Trent plunges near 6% despite stable Q1 financial earnings


Trent plunges near 6% despite stable Q1 financial earnings



Trent Limited has announced its financial results for the first quarter ended June 30, 2021 (standalone and consolidated).

Standalone Results
  • The covid 2nd wave related disruptions significantly impacted the operations during Q1. Fashion business (Westside and Zudio) operated for 46% of the trading days, up from 26% in the corresponding previous period. However, by the close of the quarter, the company was operational for over 80% of the trading days. The latter part of first quarter saw the pandemic related restrictions ease considerably aiding sentiment and improving consumer traction.
  • In this backdrop, revenue from operations recovered to Rs327cr registering a 240% growth over the corresponding previous quarter. This coupled with various cost mitigation measures, including with respect to property related payouts and operating expenditures, led to significantly lower loss from operations of Rs89cr (Rs171cr loss in Q1 FY21).
  • The company continues with the initiative of crystallizing reductions in rent and related charges. As required by the applicable standards, Rs35cr have been accounted as part of other income notwithstanding their operating nature.
  • 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 Rs25cr in Q1 FY22. Other income primarily includes rent waivers, investment & dividend income / fair value changes and recognition of Ind AS 116 impact of lease modification / termination.
  • It is encouraging to note that in recent weeks, over 90% of our stores are operational on most days of a week with local restrictions being increasingly eased. We are witnessing a sharp recovery in our fashion business with July registering revenue recovery of over 80% vis-à-vis FY20 levels. Post the first wave, this level of recovery only played out several months following the reopening, said company.
  • The customers continue to increasingly leverage the convenience of our digital platforms with the online channel registering close to 200% growth in Q1 over corresponding quarter. Trent continues to register over 5% of Westside revenues through online channels. Digital content and social media initiatives are increasingly central to our ongoing communication of the customer offer. The synchronization of these efforts with product launches each week has improved engagement across our target audience.
Consolidated Results
  • For Q1, the consolidated revenues of Rs492cr was a growth of 98% over the corresponding previous period. Loss after tax as attributable to the equity shareholders of the company was Rs127cr vis-à-vis a loss of Rs178cr in Q1 FY21.
  • The consolidated results also incorporate the Ind AS 116 lease accounting requirements. The net effect of Ind AS 116 on the reported loss before tax for the year was an adverse impact of Rs28crs.
Speaking on the performance, Noel N Tata, Chairman, Trent Limited said, “The second wave and the aftermath disrupted our operations across our concepts in the recent months. 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 continue 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.

While we cannot predict how quickly we will see the back of this crisis, we know that it will get behind us, especially given the substantial vaccination program. And when it does abate, customer demand should further grow robustly. We are confident that the business has the expertise and importantly the resilience to weather this crisis. 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.”

On Wednesday early trade, Trent Ltd is currently trading at Rs893.25 apiece down by 5.69% on Sensex.

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