhi and Bhopal.
We plan to launch 10-12 new stores this fiscal and add six lakh sq.ft of retail space.
In the next four years, we plan to add 30 new stores to the existing 30 and take the total store count to 60.
Which are your target markets?
We see increased growth potential in the national capital region (NCR). The region witnessed a double-digit growth during the recent slowdown and continues to grow at 40 per cent per annum. So, the north region is important for us.
What kind of rental tie-ups do you have with malls?
High rentals are a concern for any brand that wants to position itself in the market. Last year, rentals were as high as 12-15 per cent, but now they have come down to 7-12 per cent, giving much relief to many of us.
I firmly believe in the revenue-share model, as it benefits both parties. This model has helped business partners to grow through thick and thin and enjoy the fruits of growth.
How much do you plan to invest this fiscal? When will you come up with a QIP (qualified institutional placement)?
We will invest close to Rs.120 crore this fiscal. For our QIP, we have decided neither the date of the launch nor the price of the QIP.
Please tell us about your expansion plans. Where will tier I and II cities be positioned in that plan?
We will open new stores in tier I and II cities. In fact, very soon we will be launching new stores in Ahmedabad, Aurangabad, Jalandhar, Ludhiana, Mysore and Vijayawada. But we will add more stores in the cities where we are already present.