Trent Q3 Preview: Revenue may grow in double-digits, profit to jump on strong footprint additions in Westside, Zudio

Trent's healthy revenue growth is expected to continue due to store expansion.

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Zudio and Westside parent Trent will share its earnings report for the third quarter of the current financial year on February 6, 2025. The Tata group major is likely to report industry-leading revenue growth, as value fashion remains an outlier amid a muted consumption environment.

According to a Moneycontrol poll of five brokerages, Trent is likely to report a revenue growth of 39 percent year-on-year at Rs 4,613 crore, higher from Rs 3,313 crore reported during the same quarter last year

Net profit is likely to come in at Rs 505 crore from Rs 344 crore from the corresponding quarter of the previous fiscal year, jumping 47 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 67 percent on-year, while the most pessimistic projection sees a rise of around 11 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: Nuvama Institutional Equities expects Trent's gross margin to moderate about 50 bps
YoY, but improve 130 bps sequentially. While Nuvama expects Trent to report an EBITDA margin of 18.5 percent, slipping slightly, the overall consensus expectation sees EBITDA margins increasing 10 basis points on account of strong operating leverage.

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 1 and 56 new stores during the third quarter of fiscal year 2025. Compared to H1, Trent is likely to report a significant increase in store additions this quarter. "Furthermore, strong SSSG is anticipated, as indicated by the company's late entry into the end-of-season sales period," noted Nuvama.

What to look out for in the quarterly show?

Analysts will closely monitor demand and the commentary on demand trends in urband areas and tier-3 towns. They will also pay attention to store expansion plans.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.