Mahindra Retail, part of the Mahindra Group, is unlikely to achieve its turnover target of Rs 250 crore in FY16 and is likely to report losses during the fiscal as demand for branded kidswear remains flat.
Zhoobeen Bhiwandiwala, chairman, Mahindra Retail told FE on the sidelines of a company event, “The losses will continue this year but we expect to break even in the next two years. The company will report a turnover of around Rs 220 crore this fiscal.”
Last fiscal Mahindra Retail reported revenues of Rs 210.5 crore and incurred a net loss of Rs 118.9 crore, according to Mahindra & Mahindra’s annual report.
Mahindra Retail’s flagship brand BabyOye (formerly Mom & Me) sells maternity and childcare products. The company sells brands like Carter’s Pigeon, Fisher-price, Mee Mee among others. Mahindra Retail is also looking at closing its loss making stores and optimising store size at certain locations. At present, the company operates 110 BayOye stores in 52 cities. The company plans to add 50 franchisee stores in 2016.
“We always keep a close watch and evaluate 10-15% of our stores which are not performing that well and if we see the performance not improving for a long period we will shut the store. At the same time we look for better location to open stores. This is a continuous process and like all other retailers we do the same,” Bhiwandiwala said.
The company had shut more than 25 loss making stores last year. Mahindra Retail is also planning to launch smaller format stores of around 1,200 sq ft to 1,500 sq ft which will have only kids wear.
In select locations the company has downsized the stores. Like in GIP Noida and R-City Mall the company had large stores but now the store size in these locations are smaller. “Earlier we used to have around 5,000 sq ft to 3,000 sq ft stores which is being reduced to around 2,500 sq ft to 2,000 sq ft in select locations,” said Bhiwandiwala.
Mahindra Retail, on Wednesday said that it will bring US-based children’s clothing brand Carter’s to its BabyOye chain of stores across the country. Mahindra plans to open 40 store-in-stores at BabyOye outlets in 15 cities across the country.
Currently, BabyOye and rival FirstCry has more than 100 stores. FirstCry received $10 million in February, 2015, in a fourth round of funding from Valiant Capital, IDG Ventures India, Ventex Venture Holdings and SAIF Partners.