Reliance Retail Q1 PAT up 123% to Rs 962 cr on low base

EBITDA up 79% at Rs 1,941 crore YoY but plunged 46.3% sequentially

Reliance Retail reported a 123 per cent jump in its profit after tax (PAT) for the April-June quarter on a low base. Net profit for the quarter stood at Rs 962 crore, up from Rs 431 crore in the corresponding quarter last year. Earnings before interest, tax, depreciation and amortisation (EBITDA) at Rs 1,941 crore, was up 79 per cent year-on-year but plunged 46.3 per cent over the previous quarter.

Its operating revenue grew 19 per cent to Rs 33,566 crore over Rs 28,197 crore that it had posted last year. However, revenue declined 18.7 per cent sequentially from Rs 41,296 crore in March. According to the company, Covid related lockdowns kept consumers away from physical stores, and impacted its finances during the quarter.

Footfalls at outlets during the quarter were at 46 per cent of the pre-Covid levels and were comparable to the same period last year. In the March quarter, footfalls had surged to 88 per cent of pre-Covid levels. Further, stores and digital commerce could sell only essential items for the most part of the quarter.

“Covid-related restrictions on store operations during the quarter impacted our Retail business operations and profitability. This is a temporary phenomenon. We remained focused on ensuring supplies of necessities, including food, grocery, health & hygiene products through a combination of online-offline channels”, said Mukesh Ambani, chairman and managing director, Reliance Industries.

According to him, the company stepped up its efforts in creating partnerships with small merchants and digital engagement with consumers. “This is creating a newer and inclusive model of growth”, he said. Its focus on scaling up digital commerce and merchant partnerships helped partially alleviate the loss of business due to store closures. During the quarter, these streams contributed 20 per cent of retail sales.

During the quarter, consumer sentiment remained cautious with a hint of revival in the second half of June. Reliance Retail’s operating efficiency was impacted due to the restrictions across the network as stores were operating for 70 per cent, 25 per cent and 38 per cent of normal working hours during April, May and June, respectively.

The overall operating environment was challenging through the quarter as restrictions were enforced across several states due to the second wave of Covid-19 impacting operations, supply chain and mobility, the company said in a statement. Resultantly, its store opening plans got impacted and it managed to launch 123 new outlets during the quarter, taking the total store count number to 12,803. However, once curbs are lifted it has over 700 outlets in the pipeline.

Among key categories, grocery was resilient and registered double digit growth y-o-y but remained subdued on a sequential basis. Scaling up of JioMart to 218 cities resulted in 25 per cent higher orders over the last quarter.

While the consumer electronics business got impacted sequentially due to lockdowns, business through its reliancedigital.in e-commerce channel clocked record sales. In the fashion and apparel space, business through online channel AJIO sustained its strong momentum as it and received 300 per cent higher orders YoY.