The greeting cards and gifts company Archies Ltd has booked around 25 retail properties in key mall locations across the country. In a major company-owned retailing drive, Archies is looking at adding 50 stores in next couple of years to the existing network of 35 exclusive company-managed stores, which account for around 23 per cent of overall Archies retailing revenues.
The new expansion drive is expected to support Archies’s topline growth. In fiscal 2003-04, its revenues are expected to dip to Rs 68 crore from Rs 76 crore last fiscal, primarily because it exited from the loss-making Rs 8.6 crore perfume business.
With margins-rich paper business (it gave 80 per cent of profit after tax and 54 per cent of revenues) not growing as expected, Archies is betting on the gifting segment to grow the overall revenues. Malls have been identified as a critical driver for gift-related consumption — Archies is also expecting its gifting imports from China to account for 50 per cent of overall procurement in next couple of years.
Archies executive director Pramod Arora said, “we don’t want to lose the opportunity on prime mall retailing. In next couple of years we have plans for 50 additional stores in malls — we added half a dozen in 2003-04.”
He added, “once we expand into retail business, gifts will expand and drive topline. In next three years, topline would grow by 10 per cent odd and profit before tax by 15-20 per cent.”
Company secretary Manish Jain says, “the three-year old company-owned stores network now account for 23 per cent of overall revenues and the remaining is by the franchised entities. We expect a big bulk of sales to come from company-owned in three years.”
The company expects its 50-store project to generate margins of around 17-18 per cent at operating level in malls as compared to 18-20 per cent in current non-mall locations.
“A typical 1,000 sq ft store should do sales of Rs 50 lakh a year on an average,” hoped Mr Jain.