Fashion and lifestyle retail major, Shoppers Stop, is on the lookout for an immediate exit from its duty-free airport stores business, which it entered partnering with the Nuance Group AG in 2006.
The company, in association with the Switzerland-based travel retailer, had formed the Nuance Group (India) Pvt Ltd with Rs 103.5 crore being paid up as capital and has stores in Mumbai as well as Bengaluru airports. However, Shoppers Stop that previously had a 50 per cent stake in the joint-venture, has reduced the same to 40 per cent and is currently on the lookout to sell off its remaining stake. "We are on the lookout to exit this business as soon as possible and hopefully in the coming quarter will be able to do so", Govind Shrikhande, the company's managing director told Business Standard. Although Shrikhande refused to provide further details when asked about the financial performance of this venture, the company's annual report states that it had incurred a Rs 6.8-crore loss from this business despite the topline increasing by 19 per cent to touch Rs 157.76 crore. According to the company, the rise in sales was primarily attributed to growth in the footfall of passengers in stores and an increase in the range of perfumes and other products in the fashion and food categories. On the other hand, total assets of Shoppers Stop in this project, until March-end 2017 stood at Rs 92.5 crore, thereby, registering a decline of nearly 16 per cent. When asked about the reasons that led to the company's decision to sell off its stakes in the joint venture, Shrikhande said: "Sometimes they (business models) work and at times they don't". As per a senior industry official, airport retailing is quite different from the segment that Shoppers Stop focuses on. While customers in malls are counted as casual shoppers and those visiting standalone exclusive outlets are regarded as serious shoppers, in the airports, only travellers visit such stores. "Hence there is a vast difference between the targeted consumer segment", the official opined. At the end of the previous financial year, Shoppers Stop made a provision of Rs 11.80 crore towards diminution in value of investment in Nuance.