Trent Q2 Preview: Revenue, net profit set to surge on store expansions, Zudio, Westside popularity

Healthy revenue growth is expected to continue due to store expansion.

The Tata group’s retail player Trent will share its earnings report for the second quarter of the current fiscal year on November 7. The retail major is likely to report industry leading revenue growth.

According to a Moneycontrol poll of five brokerages, Trent is likely to report a revenue growth of 51 percent at Rs 4,365 crore. Net profit is likely to come in at Rs 444 crore from Rs 290 crore from the corresponding quarter last year, jumping 53.2 percent on-year.

While the earnings estimates of analysts polled by Moneycontrol are not in a narrow range, they all predict a sharp surge in net profit and revenue for Trent. The most optimistic estimate sees Trent’s net profit rising 73 percent on-year, while the most pessimistic projection sees a rise of around 37 percent.

What factors are impacting the earnings?

The topline is expected to surge as a result of retail expansion in Zudio and healthy store productivity levels, noted experts.

Value Fashion: As consumers tighten their belts, the demand for premium lifestyle fashion has gone down, while value retailers are likely to see double-digit growth. A contrasting trend emerged, as premium players are expected to deliver subdued performance due to weak demand environment. As a result, this will lead to healthy SSSG or same-store-sales-growth for Trent, along with strong footprint additions.

Margins: Gross margins are expected to improve around 150 basis points on-year, but remain stable on a quarterly basis, said Nuvama Institutional Equities. However, PhillipCapital modelled a 33 basis points on-year contraction in gross margins as a result of increasing expenses, such as employee costs and rent.

Store Expansion: Healthy revenue growth is expected to continue due to store expansion. It is anticipated that Westside and Zudio will expand their presence by adding between 2 and 25 new stores during the second quarter of fiscal year 2025, as per Motilal Oswal. On the other hand, Nuvama Institutional Equities predicts that Trent might report 15 store additions for the quarter gone by.

What to look out for in the quarterly show?

Analysts will closely monitor demand and the commentary on demand trends in metro areas and tier-3 towns, especially during the festive period. They will also pay attention to store expansion plans.

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