Khemlani says group looking to expand
Published:Wednesday | February 9, 2011 | 12:00 AM
Plans to open new furniture stores
After its roller-coaster operation of recent years, that has included family feuds, closure of several stores and an aggressive foray into the controversial cash-for-gold business, Steve Khemlani said the family retail group is planning a new round of expansion centred on its furniture business.
Khemlani said he is scouting for venues for new stores and, with a budget of between $85 million to $100 million, hopes take advantage of the soft market for real estate to cut deals.
"We currently have our eyes on a few locations and we are negotiating for them," Khemlani, the CEO of the family operation, told Wednesday Business.
"The real estate market is very soft, therefore we are hoping to benefit by that," he said. "Obviously, we would not disclose where the locations are."
It was not clear how the group planned to finance this proposed round of expansion, including whether it would require taking on debt.
Big players
The Khemlanis have over the years, grown to be big players in the jewellery trade, with stores in the Corporate Area and elsewhere.
In the 1990s, the family, entering the commercial real estate market, built Manor Centre, a shopping plaza in the Constant Spring/Manor Park area of the capital, hoping to gain rental income for the stores there, even as they expanded their own operations.
Among the businesses they opened was a supermarket.
However, high interest rates that contributed to the financial sector collapse of the 1990s as well as apparently less-than-spectacular success of Manor Centre as a shopping venture, weakened that business' ability to service its debts and placed the Khemlanis in a long struggle to retain the property.
More recently, two brothers in the family have fought over the control of shares in an associated company.
Separately, the family has closed branches of its Lord and Lady clothing store, Jewelerama and the Khemlani Mart furniture operation, including a branch in Tropical Plaza, St Andrew, which Steve Khemlani suggested cost nearly $100 million to set up in 2006.
Since the significant down-sizing in 2009, Khemlani, driven by the rising price for gold that spawned the TV-promoted trend of the purchase of old gold jewellery, the Khemlanis entered the-cash-for-gold business.
Cash-for-gold trade
Even the furniture stores are used as locations for the purchase of gold jewellery, helping to formalise a growing street trade, which is often done illegally and has contributed to robberies.
In the second quarter of 2010, according to Steve Khemlani, the cash-for-gold trade was rivalling the value of furniture sales.
"All indications suggest that the US economy is improving and my colleagues in the US are certainly experiencing that," he said. "This, I think, will certainly help our tourism."
Additionally, the Jamaica government's rescheduling of $700 billion of domestic debt a year ago - a scheme dubbed the Jamaica Debt Exchange (JDX) - appears to have brought stability to the domestic economy, Khemlani said.
"The JDX seems to be working and the banks are bringing down interest rates, albeit not fast enough. Inflation seems to be in check and the Jamaican dollar is quite stable [and] crime is also on the decline. Therefore, all the indicators would be right for growth."
It was in that context, Khemlani said, that he was looking not only for new locations for furniture stores, but to "expand the existing ones".
There are Khemlani Marts in at Manor Centre, Portmore, Mandeville and Montego Bay.
His preference, Khemlani said, would be to purchase new venues outright. He would, however, be willing to lease if a prime location was available and that was to the only way to acquire it.