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Informist, Friday, Aug 9, 2024

By Anjali Singh

MUMBAI – Trent Ltd's key earnings metrics beat the Street's estimates for the fourth consecutive quarter in Apr-Jun owing to robust demand. The Tata Group-owned company reported a twofold on-year surge in net profit to 3.42 bln rupees, higher than the analysts' estimates of 3.13 bln rupees. However, the net profit fell 47.7% on a sequential basis.

The company announced its earnings during the market hours today, following which the stock rose nearly 730 rupees, or 13%, to hit a lifetime high of 6,373.85 rupees on the National Stock Exchange. Today, the stock closed 11.2% higher at 6,275.35 rupees.

The company, which operates Zudio, Westside, and Zara stores, reported revenue growth of 57.4% from a year ago to 39.92 bln rupees in the June quarter. Brokerages had estimated the retailer's revenue to grow 45.8% on year to 36.97 bln rupees. The revenue was also higher than the highest estimate of 38.43 bln rupees by Kotak Institutional Equities. 

In the March quarter, Trent surprised the market after reporting a more than sixfold on-year rise in net profit to 6.54 bln rupees on the back of aggressive store additions, strong same-store sales growth, and an exceptional gain. The company's bottom line fell sequentially in the June quarter due to a one-time gain of 5.43 bln rupees in Jan-Mar from reassessing estimates for recognising right-of-use assets, including related deposits, and lease liabilities. This came after a periodic review of store portfolio and consolidation or closure of existing stores that are not representative of the brand proposition, the company said. 

WESTSIDE AND ZUDIO

Trent opened 25 stores during the quarter, missing estimates of 50 additions by Nuvama Institutional Equities. Of these, 16 were Zudio stores, taking the brand's total to 559 stores as of Jun 30. The company opened six Westside stores, while 10 stores of the brand transitioned, taking the total number of stores for this brand to 228 from 232 a quarter ago.

"Both Westside and Zudio witnessed consistent and encouraging traction notwithstanding headwinds including the heatwave conditions in certain parts of the country and the general elections," the company said in a press release. 

"The gross margin profile of Westside and Zudio continues to remain consistent with earlier trends registered by us," the company said. Its earnings before interest and tax margin rose to 10.6% in the June quarter, against 7.8% a year ago. After stripping out the impact of store additions and closures, the company's like-for-like growth during the quarter was in double digits on year, Trent said.  End

Edited by Deepshikha Bhardwaj

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