Shopper's Stop Limited - Securities and Exchange Board of India

RISK FACTORS
Any investment in Equity Shares involves a high degree of risk and so you should carefully
consider the risks described below before you make an investment decision. Risks have been
quantified, wherever possible. If any of the following risks actually occur, our business,
financial condition and results of operations could suffer, the trading price of our Equity Shares
could decline and you may lose all or part of your investment.
Internal Risk Factors
1. Our customer offering includes a range of lifestyle merchandise, various services
and aspirational products and hence our ability to correctly understand fashion
cycles and customer preference is critical for our continued operations
We are a retailer of lifestyle and aspirational products and services. Our success is
dependent on our ability to meet our customers’ requirements on a continued basis.
Customer preferences can change with change in fashion and trends, and their service
level expectations too can change from time to time.
Our success depends partly upon our ability to anticipate and respond to such changing
consumer preferences and fashion trends in a timely manner. Any repeated failure by us
to identify and respond to such emerging trends in lifestyle and consumer preferences
could have a material adverse effect on our business.
2. Our business is seasonal in nature with the Oct-Dec quarter being our best
quarter. Any substantial decrease in our sales in this quarter can have a material
adverse impact on our financial performance
Our business exhibits seasonality due to the bunching up of festivals like Durga Puja,
Diwali, Christmas, etc. in the third quarter of our financial year (October-December
quarter), in which historically we have reported higher sales. In our kind of formats the
fixed costs like lease rentals, employee costs, store operating costs, distribution and
logistics costs form a substantial portion of our costs. Since overheads in the retail
business are largely fixed, our quarterly profits traditionally have been higher during this
quarter. Any substantial decrease in sales for the October-December quarter could have
a material adverse effect on our financial condition and results of operations.
3. As some of our merchandise is fashion driven and seasonal, any difference
between our forecasts and actual customer off take can impact us adversely
We plan our offerings based on the forecast fashion and trends for the forthcoming
season. Any mismatch between our planning and the actual off take by customers can
impact us adversely, leading to potentially excess inventory and requiring us to resort to
higher markdown and thus lower margins, in order to clear such inventory.
4. Our applications for registration of some of our trademarks are still pending with
the relevant trademark authorities as a result of which we may have lesser
recourse to initiate legal proceedings to protect our in-house product brands. This
may lead to a dilution in the brand value of our in-house product brands.
Out of the various trademarks under which we presently market our in-house products,
five are registered in the name of our Company. For the rest, applications for the
registration of these trademarks in the name of our Company have been submitted to the
relevant trademark authorities as on the date of this draft Red Herring Prospectus and
are still pending with them. Pending the registration of these trademarks we may have a
lesser recourse to initiate legal proceedings to protect our in-house brands. This may
lead to a dilution in the brand value of our in house product brands.
Our success with our in-house brands/labels depends, in part on our ability to protect and
defend our current and future intellectual property rights relating to such brands. If, we
fail to adequately protect our intellectual property, competitors may manufacture, and
market products under brands similar to our brands, which may have an adverse effect
on the goodwill of our brands.
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