Shoppers Stop’s top 150 take 15% pay cut

The K Raheja Corp-controlled department store chain Shoppers Stop has cut its management ranks as is restructures operations to cut costs and swing back to profitability.

Not only have the top 150 employees of the company taken a pay cut of 15 per cent, but BS Nagesh, the vice-chairman, has cut the top management ranks to make the organisation leaner to cope with decline in same store sales.

“We have operated a two-dip structure with a back-up available for the top management up to four levels as part of our exercise of identifying and groom talent. We also had a corporate layer of heads above the respective vertical’s CEOs whose focus was to drive synergies across our formats even as we were driving top line growth. We have now dismantled this dual structure corporate layer,” said Nagesh.

Angel Broking, in a recent research report, said the company cut staff costs by not replacing 300 floor-level staff, who had left the company earlier. As a result, in the quarter ended June its consolidated employee costs fell by 24 per cent to Rs 18.43 crore. The company also cut costs by shrinking its office space by 20 per cent and cutting its corporate office expenses by 40 per cent, Viraj Nadkarni of Angel wrote in his research report.

“We have eliminated the position of business head in charge of property acquisition as we found that most developers wanted to deal directly with the managing director or the Rahejas when it came to agreeing deals,” said Nagesh. As a result now, Vivek Mathur, who is head of e-commerce, is also in charge of the corporate planning function while C B Navalkar, the gro-up chief financial officer, also doubles up as the chief executive office of Crossword Bookstores.

The restructuring initiatives have nevertheless allowed the company to register a Rs 7.63 crore profit before interest and tax in the quarter ended June 2009 as compared to a loss of Rs 20.25 crore in the year ago period.
Shoppers Stop is also on the lookout for another CEO for Hypercity Retail after its expatriate South African head Andrew Levermore left after finishing two contract terms in India.