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Shoppers Stop To More Than Halve The Size Of Five Hypercity Outlets, Looks For Investor

Shoppers Stop expects a turnaround in Hypercity this financial year.

Employees serve customers at check-out counter in a Shoppers Stop Ltd. store in the Malad area of Mumbai. (Photographer: Dhiraj Singh/Bloomberg)
Employees serve customers at check-out counter in a Shoppers Stop Ltd. store in the Malad area of Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Shoppers Stop Ltd. is cutting down the size of a fourth of its Hypercity supermarkets, even as it continues to expand its eponymous multi-brand lifestyle stores.

The retailer will add only one Hypercity store and reduce the size of five of its 19 outlets by more than half to 30,000-40,000 square feet in the ongoing financial year, said Govind Shrikhande, managing director of Shoppers Stop. Real estate developer Raheja Group-promoted retail chain, however, plans to add another five Shoppers Stop stores, taking the total count to 85, he said in an interview to BloombergQuint.

Shoppers Stop reported a loss of Rs 36 crore in the quarter ended March as it wrote down the value of its investment in the supermarket subsidiary by an equal amount. Analysts had forecast a profit.

For the full year ended March, Hypercity reported a loss of Rs 84 crore on sales of Rs 1,077 crore. The debt of the supermarket business stood at Rs 291 crore as of March 2017. The Shoppers Stop lifestyle stores posted a loss of Rs 19.9 crore on sales of Rs 3,648 crore in financial year 2016-17. Shoppers Stop’s standalone debt stood at Rs 575 crore.

Plans To Raise Rs 150 Crore

The management expects Hypercity to turn around this financial year on the back of double-digit growth in same-store sales, which stands at 10 percent, said Shrikhande. The company plans to raise Rs 150 crore by bringing in a private equity or a foreign investor by the second half of the financial year to fund Hypercity expansion, he said.

The retailer is also in talks to open a Shoppers Stop store in South Mumbai, which it expects to be operational after October.

The company expects to improve its margins by 40 basis points from 5.7 percent in the three months ended March. A basis point is one hundredth of a percentage point.

Shrikhande said Shoppers Stop will open a virtual store in the next financial year. It plans to invest Rs 20 crore to boost its online presence, on top of Rs 40 crore it invested earlier. Online sales contribute 1 percent to its revenue and the company hopes to increase it to 10 percent by 2020.