7/5/2014 Spencer' s to add 80 hypermarkets, mulls IPO next year - The Times of India

http://timesofindia.indiatimes.com/business/india-business/Spencers-to-add-80-hypermarkets-mulls-IPO-next-year/pmarticleshow/37798498.cms?prtpage=1 1/2
Spencer's to add 80 hypermarkets,
mulls IPO next year
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Speaki ng to TOI on Thursday, Spencer's
Retai l head Shashwat Goenka sai d Spencer's
woul d grow aggressi vel y i n the next four
years, taki ng the store count beyond the 200
mark from the current fi gure of 127.
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Subhro Niyogi, TNN | Jul 5, 2014, 01.43AM IST
KOLKATA: Over the next four years, Spencer's
the retail vertical in the RP-Sanjiv Goenka Groupwill invest at least Rs 250 crore to add 80 hypermarkets across
the country. The investment is likely to be financed through an initial public offering sometime next year.
Speaking to TOI on Thursday, Spencer's Retail head Shashwat Goenka said Spencer's would grow aggressively in
the next four years, taking the store count beyond the 200 mark from the current figure of 127. While only 33 of
the current Spencer's outlets are hypermarkets with store size in excess of 20,000 sq ft, the additional 80 stores
that are planned in north, south and east India will be compact hypermarts.
"Last fiscal, Spencer's has added 11 stores. The same number of outlets will be added this year. We have been
somewhat conservative after the initial foray with multiple formats seven years ago due to constraints in
availability of real estate. Also, we have shut some stores and opened others. We have a successful growth format
now, a store configuration strategy to go with it and real estate developments that are taking shape. Hence, the increased pace of growth," Goenka
said.
The expansion spree will be aided by Spencer's fiscal performance as the retail arm, that has been riding piggyback on group flagship firm CESC
since its merger around four years ago, posts a net profit for the first time in 2015. Though the company had achieved break-even at the store-level,
its balance sheet had remained in the red as the company tinkered with format, configuration and location.
"Spencer's is close to breakeven as a company. The sales growth in the first quarter of the fiscal has been higher than the corresponding period last
year. Consumer sentiment appears positive and we should comfortably register a double digit growth in 2014-15," said RP-Sanjiv Goenka Group
scion.
The per square foot revenue at its stores was Rs 1,220 in 2013-14 and has increased to over Rs 1,300 in the first quarter of 2014-15.
To improve margins, Spencer's has decided to increase its apparel and general merchandise mix while retaining the food DNA at the stores. At
present, 80% of the revenues are generated from food, a low margin business. The chain will try to increase the higher margin non-food business,
particularly casual wear and kitchenware, to 25% within a couple of years.
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