Motilal Oswal: Trent — Best In Class Apparel Retailer

Motilal Oswal Report

Trent Ltd.’s consolidated revenue/profit after tax grew 33%/9.2% to Rs 34.9 billion/Rs 1.1 billion in FY20. Standalone revenue growth of 26% was led by strong performances from Westside (up 16%) and Zudio – its freshly established Value Fashion Retail brand (up 2.5x, 16% contribution). The brands were supported by strong same-store sales growth (SSSG) and store adds. While the current Covid-19 situation has impacted store adds, the management’s comments have eased some concerns. A) India’s Retail industry ranks among the top 5 retail markets globally (consumer category targeted by Westside). B) Value Fashion accounts for approximately 75% of the market (consumer category targeted by Zudio). C) The industry focus is on supporting in-house brands in achieving margin accretion and better control over the product life cycle (100% private labels). These three factors underscore Trent’s growth levers.

The company revealed that 70 stores had resumed operations on the easing of the Covid-19-led lockdown, but our channel check suggests more than 200 stores (approximately 80%) are now operational. Key management changes include: a) Stephen Rayfield’s appointment as CEO (ex-Marks & Spencer; he replaced Philip Auld who has led Trent for the last 10 years), and b) Venu Nair’s appointment as Westside CEO (formerly served as Chief Commercial Officer).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.