Future Lifestyle dreams big, but debt remains a concern

Last year, when Future Lifestyle Fashion was born out of the de-merger of the fashion businesses of Future ventures and Future retail in November, promoter Kishore Biyani had stated that the business would grow into Rs 5000 crore business by FY15-end. CNBC-TV18’s Farah Bookwala takes a look at the first disclosure of its performance, and how close they are in achieving that target.

Weeks before Future Lifestyle Fashion goes public on the NSE and BSE, the company is laying bare its plans to grow into a Rs 5000 crore company over the next two years. Here’s how: Future Lifestyle aims to grow its revenues from seven of its fashion brands by 40 percent to Rs 1,410 crore in FY14. From the nine companies they have invested in, FL aims to grow revenues by nearly 50 percent to Rs 1,016 crore. The company will also expand the distribution and reach of its brands by adding new retail chain stores in FY14. As well as expand via existing and new exclusive and multi-brand outlets. But given that the FL was born in the midst of an economic slowdown and has already seen its quarterly sales dip 3 percent, how feasible does their target of achieving Rs 5000 crore in two years seem? Sangeeta Tripathi, analyst, Sharekhan believes if the external environment pans out the way they are expecting; if the festive season is good; the economic revival starts by the third quarter of FY14 onwards, then Future Lifestyle, since it has an array of good brands, well-recognised brands, which enjoy huge brand equity in the minds of consumers, they can grow exceeding market growth. But along with expansion, Future group needs to reduce its debt pile. Future Lifestyle Fashion currently has a debt of Rs 1,400 crore on its books. The company is in advanced stages of negotiations with global players to offload its 23 percent stake in fashion brand and its 26 percent stake in ethnic wear brand Biba. As company sources say, both deals should help reduce the debt pile by Rs 500 crore.