Trent sets 25% growth target, to expand Zudio and new brand categories

Trent plans to grow its brand portfolio, expand store density, enter new categories like beauty and innerwear, and boost omnichannel presence, brokerages note

Trent plans to grow its portfolio of in-house brands, increasing store density in select markets and continuing its expansion, the company’s management said at its analyst and investor meet.

 

The company has also set a long-term revenue growth target of 25 per cent, analysts noted in their reports following the event. Trent also said it is exploring category extensions such as beauty, innerwear, and footwear.

 

The fashion and lifestyle arm of Tata Group, which runs retail chains Westside and Zudio, told investors it is focusing on improving return ratios while scaling up operations.

 

“In our view, Trent’s emphasis on technology and automation across fashion and supply chains will be the key success factor for scalability of operations. The company should continue to be frugal and efficient on ad spends going ahead. Providing fashion and value at every price point (across Westside and Zudio) has been one of the key reasons for Trent’s outperformance over the past few years,” Antique Stock Broking said in its report.

 

The brokerage also noted that the company has regularly worked on evolving the look and feel of its stores and has consistently consolidated wherever necessary.

 

Elara Capital, in its report, said Trent is keen to scale up Zudio and deepen penetration into Tier-II and -III cities, while also increasing its density in markets such as Bengaluru and Chennai. 

 

“Trent has emphasised the offline model, as online may dilute value perception, brand equity, and interrupt inventory rotation due to price undercutting. Significant penetration opportunities with mass-market-friendly stock-keeping units will continue to support brand growth,” Elara Capital said. It added: “While store openings in dense clusters may partially cannibalise sales from older locations, they will help drive higher wallet share across the catchment.” It also noted that the company is calibrating its spending by adopting celebrity-less marketing to curtail advertising and promotional costs.

 

On channel diversification, brokerages said this is another area of focus for the retailer. While Zudio operates exclusively through offline retail, Westside has built its omnichannel presence, with online sales accounting for around 6 per cent of the brand’s total sales.

 

Antique Stock Broking also noted that, according to company management, growing demand for packaged foods and the ongoing expansion of modern retail formats remain key structural tailwinds for its grocery retail format, Star Bazaar. 

 

It said, “Consumers own multiple brands in fashion. Therefore, competition will always be there. However, gaining a larger share within the fashion wallet will be the key to success.”

 

In its key highlights, the brokerage also pointed out that lease agreements typically span 15 to 30 years. However, in Trent’s case, it has the option to exit agreements earlier, depending on the viability of the store.

 

Elara Capital said in its report that the company has the right mindset to nurture a house of brands. “Choices such as organic brand growth, customer acquisition, full-price selling, and foraying into high-frequency categories will sustain growth.”

 

It added, “Benefits from faster inventory turns, celebrity-less advertising and promotions, and shared technology infrastructure shall pare costs. Trent aims to be operationally India-first and to expand in high-frequency categories. Fast fashion brand Zudio will remain the leader, gaining market share with strong brand recall. Trent has a high single-digit market share in the overall fashion industry — there is room to grow.”