in FY13. The company opened just one store during the first half of FY14.
Trent had plans of opening smaller Star Bazaar outlets across 30,000 square feet in order to cut down on rentals and to break-even sooner. The company has also decided not to open Star Bazaar hypermarkets inside large shopping malls due to high common area maintenance costs, Rents in India account for 9-15% of retailers’ revenues, higher than the global average of 4–10%, according to a report by real estate consultant Jones Lang LaSalle.
In FY13, THL reported a 21% increase in total revenue at R785.1 crore, while its earnings before interest, tax (Ebit) was negative at R64 crore. “This (Star Bazaar) business continues to incur operational losses, especially on account of the under absorption of corporate costs. We believe this trend would continue until the business evolves into a sustainable model and consequently reaches a critical mass,” the company had said in its annual report.
After the FDI announcement on Tuesday, Trent shares closed up 10.4% at R1,178 on Wednesday on the BSE.