Shoppers Stop eyes 25% more profits in FY18

The company is expecting sales to grow in the forthcoming festival season

Shoppers Stop is expecting sales to grow in the forthcoming festival season after an initial slowdown in sales in July owing to the goods and services tax (GST).

It expects sales to grow 12-14 per cent, which would take up the company’s profits by 25 per cent for this financial year. 

Managing director Govind Shrikhande said that sales fell in July on account of supply constraints, but recovery started from August. However, since there hasn’t been any changes in the retail prices of garments, sales are likely to remain healthy in the forthcoming festival season, he said.

Shrikhande’s projection is based on three grounds. 

First, he expects same-store sales growth to hover around 9 per cent this year, against 6 per cent in the previous financial year. “Growth above 6 per cent beats inflation and, thus, it will be a key to register the projected growth rate,” he said.

Second, the company has already closed three of its loss-making stores, taking an impairment of Rs 5 crore. It is also focusing on rationalisation by reviewing the bottom five per cent under-performing stores. This year, the firm also plans to open five more stores in Delhi, Mumbai and Guwahati, among other places.

Third, the company would focus on increasing its online presence through the omni-channel route. While it would not bet big on discounting items in comparison to online fashion portals, it would rely on delivery speed, assortment of products and availability across locations.

Shrikhande, who also holds the portfolio of the firm’s customer care associate, said that since Shoppers Stop has 80 stores in the country, which will touch 100 in the next three years, it would be in a better position to offer faster delivery compared to the online marketplaces. This, he said, would be the firm’s key differentiator.

While the company registers 4,500,000 visits on its web portal every month, only 1 per cent gets converted into sales. The company expects this to grow to 100-150 per cent in the near term. 

For all these initiatives, the company said, it would be spending Rs 100 crore this year.

The retail industry in the country is pegged at $610 billion, of which $16 billion accounts for online sales. Fashion and clothing account for 20 per cent of the total online sales.