Shares of retail chain Shoppers Stop Ltd have fallen by over 10 percent on Friday after the company's Managing Director and Chief Executive Officer Venu Nair announced his resignation.

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In a stock exchange filing on Thursday, the company said that Venu Nair has resigned citing personal reasons and to be able to spend some time with family while exploring other opportunities.

While his resignation will come into effect on August 31, the company, in the meantime, elevated its CCO and CEO of Homestop - Kavindra Mishra as its new MD and CEO with effect from September 1.

Nair will continue to guide the new CEO for a period of six months.

The Street, however, seems to be concerned largely about two things: a rather frequent MD level churn at Shoppers Stop and Nair leaving amidst robust expansion plans he put in place for the company.

MD level churn

Shoppers Stop, since 2018, has now seen two changes at the helm. In July 2020, amidst the peak of the pandemic, the then MD and CEO Rajiv Suri stepped down as the MD and CEO citing personal reasons as well, effective August 25, 2020.

He was appointed the MD and CEO just three years prior to that in June 2018 when Govind Shrikhande stepped down.

His resignation came amid a spate of exists at the company and unsuccessful attempts of turning around the company's performance.

Following this, Venu Nair, who was the CEO of Trent at the time was appointed the MD and CEO of Shoppers Stop with effect from November 6, 2020.

Nair's resignation also now comes just under three years since he took over at the helm.

"Shoppers Stop has been having churn at MD level and earlier MD didn't stick around for too long. That raises some concerns," Nuvama analyst Abneesh Roy said.

MD quits amid expansion plans

A larger concern, however, is that after years of subdued growth, Venu Nair had put the company on a strong growth trajectory.

Nair joined Shoppers Stop just as the country was beginning to unlock post a spate of lockdowns due to the COVID-19 pandemic.

Earlier that year, the company had laid off more than 1,100 employees and closed down some stores on the back of declining sales and weak demand outlook for discretionary products in the wake of the pandemic.

While numbers may not be comparable like to like given that Nair joined during pandemic, post which India saw two more waves of COVID, analysts believe Nair came from good experience from Trent and put in place a healthy place of expansion for the company.

Nair doubled down on the strategic pillars of the company such as private labels, beauty, First Citizen loyalty program and also largely focused on the Omni channel strategy.

The pandemic had also forced retailers to go back and relook at costs and sharpen focus amid slowly recovering sales at the time. In his first television interview to CNBC-TV18 in September 2021, Nair said the company had, at the time, brought about operational cost savings of Rs 400 crore in FY21 and Rs 140 crore in Q1FY22 as compared to FY20.

One main focus for Nair, however, was growing the private label business. Under his helm, the company launched several new private labels such as Arcelia in the beauty segment, Bandeya in the ethnic men’s wear segment and Alt Life in the athleisure segment and grew other private labels such as Kashish, Life and Fratini. It also began working with several national brands it houses to launch exclusive lines.

As of June 30, 2023, private labels clicked sales of Rs 171 crore and contributed 14 percent to the company's sales.

However, analysts say there were still work to be done on the private label front, and therefore his resignation came as a negative.

"He came with good experience from Trent and scaled up private label which was key issue for Shoppers Stop, but a lot of work was left. The pace of expansion also picked right thing to do," Roy added.

Nair also lay a huge focus on growing the beauty segment. The company opened standalone 11 SS beauty stores so far, while also bringing in several global brands to India under an exclusive partnership.

In the first quarter of this fiscal, beauty segment clicked sales of Rs 216 crore, up 13 percent and contributed 16 percent to it's total sales. This also included it's newly launched distribution business where it would license global luxury brands and distribute it in India. In just the last quarter, it also launched 23 brands across categories including KilianParis, Lancome, Olaplex and Farmacy

It's most recent foray was into the value fashion segment, breaking away from it's traditional stand as being a premium retailer with the launch of Intune. It has so far launched 3 stores - two in Hyderabad and one in Dombivli. This is also a fast growing segment and it would compete with players like Tata Trent's Zudio and Reliance Retails newly launched Yousta.

On the back of these growth initiatives, Shoppers Stop said it clocked it's highest ever annual revenue for FY23 of Rs 5,066 crore, up 63 percent YoY, led largely by the private labels and beauty segments.

In the light of all these growth pillars put in place by Nair, with results actually starting to show, his resignation comes as a negative for the company.

Analysts say the stock will now remain under some pressure in the near term as they keenly watch how Kavindra Mishra, who also comes with extensive retail experience, takes the company forward.

Before joining Shoppers Stop as chief commercial officer and CEO of Homestop, Kavindra Mishra was working as the managing director and CEO of House of Anita Dongre, which has brands like AND, Anita Dongre, and Global Desi.

Prior to that, he served as the managing director at Pepe Jeans India for a period of 6 years. He also con founded Zovi.Com, a start-up funded by Tiger Global & Saif Partners.