Despite a persistent weakness in consumption, leading retailers in the country have managed to report decent sales, profit, and margin growth in the fourth quarter of FY24 on the back of a clever product and portfolio mix.

India’s largest retailer Reliance Retail’s revenue growth slowed in the quarter, but it was still at a decent 11 per cent. The company’s net profit growth was 11.7 per cent and EBITDA margin was 60 bps higher at 8.3 per cent compared to a year ago period.

Tata owned Trent, which has been consistently reporting robust quarterly performances, delivered 51 per cent growth in revenue. Its profit grew over 500 per cent due to one-time gains from lease readjustments, and its EBITDA was up 480 bps at 15 per cent. Like-for-like store growth was at a decent 10 per cent.

Avenue Supermarts, which runs DMart stores, saw 20 per cent rise in revenue. Its net profit was up 22.5 per cent, and EBITDA rose 22 per cent, though the margin growth was flat. Like-for-like store growth was nearly 10 per cent.

Growth drivers

It was the slowest quarter for Reliance Retail in the last three years and part of it was primarily due to store rationalisation and the higher base and partly to the slowdown in discretionary spend. Consumer electronics, fashion and lifestyle segments drove growth for the company.

The Mukesh Ambani-led company has been busy tying with up global apparel brands to bring them to India.

The focus was on premiumisation in many of the categories as buying is still sustained at the upper end of the consumer segment.

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JioMart accounted for a good part of the sales growth on festivals and event-led sales.

It added 562 stores in the quarter with gross area of 7.8 million square feet and is inching closer to the 19,000-store count.

Trent has been surprising the Street with its market-beating performance and the growth last quarter was driven by increased footfalls, good scale-up in the Zudio format, higher productivity, resulting in like-for-like store growth.

Despite the headwinds, the growth in company’s store additions was 37 per cent in the quarter. It added 12 Westside stores and 86 Zudio stores.

Zudio, the value format, accounted for for 53 per cent of the revenue of the company and it is expected to go up to 60 per cent by FY26.

“We believe Zudio has a clear path to scale up to 2,000 stores over next 7 years,” ICICI Securties said.

Its hypermarket chain Star Bazaar’s revenue rose 30 per cent driven by healthy performance of own brands, which contributed 60 per cent to the revenue. Revenue from general merchandise and apparel, staples and fresh grew 30-60 per cent, while FMCG grew at a slower 17 per cent.

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DMart, which has been seeing erratic performance of late, reported that sales per store was up 7 per cent and food was the main growth driver for the retailer. The revenue per square foot increased 6 per cent to ₹32,941. This is much higher than Reliance Retail’s ₹6576 per square feet.

The quarter showed an uptick in general merchandise and apparel though the segment’s share in total revenue saw a dip. Prabhudas Lilladher pointed out that consumers might be more inclined to shop for apparel at value formats such as Zudio and Reliance Trends rather than at hypermarkets.

Reliance Retail is still in growth mode but with slowing capex, the focus is on consolidation and expanding its reach through omnichannel offerings, strengthening its logistics, product development and continuing premiumisation.

Trent’s future growth is expected to come from its store expansion and assortment of refreshments across all store formats.

Pick up in store additions and an improvement in consumption are likely to be be the growth drivers for DMart.