Future Retail: Synergy gains in Hypercity acquisition
The deal between Shoppers Stop and Future Retail is a win-win for both sides as it helps the former bring down its debt and focus on the departmental store format while enabling the Future group to expand its presence at a reasonable cost. Manish Jain of Nomura believes that there are a number of synergies between the two (Future Retail and Hypercity) given primary focus on food/grocery and fashion. About 40-65 per cent of merchandise for the two retailers falls in the grocery segment, while the proportion of fashion/apparel is in the 17-30 per cent range. Given the higher focus of both retailers on private labels in the foods business this should help boost margins of Future Retail going ahead and improve sourcing of products (Premium Harvest, Tasty Treat among others) from sister concern Future Consumer. Finally, with its asset-light strategy Future Retail would be able to expand the footprint of HyperCity which the current management has been unable to do, says Jain of Nomura.An...05-10-2017
