Alok to shut 45 H&A stores

Owing to high rentals, and low consumer buying sentiment, retail business

of textiles major Alok Industries has suffered a loss. The company is now planning to shut 45 out of the 137 exclusive retail outlets it operates under the H&A brand by next month. This step is being taken to improve bottomlines and focus on its core business of manufacturing.

And if the corrective measure does not help in reviving the business then it may start folding the retail division. The company also runs 154 shop-in-shop outlets on a franchisee basis, which are profitable and are hence likely to be continued.

Currently, the company occupies around 230,000 sq. ft. retail space. According to Crisil Research, after the non-profitable exclusive outlets are closed, the management will not make any further investments in retail. It said Alok’s domestic retail business contributes less than 10 per cent to the company’s consolidated topline and hence the rationalisation of the retail division may not have any major impact.

Focusing primarily on return on capital employed, the company had earlier started exiting non-core business, primarily real estate. With a debt of Rs 12,900 crores, it plans to raise Rs 2,500 crores over two years. This year Alok sold the eight floors Peninsula Business Park project in Mumbai for an estimated Rs 400-450 crores and three out of the eight floors at the Ashford Centre in Lower Parel.