Star Bazaar, the hypermarket chain of Tata’s retail arm, Trent, will take at least a couple of years more to break even, said a top executive.
According to the company’s annual report, Trent Hypermarket, a subsidiary of Trent which runs Star Bazaar, made a net loss of Rs 48 crore in 2010-11 on total revenue of Rs 520 crore. The revenue rose 80 per cent in 2010-11. Trent Ltd, which also runs Westside department stores and Landmark book stores, posted a net profit of Rs 43 crore on total revenue of Rs 716 crore in FY2011.
Since categories such as food and grocery in the business have net margins of two to three per cent and are largely dependent on volumes, the company expects the format will start making profits once it achieves a particular scale, the executive said.
The company plans to invest Rs 500 crore to take the number of Star Bazaar stores to 50 from the current 12 in the next three to five years. Trent has invested around Rs 320 crore in the business. Of the dozen stores, only four have made profits so far. Each store takes two-and-a-half to three years to break even.