Shoppers Stop to reorganise for improving profitability

Shoppers Stop will shut or relocate unprofitable outlets and redesign some, as the nation’s largest departmental store chain seeks to spur growth by attracting young consumers who may have moved to fast-fashion rivals or online shopping. 

The company has 10% of total store count, which is not operating in-line with company’s target. Two of the stores were shut last quarter. The company plans to cut, down size, relocate or shut down three more stores in the coming months. Further eight old stores will go under redesigning format. 

This would result in 50-60 basis points gain in the margins. Shoppers Stop has 81 stores in 37 cities and is aiming to grow in the mid-teens segment, anticipating a strong double digit growth in PAT in FY2018.

Recently, the Company has sold almost its entire 5 percent stake in airport retail venture, Nuance Group Fashion and Luxury Duty Free Private Limited (NGFL).

Shutting down or rightsizing stores is common, and an essential practice in the retail business. Companies like the Future Group, Domino’s and Lifestyle have done so in the past.