Reliance Retail Q1 Results: Profit Rises 4.6%, Revenue Growth Slows

Reliance Retail Ventures Ltd.’s first quarter net profit and revenue grew, albeit at a slower pace, due to a slowdown in discretionary spending in the fashion business.

Net profit of India's biggest retailer increased 4.6% over the previous year to Rs 2,549 crore in the quarter-ended June, according to an exchange filing by its parent company, Reliance Industries Ltd.

On a sequential basis, however, the retailer's net profit declined 7.2%.

• Revenue from operations (net of GST) rose 6.6% to Rs 66,260 crore.

• Gross revenue increased 8.1% to Rs 75,615 crore.

• Ebitda rose 10.5% to Rs 5,664 crore.

• Margin expanded to 8.5% from 8.2%.

• Investment income fell 11.1% to Rs 216 crore.

• Depreciation increased 25% to Rs 1,667 crore due to addition of new stores.

The Mukesh Ambani-owned retailer has stepped up efforts to optimise operations in order to enhance margins. This was reflected in the year-on-year margin improvement even as the company's operations margins dipped from 8.7% over the previous quarter, according to the company.

In April-June, the retailer added 331 new stores to take the total count to 18,918. The quarter recorded footfalls of 29.6 crore across formats, a growth of 19% over the previous year, according to a statement. The total number of transactions rose 6.4% year-on-year to 33.4 crore in April-June period.

"The grocery business had another steady quarter," said Dinesh Taluja, chief financial officer and corporate development at Reliance Retail, in a post-earnings call. "This was led by expansion into tier 2 and beyond cities. In fact, in many of these locations, we are the first modern retailer."

Reliance Retail is also expanding the number of premium formats — Freshpik and Fresh Signature — with an eye on margin boost.

JioMart saw a 16% growth in average bill value during the quarter over the previous year. "Notably, the non-grocery categories did well with greater than 50% growth in average bill value led by consumer electronics," he said. A strong summer season and cricket tournaments were the key growth drivers for the consumer electronics business, according to Taluja.

However, he said, the fashion & lifestyle business suffered from a decline in discretionary spending.

Reliance Retail has also expanded its Metro Cash & Carry stores to over 200 in the first quarter, adding 30 new locations. It had acquired the Indian operations of German firm Metro AG's wholesale operations in December 2022 in a Rs 2,850-crore deal. At the time of acquisition, Metro was operating 31 large formats located in prime locations across key cities.

The company said that its focus on scaling up digital commerce and new commerce continued with these channels contributing 18% of revenue.

Furthermore, the retailer has been deepening the presence of its consumer brands including Campa Cola and Independence in general trade, with the channel growing 150% in the three months ended June, compared to a year-ago period.

"There are also multiple pilots underway across categories like biscuits, home & personal care as well as snacks so you will see a host of new launches in the coming months," Taluja said, adding that "the idea is to have an expanded portfolio at attractive price points." The company is also investing towards building a localised supply chain, which Taluja believes will give the company a cost advantage over other FMCG players, he said.