CEO Future Group Kishore Biyani said on Wednesday that his company Fabfurnish will become profitable at company level by the end of next month (October 2016).
“We will make it profitable at the company level next month, and I am not talking about profitability at warehouse level or logistics level, that these companies talk about,” Biyani said at the sidelines of the India Retail Forum 2016.
He said that after taking over Fabfurnish, Future Group reduced the spend and increased sales.
READ MORE: Kishore Biyani’s Future Group acquires FabFurnish
“We didn’t spend on advertising, or on acquiring customers and we steadily increased our business. We understood the market, our consumers, their demands and needs and created a lot of new categories. We grew geographically as well,” Kishore Biyani said.
FabFurnish is a high margin and profitable business, which currently operates at 40-41 per cent margins. Under Future Group, the home furnishing brand aims to penetrate around 100 more cities.
Future Group, a significant player in the home furnishing segment, hopes that with this acquisition, they can hit the Rs 1,000 crore mark by the end of this year.
Future Group operates more than 700 stores at present in 221 cities spanning round 13 million square feet of retail space and the country’s largest listed retail group enjoys an annual customer footfall of 295 million to its stores.
ALSO READ: Kishore Biyani’s Future Group to merge HomeTown and FabFurnish
With this move, Biyani is making plans to take on the threat that Swedish furnishing giant IKEA poses to Future Group’s home furnishing and furniture brand.
IKEA has already identified India as a key growth market and is opening its first store in the country in 2017, in Hyderabad.
On What’s Wrong With Indian E-Commerce
Biyani, who is well-known for his strong views against e-commerce, said Indian e-marketplaces are not turning profitable because they want to grow disproportionately. “One must understand the customer, and his needs. That’s the only way to turn profitable,” he said.
“People are not thinking big. We have to look at businesses that will add value to the economy,” he added.
The comments were in response to questions over his statement at The Economist India Summit, held in New Delhi recently where he said: “Ninety per cent of startups I have seen had no meaning at all. They are nonsense.”
Despite his evident disdain for e-commerce in India, he admitted that he was impressed with Amazon’s successful delivery model. “Amazon has created a great delivery model. Even If I understand the 10 per cent of it, it will be a big thing,” he said.
