Future Group plans to merge HomeTown with FabFurnish

The competition in furniture retailing is heating up and about three-fourth of the total pie is still controlled by standalone stores and carpenters.
Future Group

Kishore Biyani-led Future Group, in order to strengthen its furniture vertical, is now planning to merge its furniture retail brand HomeTown with recently acquired online retailer FabFurnish. The company is aiming to build a separate entity with a target revenue of about Rs 1,000 cr by the end of next fiscal.

HomeTown will be a major vendor on FabFurnish, which Future Group acquired last month from German incubator Rocket Internet for about Rs 20 crore.

Commenting upon the same Kishore Biyani, CEO, Future Group said that though it’s not a board decision, the company could still look at listing it as a separate entity because otherwise it can't create value. Future Group will re-launch FabFurnish on Thursday.

Future Group wants to create some value in this business. With FabFurnish, it will be creating the largest home furnishing and decor business in the country, Biyani added further. The competition in furniture retailing is heating up and about three-fourth of the total pie is still controlled by standalone stores and carpenters.

Even eRetailers such as Flipkart and Amazon have entered in this fast scaling market in the recent past and this can be one of the reasons behind the merger. HomeTown today has more than 40 stores in the country and plans to add eight by end of 2016.

The company said the average ticket size at HomeTown is about Rs 44,000, which is not easily matched at online portals. Future Group has seen exponential hikes in its furniture business and thus it targets to earn before interest, taxes, depreciation and amortisation of Rs 40 - 50 crore in the current financial year from the combined entity.

The merger comes ahead as Swedish furniture retailer Ikea is all set to open its first store in the country next year in Hyderabad and will add 25 stores by 2025. As per industry pundits the spiking demand for high-ticket items that offer big margins is driving foreign interest in India's furniture industry.

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