Pantaloon set to merge consumer electronics and furniture units

Pantaloon Retail India?s (PRIL) bleeding formats, consumer electronics chain of stores eZone and home-making and furniture business HomeTown will be merged, as the Kishore Biyani led-company is looking to turnaround the businesses. After a year to make them profitable, the company will seek strategic investors for the businesses, executives said.

As on December 31, the company’s total debt stood at R5,431 crore. The company’s debt will fall by R2,800 crore, after the sale of the Pantaloons format to Aditya Birla Nuvo and the creation of fashion company Future Lifestyle Fashions (FLFL).

?We are trying to turn around both the formats. As and when they can find their own feet, which may take a year, we will look for strategic or financial investor,? CP Toshniwal , chief financial officer of PRIL said.

The company will merge some operations of eZone and HomeTown to primarily cut costs. ?The margins at both the formats can be improved by merging some of their operations as we can bundle their products together,? said a senior executive at the company.

The company has shut about 20 eZone stores in the last one year alone due to increased competition and lower customer spending. Last year, the company also halved eZone store size to 6,000 square feet.

Likewise, HomeTown has also been grappling with negative consumer sentiment and lower home sales. ?We are reducing the store size of HomeTown to 15,000-20,000 square feet as larger stores are not being productive. These will be called HomeTown express model and can co-locate with Big Bazaar, Toshniwal said.

In the quarter ended December 31, the company?s home retail business? same-store sales fell 3.4%, while same-store sales at the other formats rose.

PRIL has been in restructuring itself more for a year now as it seeks to pare its debt. It is selling majority stake its Pantaloons format to Aditya Birla Nuvo, apart from divesting its non-core businesses like insurance. It is also demerging its fashion businesses into a separate company, thereby creating verticals for facilitating FDI in multi-brand retail.