Saturday, 1 June 2013

Bata unfazed by slowdown, plans expansion

Bata is taking a big step in an effort to go premium. The mass- footwear-major, on one hand is diversifying into scarves and sunglasses, and on the other, it's looking to close some of it's smaller outlets in order to move to large-format stores. But high rental costs are already squeezing its margins. CNBC-TV 8’s Swathi Narayanan and Farah Bookwala report.

Bata is charting out its growth roadmap. With the management confident that the current slowdown will only last for a few more quarters, Bata is on an agressive expansion drive.

The company wants to move to large format stores, 50-percent of which will be set up in malls. It will relocate 30 smaller stores this year.

In an effort to draw a younger clientele, Bata also plans to  add 20-30 'foot-in' stores every year from 2014.

Its licensed brand hush puppies will see an annual addition of 5-10 exclusive stores as well. Thomas George Bata, chairman and CEO, Bata India sais, "We are opening 100 or more stores this year and we will continue to open that number of stores next year."

"But we are changing the type of stores we are opening. We are moving towards larger format stores." Bata says their decision to opt for larger stores is not only based on rising demand for footwear, but also because they are adding to their product mix by introducing sunglasses and scarves, with the non-footwear category set to contribute 20-percent to sales soon.

With rents costs rising 31-percent year-on-year, Rajeev Gopalakrishnan, MD, Bata India says, "Rents have to naturally go up, but if you don't go and capture the market today, you are going to be left out. You need to consolidate your position. But if you are going to keep your bottom line stable with the trend of growth, there is absolutely no problem."

And to keep up their current 15- 20-percent growth momentum, Bata will also invest Rs 80 crore this year, largely on mordernising and increasing production at their 3 factories in Kolkata, Bangalore and Pune.
http://www.moneycontrol.com/news/business/bata-unfazed-by-slowdown-plans-expansion_884774.html

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