Reliance Retail, the retail arm of Reliance Industries Ltd (RIL), clocked a massive 52 percent year-on-year (YoY) growth in revenue at Rs 58,569 crore for the quarter ended June 2022 (Q1). The company's revenue in the first quarter of FY22 was at Rs 38,563 crore. The sequential growth in retail topline was nearly 1 percent.
Reliance Retail’s net profit for the quarter stood at Rs 2,061 crore, a YoY jump of 114.2 percent as compared to Rs 962 crore reported a year ago.
The strong performance partly came on the back of the low base of last year when operations were hit due to the second wave of the COVID-19 pandemic. June quarter, however, was the first normal quarter after two years of disruption due to Covid and this, too, helped Reliance Retail's performance in the period.
“Q1 has been a fully-normal quarter since the onset of COVID two years back. During this period, all our stores have fully been operational. This also resulted in regaining of footfalls across the nation through all our formats and geographies. Our footfalls are 119 percent higher than pre-Covid levels resulting in about 175 million walk-ins across all our formats,” said Gaurav Jain, head, Reliance Retail, while addressing a post-results briefing virtually.
Jain said consumer sentiments remain positive, though a bit cautious on the discretionary spend due to the inflationary concerns
The retail arm posted an operating EBITDA (Earnings before interest, taxes, depreciation, and amortisation) of Rs 3,897 crore, up 180.4 percent YoY, with a 350 basis points improvement in the margin at 7.6 percent, compared to 4.1 percent in the corresponding quarter of the previous year.
“This was led by higher contribution from fashion and lifestyle and consumer electronics and growing operating leverage with strong like-for-like growth over last year across consumption basket,” the company said.
Reliance Retail said its registered customer base crossed a milestone of 200 million during the quarter and the customer base stood at 208 million at the end of the quarter, up 29 percent YoY. Also, the company opened 792 stores during the period and now has overall of 15,866 stores with an area of 45.5 million square feet across the country.
“The business continues to bolster its supply chain capabilities with the addition of 79 warehousing and fulfillment locations measuring 3.3 million square feet of space added during the quarter,” it said.
According to the company, even as stores return to normal operations, the digital commerce platforms continue to grow with daily orders up 64 percent YoY.
Reliance Retail’s new commerce operations, which include the company’s e-commerce platform JioMart, sustained its growth momentum in the quarter gone by and onboarded merchants across new geographies and consumption baskets. The merchant base of new commerce scaled up by three times in Q1, the company said.
“Digital and new commerce grew over two times as compared to last year and contributed about 19 percent of gross revenue,” it said.
The company also continued with its partnership and acquisition momentum during the quarter and signed a master franchise agreement with GAP Inc, a leading American Fashion brand, Tod’s, an Italian luxury lifestyle brand, and Pret A Manger, fresh food and organic coffee chain.
Reliance Jio Q1 Results | Net profit rises 24%, topline 21.6% on higher per-user revenue
In addition, Reliance Retail has acquired Catwalk, a leading women’s footwear brand, and the India franchise rights for Sunglass Hut, a multi-brand premium eyewear retailer. The company has also formed a joint venture with Plastic Legno SPAs by acquiring a stake in the toy manufacturing business in India.
Reliance Retail added over 17,000 jobs during the quarter and the total employee count stands at about 3,79,000.
Consumer Electronics
Reliance Retail said it continues to maintain its leadership position in the consumer electronics segment, which houses brands like Reliance Digital and JioMart Digital. According to the company, the segment doubled its business over last year led by broad-based growth across categories of air conditioners, mobiles, laptops, and high-end TVs.
“We saw uptick in sales of phones air conditioners, laptops and TVs all of these categories more than doubled year on year. Our relationship with the brands helped us create specific launches, events, models that we could retail across all our stores on an exclusive basis,” said Jain.
Focused promotions during the IPL for TVs and for productivity devices during back-to-school helped capture consumer demand also helped the company
The retail major’s own brands portfolio or private labels continued to scale up rapidly and grew sales by six times over the last year, JioMart Digital’s revenue, too, grew by three times as compared to the same period last year.
Fashion and lifestyle
The company’s fashion and lifestyle business that houses brands like Reliance Trends, Ajio, grew by three times in Q1 as compared to the corresponding period last year driven by regional festivities and promotions resulting in all-time-high average bill values and healthy conversions.
“Men’s formal wear, women’s western wear and footwear witnessed strong growth as offices, schools re-opened and consumers resorted to refreshing their wardrobes,” Jain said.
Fashion marketplace Ajio, it said, continued to attract customers even as footfalls to stores returned to normative levels. “This is reflected in the shopping value which is twice for >1-year customers compared to new customers who are on the platform for under 90 days.”
The luxury business grew by five times over last year driven by fully operational mall stores and in-store events. The business through AJIO Luxe scaled up over six times as compared to last year with presence of nearly 400 brands and over 38,000 options on the platform.
Reliance Jewels, too, the company said, delivered a strong quarter with revenues up nearly three times over last year driven by strong festive sales, wedding season and network expansion.
The lingerie business grew nearly five times YoY as the businesses scaled up their online offering and offline distribution.
“With Amante, Clovia and Zivame as part of its portfolio, Reliance now caters to all the price segments across the lingerie business,” the company said.
Furniture retail brand Urban Ladder, acquired by Reliance Retail in 2020, has more than doubled its revenue over last year, according to the company.
“The business strengthened its own brand portfolio with multiple new brand launches in customizable sofas ‘Create’ and recliners ‘LazeON’ and launched two home brands with each focusing on traditional ‘aara craft’ and contemporary designs ‘Gypsy Trunk’.
Grocery and pharma
Reliance Retail’s grocery business, the company informed, recorded its highest ever revenues and doubled its business over last year.
“Being a pan-India player, Reliance Retail has utilized its network, scale and efficient sourcing to optimize product prices to reduce the burden of inflationary pressures on our customers. We have kept prices of key daily consumption items low to reduce the inflationary impact on consumers’ wallet,” it said.
The business has also been focusing on increasing the share of non-food categories to. Through these concerted efforts, share of non-food categories have increased by 470 basis YoY during the period, said the retail major.
During the period, business launched two new brands - ‘Bubbles’ in soft drink & ‘Joyland’ in confectionary to an encouraging response.
The e-commerce marketplace JioMart is now present in 268 cities and its merchant base in Q1 jumped by four times over last year as the business focused on onboarding HoReCa and institutions in addition to Kirana merchants. The business augmented supply chain infrastructure with the addition of 33 new fulfillment centers including four cold chain facilities for faster delivery to the merchant partners.
“The growth in JioMart Kirana orders is driven by increased merchant penetration and addition of region-specific assortment in commodities,” it said.
Pharma business, too, nearly doubled over last year on the back of stronger store performance as well as digital commerce platform, Reliance Retail said. “To enhance customer shopping experience, 80 percent of the store network is now hyperlocal enabled which is helping in faster deliveries to customers.”
The business is quickly ramping up its presence with reach scaled to over 2,400 towns, while merchant base increased by 50 percent over same period last quarter.
The way ahead
The company aims to capture larger India opportunity through continued store expansion while at the same time further strengthen its digital commerce and omni-commerce capabilities.
“Our digital commerce and omni-channel capabilities have been resulting into much stronger engagement with our customers as they shop at the stores as well as our platforms; so we will continue to strengthen that part,” said Jain.
Reliance Retail also plans to keep onboarding new merchants and increase the share of wallet to strengthen its new commerce business. “We will look at strengthening the entire supply chain infrastructure as well as the product and design capabilities. And further scale up all the businesses that we have acquired and also partnered with over the period of time,” added Jain.
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