Shoppers Stop targets HyperCity breakeven in 2 yrs

Moneycontrol Bureau

Department store operator Shoppers Stop now expects its food and grocery retail chain HyperCity will be profitable at the EBTIDA (earnings before interest, taxes, depreciation and amortization) level in two years and likely post net profit a year after that. Shoppers Stop, which holds a majority stake in HyperCity, has been restructuring the loss-making chain. As a part of this, it will "tighten" store size to control costs, increase share of apparel to 15% from 7-8% and continue adding two stores each year over the next three years. Meanwhile, Shoppers Stop will invest Rs 100-125 crore each year on its core department store operations, Managing Director Govind Shrikhande told moneycontrol.com. It has opened 13 Shoppers Stop outlets so far this fiscal, 7 Homestop furniture and home accessories stores and 3 HyperCity hypermarkets. One more Shoppers Stop is opening next week. For the next fiscal year, Shoppers Stop plans to open 8 department stores, 2 Homestops and 2 HyperCity outlets. Shoppers Stop's volumes took a hit last year as apparel prices were increased, high cotton prices being one reason. But there's good news for companies and customers now as higher abatement on branded apparels provided in the Budget this year will lead to lower prices. The Abatement has gone up to 70% from 55%, which will reduce the excise by about 0.9%, Shrikhande said. He is expecting retailers will lower apparel prices by 4-5%, which should help boost same-store sales. Click here to listen to the full conversation of Govind Shrikhande with Moneycontrol.com's Nachiket Kelkar