Shoppers Stop Ltd. will issue a total of 43.95 lakh fresh equity shares, which amounts to a 5 percent stake, to Amazon.com NV Investment Holding LLC. The buyer is the investment arm of United Sates-based e-commerce giant Amazon.com Inc.
The Indian fashion retailer will get Rs 179.26 crore, at a price of Rs 407.78 per share, from the deal, which is pending shareholder approval, it said in a notice to the stock exchanges on Saturday.
The price is 3 percent lower than the closing price of Shoppers Stop on the National Stock Exchange on Friday.
The proceeds of the deal will be used to expand Shopers Stop’s physical footprint, said Govind Shrikhande, the company’s managing director.
I think we are on the path of continuous growth and we believe that Indian retail – the physical side as well – is still under-penetrated. So, I think this will help us to invest further. We are going to open about five stores in the second half of this year and there is a plan of another fifteen stores for the next four-year period.Govind Shrikande, Managing Director Shoppers Stop
As of June-end, the company had a total of 80 Shoppers Stop stores and 19 HyperCity stores all over the country.
Amazon’s investment arm, for its part, said in response to a query from BloombergQuint, that the rationale for the investment in Shoppers Stop was that the Jeff Bezos-owned company sees “a big potential in Shoppers Stop to disrupt this segment and wants to be part of their growth story.”
This stake sale is distinct from the one that has been in the works for Shoppers Stop’s grocery business HyperCity. Shrikhande has, in the past, said the company would like to raise between Rs 150-200 crore to bolster HyperCity.
“HyperCity, as you are aware... we have been talking to multiple investors for the last 24 months period to bring investments into that business,” said Shrikhande. “As of now, we are in final lap of discussions with a few players and I believe that we are confident of announcing the next step in about four weeks’ time.”
Omni-Channel Push
Shoppers Stop aims to bolster its online sales by completing its transition to an omni-channel retailing strategy. Currently, Shoppers Stop gets only 1.1 percent of its total sales from digital channels.
The shift to omni-channel, which involves driving sales through both physical and online platforms seamlessly, will be completed in the third quarter of the current financial year, Shrikhande said.
Shoppers Stop has so far invested around Rs 60 crore to put the necessary infrastructure in place for its omni-channel strategy, and will invest Rs 15-20 crore annually going forward.
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