Reliance Retail Q1 Results: Profit Jumps 18.8% On Higher Footfalls, Store Additions

Reliance Retail Ventures Ltd.’s first quarter revenue and profit rose, aided by increased footfalls and expansion of its stores.

The net profit of India’s biggest retailer, controlled by billionaire Mukesh Ambani, increased 18.8% over the previous year to Rs 2,448 crore in the quarter ended June, according to its parent company, Reliance Industries Ltd.'s exchange filing.

On a sequential basis, however, the retailer's net profit grew 1%.

• Revenue from operations (net of GST) increased by 20.5% to Rs 62,159 crore.

• Gross revenue rose 19.5% to Rs 69,948 crore.

• Ebitda increased 33.9% to Rs 5,139 crore—an all-time high.

• Margin widened to 7.9% from 7.6%.

• Reliance Retail recorded the highest ever footfalls at 24.9 crore across formats during the quarter.

In April-June, the company added 406 stores to take the total count to 18,446, the highest in India, spanning across an area of 70.6 million sq. ft.

"Retail business delivered robust growth, with fast-paced store additions and steady growth in footfalls," Mukesh Ambani, chairman and managing director of Reliance Industries Ltd., said in a statement.

The revenue growth was led by grocery, consumer electronics, and fashion and lifestyle segments, while margin growth was a result of improving efficiencies, according to the company.

"There was a higher willingness to spend on consumer electronics during the quarter, Dinesh Taluja, chief financial officer and corporate development at Reliance Retail, said in a post-earnings call.

The company has witnessed broad-based growth across categories led by air care, phones and appliances, driving market share gains, he said.

• The grocery business grew 59%, led by Smart and Smart Bazaar formats.

• Fashion and lifestyle reported 15% growth, driven by pickup in store traffic and average bill value.

• Consumer electronics, excluding devices, rose 14%.

• Digital and new commerce contributed 18% of revenue.

• Jewellery business saw robust revenue growth across all town classes led by wedding season and regional festivals.

"Consumer preferences continue to evolve, particularly after social life and travel has resumed in a post-Covid era," the company said, adding that categories like smart casuals and athleisure are seeing "strong" growth.

Its fashion portal—Ajio—added two million new customers.

Interestingly, Reliance Retail said it has seen an uptick in sales of its summer-centric food as well as non-food portfolio.

This is in contrast to what other companies—including Hindustan Unilever Ltd., PepsiCo India and Dabur Ltd.,—dealing in items such as ice-cream, cold drinks and even consumer appliance makers have indicated.

Most of these companies, according to their earnings update, have seen summer sales being severely impacted due to unseasonal rains and a moderate summer.

Taluja said that Reliance Retail has seen a "sharp" uptick in performance of its beverage category, with sales growing 11 times over the previous year led by Campa Cola. The company ran out of Campa Cola stocks as its summer sales exceeded expectations, he said.

Reliance Retail is also focusing on expanding distribution reach and engagement in general trade channel for its consumer brands. Revenue from this channel grew eight times over the previous year, the company said.

The company was also able to increase market share in cooling categories such as refrigerators and air-conditioners, according to Taluja.

Towards the end of the quarter, Reliance Retail completed the acquisition of Germany-based Metro AG's Cash and Carry business in India. "Initiatives are underway to integrate the business with Reliance Retail," the company said.