Shoppers Stop to add 1.1 msf in 2 years

Shoppers Stop, the K Raheja Group promoted retail company, plans to reach 3 million square feet (msf) retail space in the next two-and-a-half years from the current 1.9 msf.

The retailer is looking to open three Shoppers Stop and two Hypercity stores by March 2010.

Over the next two-and-a-half years, the company plans to add 18 Shoppers Stop stores while it will open about six Hypercity stores in a year’s time.

The company intends to raise Rs 250-350 crore through warrants to promoters on preferential basis and qualified institutional placement route by March 2011 to fund expansion plans.

Of this, Rs 30 crore was raised through preferential warrants in December 2009. Although the company has enough capital for expansion for the next two years, it wants to be cash-ready in order to hike its stake in Hypercity to 51% from 19% currently.

The stake raise may cost Shoppers Stop about Rs 125 crore.

“We also want to have ample funds if we find good properties and decide to expand our stores. Because last year we managed to find good revenue-share deals with property owners, something that did not happen in the previous years,” Govind Shrikhande, chief executive officer, Shoppers Stop, said on an analyst concall on Monday.

The retailer said it has seen a rise in consumer spending and increase in average per-ticket item with the non-apparel category contributing about 41% to sales.

“The non-apparel category —jewellery, accessories, watches, cosmetics, leather — continue to do very well as more ladies have started to shop. The home segment, which was the worst affected last year, also has turned around and is showing positive growth,” B S Nagesh, vice-chairman, Shoppers Stop, said, adding that consumer sentiment was very positive now.

Shrikhande said Shoppers Stop stores are older than five years had slowed down in growth in comparison to ones launched after them. The retailer is renovating the non-performing stores to turn them around.

The company has brought down its capex in the last 12-14 months by saving Rs 200 per sq ft on the new stores. Shoppers Stop reported a 15% rise in its gross retail turnover for the quarter ended December 31, 2009 at Rs 427.4 crore as compared with Rs 373.16 crore in the same period of the previous fiscal.

The retailer launched a flagship store at Hyderabad, one store of Crossword, MAC, Estee Lauder and Clinique during the third quarter. 

Shoppers Stop added more  than 76,000 members to its loyalty programme in the quarter taking the total to 15.27 lakh memberships.