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Reliance Retail back to pre-COVID levels led by strong growth in fashion and lifestyle categories

The retail arm of Reliance Industries posted an 11 percent year-on-year jump in its revenues to Rs 45,426 crore for the second quarter-ended September, while net profit jumped by 74 percent to Rs 1,695 crore as compared to the same period last year.

October 22, 2021 / 11:35 PM IST
With the easing of COVID-related restrictions, retail business' operating days available jumped from 61 percent last quarter to 89 percent (Image: Shutterstock)

With the easing of COVID-related restrictions, retail business' operating days available jumped from 61 percent last quarter to 89 percent (Image: Shutterstock)

 
 
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Reliance Retail, the retail arm of Reliance Industries, posted strong quarterly results for the second quarter (Q2) on Friday as strong momentum in its lifestyle and fashion business propelled the business to the pre-COVID levels. According to the company’s management, the fashion and lifestyle category which includes brands such as Reliance Trends, AJIO, Reliance Brand and others grew by over two times during the September quarter as restrictions eased further and consumers flocked back to the stores.

“Retail had a very good quarter and our revenue has crossed pre-COVID levels. We grew about percent as compared to Q2FY21 but we are ahead of even Q2 of FY20,” said Dinesh Thapar, Group Chief Financial Officer, Reliance Retail while addressing a media briefing after announcing the second quarter results.

Reliance Retail posted a 10.5 percent year-on-year (YoY) jump in its Q2 gross revenue to Rs 45,426 crore as compared to Rs 41,100 crore reported in the year-ago period. The company’s net profit for the period climbed by 74 percent YoY to Rs 1,695 crore as compared to Rs 973 crore in the same quarter last year. Sequentially, Reliance Retail’s quarter-on-quarter gross revenue jumped by 18 percent and net profit by 76 percent. The company had reported a revenue of Rs 38,547 crore in the first quarter, and a net profit of Rs 962 crore.

The company posted an EBIDTA of Rs 2,913 crore, up 45.2 percent YoY and 50 percent QoQ, driven by fashion and lifestyle, cost management and investment income.

Recovery on track

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Recovery in footfalls and sales as restrictions eased helped the company register growth across categories but especially in fashion and retail which were the star performers of the quarter. With COVID-related restrictions easing, the business recorded higher store operating days at 89 percent compared to 61 percent last quarter while footfalls recovered to 78 percent of pre-COVID levels compared to 46 percent last quarter.

“We are now getting back to normal; footfalls were at 78 percent in Q2 and in October we are getting closer to 90 percent recovery in footfalls,” said Thapar.

“The sentiment has also distinctly improved and we have seen demand come back in a big way across the country. We have had a good festive season and due to relaxations and increased pace of vaccination people are out shopping across our stores,” he added.

As curbs eased, the company resumed its expansion plans and added 813 new stores during the quarter taking the total count to 13,635 stores across 37.3 million sq ft. retail space while the business commissioned 86 warehouses and fulfilment centres spread in an area of 2.5 million square feet of space to bolster its service capabilities.

Star performers: Fashion and lifestyle

Fashion and lifestyle though is yet to recover its footfalls, which still stand at 70 percent, the higher conversion in the business led to record high growth.

“We have activated the right product portfolio at the local level for the festivals and that is driving the conversion in this business,” said Thapar.

AJIO, too, recorded another quarter of highest ever revenues on the back of impactful activation, strong event execution, and wider catalogue, the company informed.

In the consumer electronics category, the company saw strong double-digit growth in store sales. Reliance Digital website, said Thapar, is back to delivering from 90 percent of locations and has extended its reach to over 2000 cities and towns. The company also launched 48 new stock-keeping units category continuing with its portfolio expansion during the quarter.

Reliance Retail’s grocery segment too performed strongly during the quarter.

“Grocery’s double-digit growth momentum has continued due to higher operating hours. As the operating curbs were imposed, we were not able to sell products in the non-essential categories and now as that has eased out, this part of the business has come back in a big way,” said Thapar.

The company has reached 400 stores milestones for its Smart Super after adding 200 stores over the last two years, 50 percent of which are in tier II and below towns.

Its online grocery platform JioMart, said Thapar, continued to scale new heights. The platform recorded 3.7 million orders within two days of the sale event ‘Tak Dhina Din’.

According to Thapar, the company’s new businesses such as Netmeds, Zivame, UrbanLadder are also witnessing rapid growth. Netmeds, he said, has doubled its store footprint, while its traffic is up 48 percent. Zivame, similarly, has added 15 new stores and extended its products to AJIO, Avantra by Trends and SMART stores.

The plan ahead

As the economy gets out of the woods, Reliance Retail plans to push ahead with aggressive growth plans and execute the rapid rollout of stores.

“Now with markets opening up and normalcy coming back we would like to rapidly roll put stores that are in various stages of development,” said Thapar.

“We also plan to expand digital commerce and service capabilities and invest in technology,” he added.

The company plans to accelerate new commerce and merchant onboarding across businesses, ramp up grocery and fashion lifestyle, and expand its coverage.

Disclaimer: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Devika Singh

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