Trent Shares Plunge: Q3 Revenue Miss Puts Apparel Major Under Pressure

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AuthorIshaan Verma|Published at:
Trent Shares Plunge: Q3 Revenue Miss Puts Apparel Major Under Pressure
Overview

Trent's Q3 revenue growth fell short of Street estimates for the sixth consecutive quarter, sending shares down 8.6% on Tuesday. Despite aggressive store expansion, revenue per store declined 11% year-on-year, raising concerns. Brokerages remain divided, with near-term pressure expected.

Trent, the Tata group apparel retailer, saw its shares tumble 8.6% to ₹4,047 on Tuesday, trading near a 52-week low. The decline followed a third-quarter revenue performance that missed market expectations, a trend now seen in six consecutive quarters.

Weak Revenue Growth

The company reported 17% year-on-year sales growth for the quarter ended December, falling short of Street estimates. Over the nine months of fiscal year 2025-26, revenue grew 18%. Analysts at Motilal Oswal noted that this expansion was primarily fueled by a significant 28% year-on-year increase in store count. However, revenue per store contracted by 11% year-on-year, suggesting continued cannibalization.

Aggressive Store Expansion Continues

Trent aggressively expanded its store footprint in the quarter, adding 48 Zudio stores and 17 Westside stores net, bringing the total to 854 and 278 locations, respectively. Zudio's rapid growth has seen hundreds of new stores added annually. Westside also saw an acceleration in store additions compared to previous years. The company operates 1,164 stores across all formats. Antique Stock Broking anticipates some moderation in Zudio additions and a pick-up at Westside.

Analyst Outlook and Margin Trends

Despite a recent 9% rally in Trent's stock since December 19, the weak revenue numbers could dampen sentiment. Earnings downgrades are anticipated. Motilal Oswal maintains a 'buy' rating. Brokerages like Citi Research remain cautious with a 'sell' rating, while Morgan Stanley and UBS hold 'overweight' and 'buy' recommendations respectively, with varied price targets. Focus will also be on margin trends. While gross margins dipped in Q2, operating margins improved due to rationalized employee and rental costs. These efficiencies are expected to persist in the second half of FY26.

Long-Term Prospects

Antique Stock Broking projects robust revenue and operating profit growth through fiscal 2028, driven by disciplined scaling, Westside momentum, and cost efficiencies. They view Trent as an outperformer.

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