Cantabil Retail India is planning to put its expansion plans on hold and is shutting down its non-profitable stores to minimize losses. The company has already closed down 150 stores of Lafanso, its casual men's wear brand, and about 10 stores of Cantabil leaving the company with 45 and 300 stores of Lafanso and Cantabil respectively. The company recorded a net profit of INR 125 million on a turnover of INR 1.86 billion in 2010-11 against INR 2.02 billion in the previous fiscal. The total debt recorded on its books was INR 500 million in March 2011.
Vijay Bansal, MD, Cantabil Retail India Ltd, says: “Many competitors have closed down their non-profitable stores, mainly their second brand stores which ran on larger discounts. There has been a sharp decline in the purchasing power of middle class buyers due to inflation."
The company has seen its sales drop by 20% in the past 8 months which has compelled the company to completely do away with its discount-driven strategy and sell the current stock at maximum retail price.
A new premium brand called 'Kaneston' has been launched, to be sold on net price ranging from INR 1100 to INR 2000. Among other steps being taken by the company to check losses are - cutting down on marketing and advertising expenditure, reducing manpower and preferring company owned stores. Cantabil now prefers to work with franchisees on a commission basis rather than using the minimum-guaranteed income model.