Part of the Dubai-based Landmark Group, Max Fashion is planning to add 40 new stores in next six months and to expand across 15 more cities so as to take its overall store tally to 220 by March 2018. Currently, the retail company is present in over 70 cities across the country and plans to foray into 15 more cities by next year. The company may invest over Rs 180 crore towards the expansion plans. Overall, the company wants to expand its presence through the brick-n-mortar stores across 100 towns and over 300 physical stores before 2020.
When asked about specific investment plans in India, Executive Director of Max Fashion, Vasanth Kumar, said Rs 5 to 6 crore in-house investment has been made for opening one single store. “80 per cent of our stores are direct stores whereas 20 per cent are franchised retail stores, which are mainly present in Tier 2, Tier 3 and Tier 4 cities,” Kumar said.
According to Kumar, the metro cities contribute around 50 to 60 per cent to their overall India business, with the balance coming in from mini-metro cities. “Our target is to reach 100 cities and open up to 300 brick and mortar by the year 2019,” said Kumar.
Also, among the various categories that the company caters to, kids wear and women western wear is the most sold segment in Max Fashion. Both the categories individually account for 23 to 24 per cent of the business. Max Fashion’s production house is present in the country whereas the designs are made outside India.
When Max Fashion entered the Indian market in 2006, it witnessed losses for consecutive five years. It broke even for the first time in 2011 and has been profitable growing at a compound annual growth rate (CAGR) of 30 per cent since 2012. Max Fashion’s current turnover in India for the year 2017-18 is Rs 3,000 crore; it was Rs 2,400 crore in 2016-17 and Rs 2,000 crore the year before that. Globally, Max Fashion’s combined turnover for the year 2017-18 is around $1.7 billion, according to the company.
Talking about the impact of Demonetization and the Goods and Services Tax (GST) on the retail company’s sales, Kumar said that due to Max Fashion being a value-fashion platform, most of its products are present below Rs 1000 and thus attract GST 5 per cent or rates below that, hence GST impact has been favorable in the company.