Home Retail Hypercity Retail hopes to break even next fiscal

    Hypercity Retail hopes to break even next fiscal


    Hypercity Retail, which began operations in 2006, expects to break even by financial year 2012-13 as the retailer looks to resize its stores to reduce operational costs and increase share of private labels for higher margins.

    Mark Ashman, CEO, Hypercity told FE, “Our like-to-like growth has been 22% in the last fiscal. Some stores are profitable but the business is yet to turn cash-positive. We’re confident of breaking even in the next fiscal.” The company is the only loss-making venture of K Raheja-operated Shoppers Stop (SSL). SSL had a net profit of Rs 27.86 crore on revenues of Rs 459 crore for the third quarter of FY2010-11.

    “Most hypermarkets in the West break even within 3-5 years of operations,” said Arvind Singhal, chairman, Technopak Advisors. “They have good resources and a different retail format. In India, where modern retail is just about finding its foothold, 4-7 years is the ideal time to turn profitable in this format. In that respect, Hypercity is on track.”

    Re-sizing of stores has seen the retailer do away with the one lakh st ft format. Ashman said, “Every store we open will be boxes of 70,000-75,000 or 50,000-55,000 square feet, depending on the location. We’ve done away with the 1 lakh sq ft format, to bring down our cost of operation.”

    The hypermarket also plans to increase share of private labels from 22% to 30% for better margins. In the apparel segment, which forms 7-10% of total sales, the share of private labels in menswear and women’s ethnic wear will be 90%, while that in kidswear will be increased to 70%. Ashman said, “We see a big opportunity in apparel and general merchandise. Margins from this segment will allow us to become very competitive.”

    The company also intends to expand its current presence of 9 hypermarkets to 35, in the next 3-4 years. Ashman said.

    Source : Financial Express