Home Retail Group Plc, owner of Britain's Argos and Homebase stores, said it had signed a franchise arrangement to develop its Argos retail format in India and a separate deal to buy a stake in an Irish retailer. The company said on Friday it would buy a 33 per cent stake in Irish homewares retailer Home Store + More and would invest 7 million pounds ($13.7 million) to expand the out-of-town home wares chain. Home Retail said its deal with an Indian joint venture owned by Shopper's Stop Ltd and Hypercity Retail India Private Ltd would give Argos an initial foothold in the rapidly growing retail market in India, which has a population of 1.1 billion.
To offset slowing consumption at home, global retailers such as Wal-Mart, French supermarket giant Carrefour and Germany's Metro are pushing to enter India's $300 billion retail industry, which is forecast to grow to $637 billion by 2015. Home Retail said Argos, one of Britain's biggest Internet retailers, will be launched towards the end of the year under the 'HyperCITY-Argos' brand, initially in the Mumbai region, and provide its brand, catalogue and multi-channel expertise. It said the Irish deal would also strengthen its position in the highly fragmented home wares market. "These two ventures provide an exciting but cost-effective opportunity to leverage our skills, sourcing scale and capabilities over time," Chief Executive Terry Duddy said in a statement.
"However our core focus continues to be driving the organic growth opportunities within Argos and Homebase."
Shares in Home Retail, spun off from conglomerate GUS last year, closed little changed at 429-pence on Friday. Seymour analyst Richard Ratner cut its pretax profit forecast for the year to February 2008 to 343 million pounds from 348 million. He estimated the two deals would incur a cost of around 5 million pounds in the new financial year and another 5 million in the following year.
courtesy:economictimes
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