30th MAY - 4th JUNE               Titan Industries to open 250 stores in 2011-2012!                                       ...
Vishal Retail goes under the Hammer of 70 CR                                           Three years ago, Vishal Retail comm...
Pantaloon Retail faces growth challenge                                                  After a disappointing Calendar Ye...
US POLO clocks `75 crore in India                                     US Polo, the mid-tier American brand, brought to Ind...
Versace Home opens in Delhi                              Versace Home, the home-furnishing line from the Italian design ho...
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Weekly digest 30 may 4 june


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Weekly digest 30 may 4 june

  1. 1. 30th MAY - 4th JUNE Titan Industries to open 250 stores in 2011-2012! Watch and jewelry maker Titan Industries plans to open 250 stores across India in 2011-12 (April-March), compared to 150 stores last financial year. The company’s capitalexpenditure for the next financial year is likely to be around Rs.100 crore, part of which, will be used forexpansion and maintenance of the stores it currently owns. The company will continue to open 30-40stores of Titan in 2011-12, but the aim is now to scale up expansion of newer formats like Helios, Eyeplusand Fastrack. Titan, for instance, currently only has 3 stores of Helios, a high-end multi-brand watchchain. But by the end of the next financial year, it plans to have 40 operational stores of Helios. Thecompany will also open around 60-70 stores of Fastrack, which sells casual range of watches andaccessories, and around 20 stores of its jewelry retail chain Tanishq. Titan will also open 6-7 stores of itsmass-market jewelry brand Goldplus. The company currently has 29 Goldplus retail stores. Titan hadlaunched the Goldplus brand in 2005 targeting smaller towns, but froze expansion last year, afteropening 30 stores since launch. The company had last year said it wanted to get its business model rightand might have to close or relocate some Goldplus stores. The focus of Goldplus will continue to be ontier II and III towns mainly in South India. Titan Industries already has 646 stores under operation acrossIndia (as of February-end). Less than 15% of these are company owned, while the rest are franchisees. McDonald’s signs deal with IOC to open in petrol stations Mcdonald’s India has joined hands with the Indian Oil Corporation (IOC) to increase its presence in petrol stations in the western and the southern regions and aims to more than double its sales from these areas by 2014. Under the agreement, IOC will provide space to McDonalds for opening `Drive Thru restaurants in western and southern India. IOC has over 8,000 fuel outlets in south and west India, and this agreement will support McDonalds expansion plans. The company plans to open 30-50 Drive Thru outlets in five years in tier II destinations in south and west India.
  2. 2. Vishal Retail goes under the Hammer of 70 CR Three years ago, Vishal Retail commanded a market valuation of about Rs.2,200 crore. Now, the retail chain has sold its retail and wholesale business at just 3% of its peak valuation. In a filing to Bombay Stock Exchange, the debt-laden retailer has declared the sale of its retail business to Chennai-based Shriram Group and wholesale business to PE firm TPG for 70crore. The deal makes Vishal the first listed Indian retailer to sell out in the wake of the economicmeltdown in 2008. It completes the Corporate Debt Restructuring (CDR) process started last year afterVishal Retail failed to pay its dues. The retailer ran up debt of around 730 crore as on September 30,2010, as it tried to fund an ambitious expansion plan. The transaction on a slump sale basis includes allthe assets, rights, interests, inventories, cash flows, store leases and liabilities of the company. Slumpsale is a mode of selling a business where one or more undertakings are transferred for a lump sumwithout fixing values for individual assets and liabilities. Of the 500-crore debt the company owes tolenders who have participated in the CDR process, about 75 crore has been retained as debt at VishalRetail, to be repaid through asset sales. The remainder was converted partially into long-term TPGWholesale debt securities and compulsory convertible security. These will be converted into equity atthe time of the eventual public issue. Lenders who did not participate in the CDR include Barclays,Deutsche Bank and LIC Mutual Fund. The non-CDR lenders were offered an option of either acceptingthe same terms that were given to the CDR lenders or a one-time settlement plus a small amount ofequity. DLF in licensing deal with MANGODLF Ltd. has entered a licensing deal with Spanish brand Mango. The Spanish clothing major has been inpartnership with Major Brands through which it opened 15 stores. It isreported that the existing stores will continue to be operated by MajorBrands, while DLF will be spearheading the new store openings. DLF, whichhas already opened Mangos travel retail store at the new terminal of NewDelhi airport, plans to add six more stores in the current year. DLF currentlyoperates other global fashion names such as Armani, DKNY, and Ferragamo.The company is now set to launch a multi-brand retail store chain leveraging on its basket ofinternational fashion brands. These stores will also stock brands that are not part of DLF Brands. Themulti-brand stores will be like a premium discount store stocking high-end fashion labels but at lowerprice. The first of the multi-brand stores spread across 10,000 square feet will open in Gurgaon.
  3. 3. Pantaloon Retail faces growth challenge After a disappointing Calendar Year 2009, when the same- store sales growth across segments grew 6-12 %, in Calendar Year 10 it has been in the 12-21 % range. Whilethe value and lifestyle segments are doing well, the company is struggling to make profits for the homedivision. The company had Ebdita margins of 9.2 % in 2009-10 and is likely to end 2010-11 at about 8.8%. According to analysts, margins are likely to drop to 8-8.5% due to higher contribution from the valueretail business. Unlike lifestyle business (Pantaloon, Central), which fetches Ebidta margins upwards of15 %, the value segment (Big Bazaar, Food Bazaar) earns single-digit margins. With food being the fastestgrowing business for the company, analysts believe margin expansion in the short-to-medium term isunlikely. In fact, its margins for the December quarter last year fell 150 bps year-on-years to 8.6 % due toinadequate price rises, losses in the electronics business and higher sales of food retailing in the overallmix. In addition to the product mix, the company has to contend with cost inflation both in food as wellas other product categories. Fears that rising interest rates and inflation could impact its margins andsales have driven the stock of India’s largest listed retailer are down 24 % since the start of the year. Tommy Hilfiger to focus on children’s wearIn the next 2 years, Tommy Hilfiger is eyeing 12-15 % revenue through the sale ofchildren’s apparel. To achieve this, the company would be looking at setting up100 retail points including exclusive stores and shop-in-shops. Presently the brandhas 20 children’s wear retail points with two exclusive stores. The secondexclusive store was opened in Chandigarh recently. Children’s wear is a new pusharea for the brand which has so far focused primarily on menswear, women’swear. Delhi Duty Free adds fashion brandsDelhi Duty Free, which until now focused on liquor, tobacco and toiletries, is adding fashion and luxurybrands to its retail offer. The company claims brands like Hugo Boss, Samsonite Black and Swarovski willbe up to 35 % cheaper at duty free stores than on the retail shelves across the city. The average storesize for each of the brands is 800 sq ft and the total space dedicated to fashion retail under duty free is3,200 sq. ft.
  4. 4. US POLO clocks `75 crore in India US Polo, the mid-tier American brand, brought to India by Arvind Brands and Retail, expects to clock a turnover of Rs.75 crore this year (2 years after launching the brand in India). The brand currently has 150 points of sales and 20 EBO’s (Exclusive Brand Outlets). Besides investing in the exclusive boutiques, the brand has also invested heavily in shop-in-shops in department stores by creating special islands with superior visual merchandising, incorporating elements such as saddles,mallets and photos of polo players. Today, US Polo claims to have the highest productivity amongapparel brands in India in terms of sales per sq. ft. While the average brand is said to deliver `30 a sq ftper day, US Polo delivers `50. The brand launched with men’s wear and extended into footwear. Thisyear, it is looking at getting into kids wear, womens wear and luggage.Globally, in 2010, US Polo clocked a retail turnover of $850 million. Its top markets today are the US andWest Asia. Currently, the Indian market accounts for just 5% of business globally, while China represents15%. Recognized by its double horsemen logo, which represents one horseman playing another, thecompany has been in litigation with Ralph Lauren over the logo for long. They claim that Ralph took theirlogo and made it popular. US Polo was founded in 1890 — long before Ralph Lauren was started in 1967. Britannia to expand its chain of café’sOut-of-home consumer spend is being seen as the next big opportunity. In aneffort to tap into this segment, Britannia Industries plans to scale up its cafebusiness which is currently lead by Daily Bread Gourmet Foods, a whollyowned subsidiary of Britannia. The company currently has 22 company-ownedand eight franchisee stores in Bangalore, it has five stores in Hyderabad andthree in Goa. The company plans to open 75 more stores across India with a focus on cities such as Bangalore,Hyderabad and Goa. The company has also tied with large-format retailers such as Spencers to set up shop-in-shop formats.
  5. 5. Versace Home opens in Delhi Versace Home, the home-furnishing line from the Italian design house has opened its first standalone furnishing boutique. Internationally, Versace Home was launched in 1992 with a collection of bed sheets, pillows and cushions. This was soon followed by porcelain dinner sets and high-end furniture with the trademark Versace logo. Located in The Gallery Mall at MG Road, the store is spread over 300 square meters. Versace already has a prêt store at the DLF Emporio mall, Vasant Kunj where it had introduced a small section of the Versace Home line on a trial basis. Encouraged by theresponse the company decided to set up a full store. At the store a designer Versace vase can cost you`8,000 and the other products can range from Rs.10,000 to Rs.100,000 and above. Versace is beingretailed in India through Blues Clothing Company. Raymond to re-launch Park Avenue with a new logoRaymond is re-launching its largest selling Rs.500 crore Park Avenue and investing in the25-year apparel brand with a new logo and extending it to areas like business casuals and eyewear. It hasappointed an UK-based company to design a new logo. It would also increase the number of Park Avenue andRaymond stores, adding another 100 new stores this fiscal. Tanishq inaugurates its 6th store in Chennai Tanishq has launched its 6th showroom in Chennai, at Chromepet and will be setting up 15 new showrooms in the next fiscal year. With the store at Chrompet, Tanishq retail chain now has 123 exclusive boutiques in 76 cities. The area of proposed showrooms would range from 3,000 sq.ft. to 20,000 sq.ft., including four to five large showrooms spanning total area of more than 8,000 sq.ft. each. The largest of theupcoming outlets would be a 20,000-sft showroom in Mumbai. At Tanishq gold jewelry accounts for 70 % of alljewelry sales.