Reliance Retail Reports Mixed Q1 Results Amidst Strategic Shifts
India’s foremost retailer, Reliance Retail Ventures, has divulged a notable 14.2% decline in net profit, which amounted to ₹2,806 crore for the quarter ending in June.
In contrast, revenue from operations showcased an 8.2% year-on-year increase, achieving ₹79,745 crore. The company’s growth trajectory was somewhat hindered by the demerger of its fast-moving consumer goods (FMCG) segment last December.
Notably, Reliance Consumer Products (RCPL)—the branch managing the FMCG business—experienced a remarkable doubling of gross revenue, totaling ₹8,600 crore during the same quarter, although precise Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) figures were withheld.
During the earnings presentation, management articulated the robust sales generated under the Independence brand, which reached ₹3,200 crore in the quarter. Additionally, beverages spearheaded by Campa contributed ₹2,900 crore to this figure.
In terms of retail performance, the company reported that sectors including grocery, fashion, and consumer electronics exhibited double-digit growth.
However, operating margins have come under persistent pressure for the third consecutive quarter, attributed to the expanding share of e-commerce sales and the burgeoning investments in digital infrastructure, which have escalated fixed costs.
Isha M. Ambani, Executive Director of Reliance Retail, emphasized the company’s resilient performance during this quarter, highlighting growth across pivotal consumption baskets. “Our continued investment in digital commerce underscores the transformative power of our digital platforms,” she remarked.
Reliance Retail’s total gross revenue climbed 7.4%, reaching ₹90,408 crore. Excluding the divested FMCG sector, the gross revenue growth picked up to 11.6%. Sequentially, the EBITDA margin held steady at 7.9%, a dip from 8.7% in the same period last year.
The management anticipates continued pressure on retail margins in the ensuing quarters, as Reliance intensifies efforts to bolster its e-commerce operations, particularly in the realm of quick commerce.
Our three-year objective in retail is to double operating EBITDA through both growth and enhanced economics. We are laying the groundwork for our e-commerce enterprise and are prioritizing quality over volume.
As the business evolves, we expect improvements in capital returns and EBITDA. Should a market underperform, we shall recalibrate our strategies, stated Dinesh Taluja, Chief Financial Officer of Reliance Retail, during the briefing with analysts.
The company expanded its footprint by inaugurating 252 stores in the quarter, culminating in a total network of 20,169 stores spread over 78.4 million square feet.
Regarding the FMCG sector, Ketan Mody, Executive Director of RCPL, disclosed that Campa is set to enter the Australian market this month, with an expansion into Africa slated for the following quarter.
Additionally, Reliance has transitioned its beverage joint venture with Sosyo into a majority-owned subsidiary and is in the process of establishing an edible oil facility in West Bengal.
In the realm of grocery e-commerce, JioMart has registered a staggering 116% year-on-year growth in average daily orders, with online sales contributing to 13.4% of consumer grocery revenue.
The consumer electronics segment enjoyed a 16% annual growth, fueled by steadfast brand partnerships ensuring product availability amidst global supply chain challenges.
The fashion division reported a modest 4% revenue increment, bolstered by merchandise refreshes and store enhancements.
E-commerce transactions constituted 27% of apparel and footwear sales, an increase of more than 490 basis points from the preceding year.
The fashion quick-commerce platform, Ajio Rush, experienced an impressive 136% quarter-on-quarter growth in orders, while the Shein application surpassed 30 million downloads.
Source link: M.economictimes.com.
