Trent Share Tanks 11% As Business Update Misses Estimates, Slowing Growth Bothers Street

Mumbai, July 7: Trent share price witnessed sharp fall on Tuesday after the Tata Group retailer’s June-quarter business update failed to meet Street expectations, triggering a wave of cautious brokerage commentary despite continued store expansion and double-digit revenue growth. As of writing the stock was down 11.5% at Rs 2,960.

Revenue growth misses expectations

The stock plunged after Trent reported a 19% year-on-year increase in standalone revenue to Rs 5,666 crore for the quarter ended June. While the retailer maintained healthy growth, analysts had expected revenue to expand by around 22-23%, reflecting the premium expectations built into the stock.

Investors punished the stock for slowing growth in business. Source: NSE

The company attributed the growth to continued momentum across its fashion formats, particularly Westside and value-fashion chain Zudio. Revenue from the sale of products, net of other operating income, also rose about 19% from the year-ago period.

Expansion continues, but pace slows

During the quarter, Trent added 20 stores, including one Westside outlet and 19 Zudio stores. As of June-end, the company operated 301 Westside stores and 982 Zudio outlets. Its overall retail network stands at 1,312 stores.

However, brokerages noted that store additions were lower than anticipated, adding that the update suggested growth may be moderating after several years of breakneck expansion.

Brokerages flag productivity concerns

The quarterly update prompted several brokerages to reassess near-term growth assumptions.
One brokerage retained its ‘Sell’ rating, highlighting weaker-than-expected revenue growth, declining revenue per square foot and signs of slowing productivity. The brokerage also pointed to rising competitive intensity and execution risks as Trent expands into smaller cities.

Another brokerage maintained a Neutral stance, while other brokerages acknowledged that although the long-term story remains intact, near-term earnings may not fully justify the stock’s premium valuation.
With expectations running high, even a relatively modest miss on revenue growth was enough to spark heavy profit booking. The stock also suffered one of the biggest single-day erosions in market capitalisation this year as investors questioned earnings growth.

Source: https://www.nseindia.com/get-quote/equity/TRENT/Trent-Limited