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Shoppers Stop - Capitalising on the consumption story…
We recently met the management of Shoppers Stop to understand the
company’s business and future plans. Shoppers Stop Ltd (SSL),
promoted by the K Raheja Corp Group, was established in 1991. The
company operates through a chain of 33 departmental stores (as on
September 30, 2010) across 13 cities covering a total area of ~1.99 mn sq
ft. Besides its departmental store, SSL has promoted several speciality
retail formats including Home Stop (home furnishing), Crossword (books,
music and stationery), Mothercare (parenting products), M.A.C, Clinique
and Estee Lauder (cosmetics), and Arcelia (cosmetics, jewellery and
accessories). SSL’s total retail space (excluding Hypercity) as on Q2FY11
stands at 2.24 mn sq ft spread over a network of 126 stores. In June 2010,
SSL increased its stake in Hypercity from 19% to 51% for a consideration
of ~| 97 crore, making the company its subsidiary. As on September
2010, Hypercity operates 8 hypermarket stores covering a total retail area
of 9 lakh sq ft.
Increased space to spearhead growth
SSL has doubled its space during FY06-10 from 0.91 mn sq ft to 1.80 mn
sq ft. It further plans to add ~21 stores during FY11-13E and increase the
space under operation to ~3.07 mn sq ft. On the Hypercity front too the
company plans to triple the no of stores from the 7 in FY10 to 21 stores in
FY13E.
Cost rationalisation to aid margin expansion
In an endeavour to reduce costs, SSL has moved from paying fixed lease
rentals to a revenue sharing model which will lead to cost savings. Also, it
has reduced the capex per store from | 1600-1800 per sq ft to | 1200-
1400 per sq ft.
Better working capital management
In the last 2-3 years SSL has shown increasing preference towards the
consignment model (where the vendor bears the inventory risk and
payment is made post sales) for sourcing merchandise thereby reducing
working capital needs.
V i e w
Considering the improving consumer sentiment, space expansion plans,
cost rationalisation efforts, scalability of Hypercity’s business we are
positive on the long term prospects of the company.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Shoppers Stop - Capitalising on the consumption story…
We recently met the management of Shoppers Stop to understand the
company’s business and future plans. Shoppers Stop Ltd (SSL),
promoted by the K Raheja Corp Group, was established in 1991. The
company operates through a chain of 33 departmental stores (as on
September 30, 2010) across 13 cities covering a total area of ~1.99 mn sq
ft. Besides its departmental store, SSL has promoted several speciality
retail formats including Home Stop (home furnishing), Crossword (books,
music and stationery), Mothercare (parenting products), M.A.C, Clinique
and Estee Lauder (cosmetics), and Arcelia (cosmetics, jewellery and
accessories). SSL’s total retail space (excluding Hypercity) as on Q2FY11
stands at 2.24 mn sq ft spread over a network of 126 stores. In June 2010,
SSL increased its stake in Hypercity from 19% to 51% for a consideration
of ~| 97 crore, making the company its subsidiary. As on September
2010, Hypercity operates 8 hypermarket stores covering a total retail area
of 9 lakh sq ft.
Increased space to spearhead growth
SSL has doubled its space during FY06-10 from 0.91 mn sq ft to 1.80 mn
sq ft. It further plans to add ~21 stores during FY11-13E and increase the
space under operation to ~3.07 mn sq ft. On the Hypercity front too the
company plans to triple the no of stores from the 7 in FY10 to 21 stores in
FY13E.
Cost rationalisation to aid margin expansion
In an endeavour to reduce costs, SSL has moved from paying fixed lease
rentals to a revenue sharing model which will lead to cost savings. Also, it
has reduced the capex per store from | 1600-1800 per sq ft to | 1200-
1400 per sq ft.
Better working capital management
In the last 2-3 years SSL has shown increasing preference towards the
consignment model (where the vendor bears the inventory risk and
payment is made post sales) for sourcing merchandise thereby reducing
working capital needs.
V i e w
Considering the improving consumer sentiment, space expansion plans,
cost rationalisation efforts, scalability of Hypercity’s business we are
positive on the long term prospects of the company.
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