Tata Trent riding high on positive consumer response and good revenue growth

08 September 2023, Mumbai

Tata Group’s retail arm Trent is on a bull run. Last month, Trent released its unaudited financial results which showcased that despite the market being in dormancy, Trent experienced encouraging revenue growth during Q1FY24.

The change in revenue profile across formats continued to remain aligned with its expansion strategy.

Opertaional leverage; Operating EBIT margin for Q1FY24 was 8.8 percent. Business performance and its growth momentum have encouraged the retail giant to continue its expansion agenda over the medium and long term said a Trent communiqué.

Optimism

At the end of Q1 2023-24, Trent had added seven Westside and 40 Zudio outlets across 35 cities, bringing the total to 221 Westside outlets, 388 Zudio outlets, and 23 outlets of other lifestyle concepts across India.

Indeed, good Q1 results can be attributed largely to a year of subdued discretionary spending by Indian consumers, and the economy’s growth has brought back consumer confidence and therefore discretionary spending again.

Solid results across the board

Commenting on the good results, Noel Tata, Chairman, Trent said, “Our lifestyle offerings across concepts, categories, and channels continue to witness strong momentum in Q1FY24. We continue to see growing relevance for our offerings, resilience in our business model choices, and attractiveness in our differentiated platform.

We will further expand our reach with vigor with the aim of being ever more proximate and convenient to customers reinforcing our brand promise.” He added the growing acceptance of Trent brands demonstrates the attractiveness of its platform and tremendous potential to address opportunities that lie ahead.

Nuances

The company now has 632 fashion stores as 49 stores were added just in Q1FY24.

Standalone revenues were up 54 percent over Q1FY23 while CAGR over Q1FY20 was up 35 percent for revenues and 22 percent for profit before tax. Hypermarket format Star Bazar’s revenues were up 33 percent with a CAGR over Q1FY20 up 20 percent.

As soon as the results were declared Trent shares went up 4.4 percent. The stocks have given 53 percent returns since January 1 and 45 percent returns in the last year. The company reported a compounded profit growth of 26 percent in five years and its return on equity grew at a CAGR of 3 percent in the last five years.

A performing portfolio

The primary customer propositions of Trent include Westside, one of India's leading chains of fashion retail stores, Zudio, a one-stop destination for great fashion at good value and Trent Hypermarket which operates in the competitive food, grocery, and daily needs segment under the Star banner.

Trent’s new fashion concepts include Samoh, a differentiated and elevated occasion wear offering, and Misbu which offers a range of beauty, personal care, and fashion accessories. Zudio; Meanwhile, experts concur, that the value fashion brand Zudio seems to be emerging as the leader that will drive Trent’s growth thanks to its benefits of scale and product differentiation.

Dipstick

In Q1FY24, the company’s fashion concepts registered encouraging growth of over 12 percent compared to Q1FY23.

Online revenues through Westside.com and other Tata Group platforms contributed 4 percent of Westside revenues for the quarter.

Westside.com contributed 32 percent of the overall online revenues. Emerging categories now contribute over 19 percent of Trent’s standalone revenues.

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