Reliance Retail bucks trend as revenue rises 27%; pre-tax profit up 67%

This is the second straight quarter that Reliance Retail's Ebitda has crossed Rs 2,000 crore

The retail arm of Reliance Industries (RIL) posted a pre-tax profit of Rs 2,322 crore for the quarter ended September 30, (Q2) year-on-year (YoY) growth of nearly 67 per cent as it reaped benefits of scale during the quarter.

This is the second straight quarter that Reliance Retail’s earnings before interest, tax, depreciation, and amortisation (Ebitda) has crossed Rs 2,000 crore. Along with the telecom venture Jio, Reliance Retail contributes nearly a third of its earnings, RIL said on Friday, with a plan in place to take contribution of the two businesses to 50 per cent in the next few years. But the bigger surprise was on the revenue front.

Reliance Retail’s revenue grew 27 per cent YoY during the quarter to touch Rs 41,202 crore, bucking the slowdown trend in the market. The company also added 337 stores in Q2, taking its total count to 10,901 stores across 6,700 towns and cities. In terms of retail area, the company covers 24.5 million sq ft in Q2, growth of nearly 26 per cent from a year ago.

In a statement, RIL Chairman Mukesh Ambani said Reliance Retail gained from optimum customer value proposition, segmentation and a targeted strategy in the July-September period even as the consumer slowdown got worse.

“The gains of modern retail are being brought to the real ‘Bharat’ as more than two-third of stores are operated in tier-II, tier-III, and tier-IV towns,” the company said.

This statement acquires significance given that rural consumer goods growth has plunged to a seven-year low in Q2, market research agency Nielsen said on Thursday. Yet, the country’s largest retailer continued to bet on small-town growth, sector analysts said.

Reliance Retail, which first began operations in 2006, is present across areas such as food and grocery, consumer electronics, fashion and lifestyle. It also has 516 petro retail outlets and 8,157 Jio sales points as part of its business.

During the quarter, Reliance Trends Small Town, the company’s apparel retail chain in smaller cities, crossed 100 stores. The retailer opened its 200th Reliance SMART store, which is into food and grocery, and launched its 100th Hamleys store in the country. The company had announced the acquisition of Hamleys, the British toy retailer in the June quarter, for Rs 620 crore.

In all, the company added 43 stores in food and grocery, 100 stores in consumer electronics, and 76 stores in fashion and lifestyle during the quarter. Also, Reliance Brands, which is part of Reliance Retail, announced a joint venture with Tiffany & Co to bring the American luxury jewellery retailer to India. It also announced a tie-up with WOMO Bullfrog, a premium Italian men’s cosmetics brand during the quarter.