Spencer’s Retail, the retail arm of RP-Sanjiv Goenka Group flagship CESC, plans to add 20 new compact hypermarket stores, and will invest around Rs 45-50 crore in FY19, Shashwat Goenka, sector head, Spencer’s Retail, tells FE’s Jharna Mazumdar. The company is also looking at double-digit revenue growth and high single-digit same-store sales growth in FY19. Excerpts:

Spencer’s Retail has already become EBITDA (earnings before interest taxes depreciation and amortisation) positive after the takeover of debt of Rs 280 crore by parent in FY18. Your losses have also narrowed to Rs 30 crore in FY18. When do you expect to be PAT positive?

We have become a debt-free company post the takeover of Rs 280-crore debt by the parent company and it is part of our demerger process. The process is on and we can’t share more details on it. We have become PBDT (profit before depreciation and amortisation) positive in FY18 and in FY19, we will be PBT (profit before tax) positive. Becoming PAT (profit after tax) positive will not be too far after we become PBT positive. The company reported EBITDA of Rs 17 crore in FY18, against an EBITDA loss of Rs 46 crore in FY17.

What is the kind of revenue and same-store-sales growth you are expecting in FY19?

We are expecting to report double-digit revenue growth and high single-digit SSG growth. More or less, it will be in line with the industry trend. Spencer’s Retail reported a revenue growth of 2.5% to Rs 2,091 crore in FY18. Same-store sales growth (SSG) increased marginally to Rs 1,604 per sq ft in FY18, compared with Rs 1,603 in FY17.

It is almost a year after implementation of the GST. How has been the business and has everything settled down now?

The GST is one of the best things to happen to the retail sector. It has brought many small and medium-sized retailers under the tax bracket and transactions are more transparent. Also logistics and setting up warehouses has become easier.

What are you investment and expansion plans for 2018-19? Do you plan to shut any loss-making store?

We plan to add around 20 compact hypermarkets ranging between 15,000 sq ft and 22,000 sq ft. It will be around 2 lakh sq ft in total and we would invest around Rs 45-50 crore through internal accruals. We also keep reviewing our stores and if the performance is not satisfactory, we may look at shutting it down. Spencer’s had 128 stores operational at the end of FY18 comprising 1.18 million sq ft.

How is your online business performing and what percent of revenue is coming from the online business? Where do you see it in the next five years?

We have recently re-modelled our app and website and have introduced Spencer’s Kitchen and also a subscription model where one can get their breads, eggs and other daily-used items delivered in the morning. It is almost a year now we have got into the online business and right now the share is not that significant. However, it is growing fast and in a few stores 10% revenue is coming from online orders. At present, we have online services in six cities and we will continue in these cities.

Are you looking at any acquisition or tie-ups with other retailers?

We keep evaluating acquisition and tie-up opportunities, but right now, nothing has firmed up which could be shared.