Trent Ltd. Q2FY25: Resilient Growth Fueled by Expansion, Navigates Weak Consumer Demand

– Revenue for Q2FY25 stood at Rs. 4,157 crores, up 39.4% YoY and 1.3% QoQ, but missed street estimates of Rs. 4,388 corers, due to muted consumer sentiment and seasonality. Despite these challenges, the business performed well and gained traction in new categories, channels, and brands, such as footwear, innerwear, and beauty & personal care, which together now account for more than 20% of total sales.
– During the quarter, the company added 7 Westside and 34 Zudio stores (including 1 in Dubai) in 27 cities, and closed 9 Westside and 16 Zudio stores. This brought the total to 226 Westside stores, 577 Zudio stores, and 28 stores across other lifestyle brands.
– In Q2FY25, the company’s fashion concepts, including Westside and Zudio, achieved strong double-digit like-for-like growth despite seasonality challenges, driven by successful expansion plans and the management’s focus on delivering value through fashionable offerings at affordable prices.
– In Q2FY25, the star business saw a 27% rise in revenue, with a 14% like-for-like growth. This strong performance was driven by growth in its brands, everyday products, fresh items, and general merchandise, which contributed 73% of total revenue and reflected better overall performance. With 74 stores (adding 2 in Q2 and 8 in H1FY25), the business witnessed more customer interest and higher sales per store.
– The overall EBITDA up 41% YoY / up 5% QoQ to Rs. 643 crores, missing market expectations of Rs. 670 crores. The EBITDA margin stood at 15.5% in the quarter compared to 15.3% in the corresponding quarter of last year.
– Profit after Tax stood at Rs. 335 crores (up 47% YoY / down 14% QoQ) in Q2FY25.

View of Akriti Mehrotra, Research Analyst, StoxBox

 In Q2FY25, the company delivered strong results despite muted consumer sentiment and seasonality challenges, which impacted the retail sector. This performance was driven by successful expansion plans and a focus on offering fashionable products at affordable prices. Key milestones during the quarter included the launch of the first international Zudio store in the UAE and the introduction of Zudio Beauty in India, reflecting the company’s commitment to expanding its brand footprint and exploring new growth opportunities. The Star business, leveraging Trent’s proven strategy, has seen strong customer traction, with the success of its own-branded products supporting growth. Management is confident that the Star business can continue to accelerate and deliver significant value to both customers and shareholders. Looking ahead, the company remains optimistic about the potential of its direct-to-consumer business, especially with its expanding store network. Key focus areas include demand trends across metros and Tier 2/3 towns, as well as the progress of store expansions, which are crucial for future growth.