Trent Ltd. posts 11% profit growth on sales, cuts stake in Zara JV

Trent Limited announced an 11 percent rise in its net profit for the second quarter of the fiscal year, supported by healthy sales growth primarily fueled by the opening of new stores. The company also confirmed a strategic move to reduce its stake in its joint venture, Inditex Trent Retail India, which manages the Zara brand operations in India. Inditex Trent Retail India plans to buy back 94,900 shares from its shareholders, and Trent Limited has agreed to tender its shares for this buyback, consequently lowering its stake in the JV from 49% to 34.94%. Trent reported a consolidated net profit of ₹377 crore on revenues amounting to ₹4818 crore. Despite facing a relatively muted consumer sentiment and headwinds from unseasonal rains during the quarter, the company demonstrated resilience. Trent aggressively expanded its retail footprint, adding 19 Westside stores, 44 Zudio stores, and launching its youth-focused fashion brand 'Burnt Toast'. It concluded the quarter with a significant presence across its lifestyle portfolio, including 261 Westside stores, 806 Zudio stores, and 34 other outlets. The company is focusing on expanding into newer Tier 2 and Tier 3 cities, along with emerging catchments near metropolitan areas. Operating EBITDA saw a healthy 14% year-on-year increase, reaching ₹575 crore. Chairman Noel Tata expressed a focus on portfolio growth, product enhancement, and customer experience, while noting that potential GST rate cuts could benefit their product categories. He also highlighted confidence in building a scalable direct-to-customer business. Emerging categories like beauty, personal care, innerwear, and footwear now contribute over a fifth of total revenues, and online sales surged by 56%, making up over 6% of Westside's revenue.

Impact This news is likely to positively impact Trent Limited's stock due to its profit growth, aggressive store expansion, and strategic focus on direct-to-customer sales, indicating strong operational performance and future potential in the Indian retail market. The stake reduction in the JV, while reducing direct control, allows Trent to focus resources on its core brands and expansion plans. Rating: 8/10

Heading Difficult Terms and Meanings: Consolidated Net Profit: The total profit of a company after accounting for all expenses, taxes, and interest, including the profits of its subsidiaries. Revenue: The total income generated by the sale of goods or services related to the company's primary operations. Joint Venture (JV): A business arrangement where two or more companies agree to pool their resources for the purpose of accomplishing a specific task. Tender Offer Route: A method for a company to buy back its own shares from existing shareholders, offering to purchase them at a specified price within a set timeframe. Stake: An investor's ownership interest in a company, expressed as a percentage of the total shares. Headwinds: Factors that hinder progress or make a situation more difficult. Operating EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization, representing a company's operating performance before accounting for financing and accounting decisions. Like for like growth: A measure of growth that compares performance in the current period to the same period in the previous year, excluding the impact of new stores or acquisitions. GST (Goods and Services Tax): A consumption tax imposed on the supply of goods and services in India.