Trent Ltd. share price falls as revenue growth moderates

Indian clothing retailer Trent Ltd., the owner of the Westside and Zudio brands, reported its second-quarter standalone revenue rose by 17 percent on Monday. This growth marks its slowest increase since the March 2021 quarter and fell short of the company's near-term target of 25 percent. Following the business update, Trent's share price fell as much as 2 percent before closing 0.8 percent lower, reaching a six-month low on Tuesday, which has intensified concerns among analysts about the company's future outlook.

The moderating growth rate has fuelled worries that Trent's operating performance is in decline, with analysts citing muted sales growth as middle-class shoppers are impacted by higher living costs. The company's revenue growth had previously been robust, driven by a focus on trendy but affordable styles, primarily through its Zudio brand aimed at young adults. This strategy had yielded a compounded annual revenue growth rate of more than 35 percent over the past five years. This period of strong performance had led to a more than five-fold rise in Trent's stock value between 2023 and 2024, driving its inclusion in the benchmark Nifty 50 index last year.

At its peak, the company was valued at about Rs 3 trillion (around 33.79 billion dollars), with shares trading at Rs 8,345. The latest figures show standalone revenue rising to Rs 5,002 crore. In response to the slowdown, financial firms have begun revising their outlook: Equirus has downgraded the Tata Group stock, and Goldman Sachs has cut its target price.

In terms of physical expansion during the quarter, Trent opened 13 new Westside stores and 40 new Zudio stores.