Fashion retailer Shoppers Stop has said it is reviewing the joint venture with Nuance Group, under which it had forayed into duty-free airport retailing, as there is not much scope for "cash flow and profitability".
"We are always reviewing all formats, all businessesbased on their profitability on long-term basis. Hence, we arealso reviewing our airport business," Shoppers Stop Managing Director Govind Shrikhande said here today.
Shoppers Stop's Zurich-based JV partner Nuance Group was awarded the duty-free contract for Bengaluru International Airport and Mumbai International Airport (fashion, luxury and lifestyle).
"We believe it is a tough business... We are not completely equipped to handle in full sense because we have been a domestic player, and our domestic operations we understand well... There is not much scope for cash flow and profitability," he said.
To a query on the losses faced by the company induty-free airport retail venture so far, Shrikhande said:"Can't really quantify, but not that large that youhave to look at only as an exit path. If you look at our domestic airport operations, they are doing pretty well."
When asked whether exiting duty-free airport retail business forms the part of review deliberations, Shrikhande said, "Currently and frankly speaking, there is nocomment on whether we are exiting or not, but we have been suffering to handle the business.
Giving reasons for the losses in the business model he said, airport retailing is different from general retailing as travellers are visiting airports not to shop.
On proposed increase in excise duty on branded readymade garments worth over Rs 1,000 announced in the Budget, he said the retailers had made a representation to the Finance Minister Arun Jaitley immediately, but there has been no response.
"We had made a representation, the next day, and there has been no response," he said.
He further said the additional excise duty and increase in service tax to 15 per cent is likely to impact consumer spending in the respective categories.
