Trent's Mixed Q2 Performance: Profit Growth Amid Expansion Drive
Tata Group's retail arm Trent Limited delivered a mixed performance during the September quarter, reporting profit growth that fell short of market expectations despite aggressive store expansion. The company's net profit increased by 11.34% to ₹373.42 crore compared to the same period last year, missing analyst estimates of ₹446.3 crore.
Revenue from operations showed 15.9% growth to ₹4,817.68 crore, though this also fell short of Bloomberg's analyst consensus of ₹4,998.30 crore. The muted growth comes amid softening consumer demand after a strong start to the fiscal year.
Aggressive Store Expansion Continues
Despite the earnings miss, Trent maintained its aggressive store-led growth strategy, adding 13 new Westside stores and 40 Zudio outlets during the quarter. This expansion underscores the company's commitment to physical retail presence despite uneven discretionary consumption patterns across the market.
As of September, Trent's retail network has grown significantly, now comprising 261 Westside stores and 806 Zudio stores, including three locations in the United Arab Emirates. The company now operates over 1,100 outlets across its various retail formats, solidifying its position as one of India's leading retail players.
Analyst Perspective and Future Outlook
According to an October 7 analyst note from Antique Stock Broking Ltd, "Trent continues to outperform peers. However, due to the high base, the growth trend looks to be moderating. It is well-positioned to navigate the competitive business environment in the medium to long term."
The brokerage highlighted that Westside will remain a key focus area for the company, noting that "a majority of the Westside stores were turned operational during September, which would contribute to revenue in the coming quarters." The report emphasized that Trent has already added 13 Westside stores in the first half of the current fiscal year, compared to annual additions of 14-18 stores during the previous three years.
The quarter also saw governance changes with the exit of independent director Susanne, who completed her five-year term with the company. This transition marks another chapter in Trent's evolving corporate structure as it navigates the challenging retail landscape.
While the company faces headwinds from softening consumer demand, its continued investment in physical retail expansion suggests confidence in long-term growth prospects, particularly through its successful Westside and Zudio formats that cater to different segments of the Indian retail market.
