Trent Limited reports earnings for Q2FY22

Trent Limited (the "Company"), has announced its financial results for the second quarter ended September 30th, 2021 (standalone and consolidated).

Standalone Financial Performance

• The second quarter saw sustained recovery from the covid 2nd wave related disruptions which had significantly impacted our operations during Q1. Our fashion business (Westside and Zudio) operated for 91% of the trading days, up from 46% in Q1. The later part of the quarter saw significant easing of pandemic related restrictions following the vaccination drives considerably aiding consumer sentiment.
• In this backdrop, the recovery of revenues coupled with various cost mitigation measures, including with respect to property related pay-outs led to improved operating profitability. Also, for the half year revenues at INR 1348 crores was a growth of 146% with a profit from operations at INR 49 crores compared with a loss of INR 230 crores in the corresponding period.
• We continue with the initiative of crystallizing reductions in rent and related charges. As required by the applicable standards, INR 12 crores have been accounted as part of other income in the current quarter notwithstanding their operating nature. We continue to engage with our property partners as in the previous periods.
• The reported results incorporate the IndAS 116 lease accounting requirements reflected across rent, depreciation, other income and finance costs in the statement of profit and loss. The net effect of Ind AS 116 on the standalone profit before tax was an adverse impact of INR 19 crores in Q2 FY22 and INR 43 crores in H1 FY22. Other income primarily includes rent waivers, investment & dividend income / fair value changes and recognition of Ind AS 116 impact of lease modification / termination.

Consolidated Financial Performance

• For Q2, the consolidated revenues of INR 1178 crores with a growth of 101% over the corresponding previous period and the profit after tax as attributable to the equity shareholders of the company was INR 93 crores vis-à-vis a loss of INR 72 crores in Q2 FY21.
• The consolidated results also incorporate the Ind AS 116 lease accounting requirements. The net effect of Ind AS 116 was an adverse impact of INR 19 crores for the quarter and INR 48 crores for the half year.

Operational Highlights

• Store portfolio: We continue to remain focused and committed to the accelerated store expansion agenda. As of date, 191 Westside and 147 Zudio stores are operational. Also, several additional stores are fitted out and ready to open once the necessary approvals are obtained/ the respective malls commence operations.
• Digital channel: Our customers continue to increasingly leverage the convenience of our digital platforms with the online channel registering over 95% growth in Q2 over previous quarter. We continue to register over 5% of Westside revenues through online channels with Westside.com accounting approximately 20% of these revenues. Digital content and social media initiatives are increasingly central to the ongoing communication of our customer offer. We have also launched exclusive styles on our online platform which is witnessing encouraging traction.

Speaking on the performance, Mr. Noel N Tata, Chairman, Trent Limited said, "The second wave and the aftermath disrupted our operations across our concepts in the first quarter. Nevertheless, we have been pleasantly encouraged by the rapid recovery in customer offtake starting from the middle of June as the business reopened in many markets.

Our fashion business has in particular recovered sharply and is now back to operating profitability. We have continued to focus on our expansion program, and I am happy to report that we are seeing good progress on building a strong pipeline, even as the constraints for actual opening to customers remains a challenge in the near term in the case of mall locations / select markets.

Increasingly, we are also convinced that the model we have pursued with our Star food business over the last couple of years - tight footprint stores, sharp pricing, focus on fresh etc is resilient and has strong economic viability. The customer traction witnessed by Star stores operating under this model has been encouraging. In this context, we are actively readjusting properties on the basis of this model and are looking to pursue a significantly accelerated expansion program.

While we cannot predict how quickly we will see the end of this pandemic, we know that it will get behind us, especially given the substantial vaccination program. We are confident that the business has the expertise and importantly the resilience to navigate and leverage this difficult phase. Near term uncertainties notwithstanding, we are continuing to focus on building out differentiated brands and strong expansion of our reach through stores and digital platforms."

Shares of Trent Limited was last trading in BSE at Rs. 1094.15 as compared to the previous close of Rs. 1092.65. The total number of shares traded during the day was 9177 in over 1013 trades.

The stock hit an intraday high of Rs. 1103.80 and intraday low of 1090.10. The net turnover during the day was Rs. 10058608.00.

Source : Equity Bulls

Keywords

TrentLimited INE849A01020 Q2FY22 H1FY22 ResultUpdate