Bangalore: Brandhouse Retails Ltd, the brand-specific retail unit of apparel company S Kumars Nationwide Ltd (SKNL), is planning to enter multi-brand, large-format, discount outlets and expand its total network of stores to 400 by the end of this year and another threefold by fiscal 2010.
Brandhouse needs an investment of about Rs400 crore for its expansion plans and its chief executive and managing director, Tarun Joshi, said the company was comfortable with the capital expenditure requirements.
“More than Rs100 crore has come to us from ADM Capital (a Hong Kong-based, private equity firm) while the rest would be managed internally,” he said. Hong Kong-based private equity firm ADM Capital had earlier invested Rs108 crore in Brandhouse Retails for a 10% stake.
Retail growth: Brandhouse Retails chief executive and managing director Tarun Joshi. He says the company needs an investment of about Rs400 crore for its expansion plans.
The company, which currently has 260 outlets, said the new stores would be branded factory outlets, which would sell private labels as well. Joshi did not divulge the number of stores the company is planning to open under the new chain, but said they would come up across the country.
SKNL, Brandhouse’s parent, holds brands such as S Kumars, Reid and Taylor, Belmonte and Carmichael House in India. Brandhouse, which already retails international luxury brands such as Alfred Dunhill and Escada in India, also plans to bring in three to four additional luxury brands this year, he said.
In the domestic market, Joshi said, six-seven brands were in talks with Brandhouse for retailing partnerships. He, however, did not reveal the names of the brands. Some of the retailing alliances are expected to be announced by March, he added.
“We would emphasize on womenswear, casual wear and accessories apart from menswear. We know there are gaps in our current portfolio and we will address them,” Joshi said. He said the company’s current focus is on fashion and accessories like leather products, footwear, cufflinks, and ladies’ handbags, among others.
Brandhouse, currently in the process of being demerged from its parent, will get listed on the Bombay Stock Exchange next month without an initial public offering.
SKNL has already received shareholder approval to demerge the retail unit and list the company as a separate entity. Brandhouse, which is expecting Rs1,000 crore turnover by fiscal 2010, will open its second exclusive Dunhill store in the country in Bangalore, after Delhi, later this month.
According to the company, one luxury brand outlet costs about Rs1.5 crore—excluding rentals, advances and stocks—and takes about three years to become fully profitable, though break-even can happen in about a year.
“Retailing luxury brands is for people with long-term plans. India’s luxury retails market will touch Rs20,000 crore in next five years. Now is the time to enter it, for there is a boom waiting to happen,” Joshi said. Brandhouse works on a “franchisee model” and brings all the products for its outlets from overseas companies, said Joshi. SKNL’s stock closed at Rs146.10, down 0.61%, on Wednesday on the Bomaby Stock Exchange.