With losses of R24 crore in 2015-16, the accumulated losses at fashion chain Globus Stores have now gone up to R241.19 crore.
The retailer’s sales were up just 2.7% at R220 crore and consequently, the loss before interest taxes depreciation and amortisation widened to R2.52 crore. The management has attributed pressure on sales and margins in the branded garments and accessories business to the onslaught of the e-commerce sites and their aggressive discounting.
“The company has, during the year, responded to this challenge by selling its products from most of the major e-commerce sites and has seen a good potential of growth there. The company is also investing in upgrading its own e-commerce site with all latest features,” the management noted in a filing with the Registrar of Companies (RoC).
In the June, 2016, quarter, the retailer shut two loss making stores leaving it with 35 stores. Despite being an early entrant Rajan Raheja promoted Globus Stores has failed to keep up with Shoppers Stop, Pantaloons, Lifestyle International and others which entered the fashion segment around the same time or much later.
Arvind Singhal, chairman, Technopak, said the fashion category has been growing by 12% to 13% every year for the last five years and fetches higher margins.
“Most fashion retailers are performing well and better than food and grocery, or jewellery players. However, Globus needs to change its strategy,” Singhal said.
Globus’ operating expenses in 2015-16 rose 2.9% to R222.6 crore. The total debt of the company increased 11.9% to R159 crore, according to data from the registrar of companies.
The company did not reply to an email query.
While Globus started its operations in 1999 and caters for both men and women it runs just 35 stores now whereas Pantaloons has 179 stores and one factory outlet. Shoppers Stop, promoted by K Raheja Corp, which started operations in 1991, has 80 Shoppers Stop departmental stores while Westside, the flagship store of Tata Group’s retail arm Trent, launched in 1998 has 104 stores.
Reliance Trend which was launched in 2007, a part of Reliance Retail, the retail arm of Reliance Industries, currently has 300 stores. Last year Globus has shut down operations of its store in Bhandup (Mumbai). The company has also closed down operations of its store in Dahisar (Mumbai) owing to the closing down of Mall by the developer, the company said in a MCA filing.