The Loot undertakes restructuring

Deep discount chain, Loot is next in line to face the rough weather and acute fund crunch.

As a result it’s restructuring its operations to wade through drop in sales and rise in operating costs. The situation is so bad that the company has delayed staff payment by two months. Even many of their front-end staff has put in their papers in the last two months. The company’s efforts to bring in investments through private equity players and by selling stakes in the business have not yielded any results so far.

The Loot, which did business worth Rs 117 crores and had a profit after tax of nearly three per cent on sales in FY 2011,was looking for sales worth Rs 150 crores in FY 2012. But now the chain is likely to witness a 20-25 per cent drop in its FY 2012 sales target. The company is hoping for a turnaround and pinning its hopes on the December-January sales.

Though the chain has not seen tremendous growth, it has been able to keep its liabilities low. It has a debt burden of around Rs 30 crores apart from suppliers’ pending dues. Like other retailers, the April-to-June period was very bad for the Loot, followed by the damp festive season.

It has also pulled down shutters on eight stores in last six month since they were proving to be non-profitable. The chain runs 100-odd stores across the country. Prior to that, it had closed 15 stores in the last one year to stop losses. The company had plans of launching 30 new stores by December 2011, which doesn’t seem viable given the current state of business. Some of the measures to cut costs include, closing non-profitable stores, cutting down of staff, keeping inventory low by cutting down orders and focussing on big stores, where shoppers can choose what they want.