Execution, valuations could reverse Trent's fortunes despite pressures

Weak same-store sales, rising competition, muted discretionary demand weigh on sales

The stock of the largest listed apparel retailer, Trent Ltd, has underperformed, declining 37 per cent over the past year. By comparison, losses in the BSE Sensex and the Nifty 50 over the same period have been limited to 3-5 per cent. The pressure on the stock has largely stemmed from a declining trend in revenue growth over the past six quarters. 

Weak same-store sales growth, heightened competition, muted demand in the discretionary segment, and the gradual scaling up of new stores have all weighed on its sales trajectory. While some brokerages remain cautious, others believe the decline in same-store sales growth could reverse going ahead. Additionally, valuations have corrected significantly, improving the risk-reward balance for the stock. 

The company is expanding the Zudio network into new geographies as well as smaller cities and towns. While denser networks in core markets have helped it gain market share, they have also led to cannibalisation, lower revenue per store, and softer growth and margins. 

Although absolute additions remain strong in large markets such as Maharashtra, Karnataka, and Telangana, the contribution of the top seven states has steadily declined from 73 per cent in FY20 to 64 per cent in FY25 and 60 per cent in FY26 year-to-date. 

The share of the top seven states in incremental rollouts has dropped to 37 per cent in FY26 so far. This indicates that incremental stores are increasingly coming from Tier-2 and Tier-3 towns and newer states rather than established clusters, point out analysts led by Aditya Bansal of Motilal Oswal Research. Instead of mature core catchments in the South and West, expansion is now concentrated in the North and East, which account for 58 per cent of store additions this financial year, compared with 33-45 per cent in FY24 and FY25. 

An additional boost to same-store sales could come from expansion and membership additions at Westside. The company has accelerated its store addition pace for Westside, adding 30 stores (net) in 9MFY26 alone, surpassing its historical annual run rate of 14-18 stores during FY23-FY25, according to analysts Jay Gandhi and Vedant Mulik of HDFC Securities. 

Westside also onboarded 5.5 million Weststyle Club members in FY25. As this recently acquired member cohort matures, it is expected to serve as a tailwind for Westside’s same-store sales growth over FY26–FY28, according to the analysts. 

Even as apparel demand remains soft and footfalls muted, brokerages note that Trent’s stores are performing better than peers on the sales front. Analysts led by Manoj Menon of ICICI Securities highlight that Trent’s formats, Westside and Zudio, are clearly outperforming peers. This is driven by disciplined inventory management, frequent fresh stock arrivals (weekly), and steady consumer traction in low-ticket beauty and personal care items. 

In contrast, competing value-fashion formats such as Intune (Shoppers Stop) and Yousta (Reliance Retail) are showing merchandising gaps, struggling with older inventory (from mid-CY25), and facing soft consumer demand. In addition to apparel, what could add to Trent’s overall growth is the traction in low-ticket adjacencies — particularly cosmetics, nail paints, and a few personal care accessories— which is missing in other formats. 

Given these multiple triggers, HDFC Securities has upgraded the stock. According to the brokerage, Trent remains a strong business supported by healthy future operational metrics of ame-store sales growth store expansion, and a favourable risk-reward profile following a 30 per cent correction in the stock price since September 2025. It has set a target price of ₹4,300 per share. 

Motilal Oswal Research, too, has a buy rating on the stock. After the recent correction, the stock now trades at 32 times FY28 pre-Ind AS operating profit, which is significantly below its historical levels, though still at a premium to other Indian fashion retailers. The brokerage has a target price of ₹4,350 per share. 

According to ICICI Securities, the pricing environment has fully normalised following the end-of-season sale in December 2025-January 2026. Promotional intensity is limited, and no meaningful price hikes have been observed across the stores visited by the brokerage. ICICI Securities has an add rating on the stock with a target price of ₹4,100. It expects Trent to post revenue growth of 18 per cent, operating profit growth of 22 per cent, and net profit growth of 14 per cent over FY25-FY28.