Reliance Retail Q1 Results: Profit Declines 3.6% Sequentially, Margin Expands

Reliance Retail Ventures Ltd.’s first-quarter profit fell, while its margin expanded on the back of higher contribution from fashion and electronics businesses.

Net profit of India’s biggest retailer, controlled by billionaire Mukesh Ambani, fell 3.6% over the preceding quarter to Rs 2,061 crore in the three months ended June, according to its parent Reliance Industries Ltd.'s exchange filing.

Reliance Retail Q1 FY23 Highlights (QoQ)

• Gross revenue was flat at Rs 58,554 crore.

• Revenue from operations (net of GST) rose 1.5% to Rs 51,582 crore.

• Ebitda rose 3.56% to Rs 3,837 crore.

• Margin widened to 7.6% from 7.1%.

"The business witnessed its first quarter without any operating disruptions since the onset of Covid-19, two years back," said Gaurav Jain, strategy and business development at Reliance Retail, in a post-earnings call.

Consumer spending, he said, got a boost as families indulged in leisure activities, socialising, festivities, and shopping as restrictions eased.

Sentiments though, especially for discretionary spending, remained cautious due to inflationary concerns, Jain said.

In Q1, footfalls rose 19% above pre-Covid levels to 17.5 crore as consumers returned to stores. The number of registered customers stood at 208 million at the end of the quarter, up 29% YoY.

"Even as stores return to normal operations, the digital commerce platforms continue to grow from strength to strength with daily orders up 64% YoY," it said. Digital and new commerce now contributes 19% to sales.

The company opened 792 stores during the April-June quarter, taking the total number of retail outlets to 15,866. The business also bolstered its supply chain capabilities with addition of 79 warehousing and fulfillment locations measuring 3.3 million square feet of space.

The retailor added over 17,000 jobs in the first quarter, taking total employee count to 3.79 lakh.

Consumer Electronics

• Reliance Retail continues to maintain its leadership position in consumer electronics as it doubled its business over last year, led by broad-based growth across categories of air conditioners, mobiles, laptops, and TVs.

• Focused promotions during the IPL for TVs and for productivity devices during back-to-school helped capture consumer demand.

• Brands portfolio recorded 6x growth in sales over last year led by increased general trade penetration, attractive offers, and new launches.

• JioMart Digital's revenue grew 3 times over trailing quarter, while its merchant base has grown twice on a sequential basis.

Fashion & Lifestyle

• Reliance Retail delivered a revenue growth of 3x over last year driven by regional festivities, wedding season, opening up of malls, and promotions resulting in an all-time high average bill values and healthy conversion.

• Premium brands saw 5x growth over last year, driven by reopening of malls.

• Men’s formal wear, women’s western wear, and footwear witnessed strong growth as offices, schools re-opened, and consumers resorted to refreshing their wardrobes.

• Its fashion portal Ajio introduced 14 new own brands during the quarter increasing the share of own brands to 30%, an increase of 300 bps over last year. Brand loyalty improved with repeat shoppers up 500 basis points, while we saw 2x higher spend by older members. The luxury fashion platform - Ajio Luxe - grew 6 times year-on-year, with 400 brands now live on the platform.

• Jewellery business delivered a strong quarter with revenues up nearly 3x over last year, driven by wedding season and network expansion.

• The lingerie business, with brands like Amante, Clovia, and Zivame, grew nearly five times over last year as the businesses scaled up their online offering and offline distribution.

• Urban Ladder, the furniture business, has more than doubled its revenue over last year.

Grocery

• The business recorded its highest ever revenues and doubled its business over last year, led by broad based growth across categories.

• Reliance Retail has utilized its network, scale, and efficient sourcing to optimize product prices to reduce the burden of inflationary pressures on customers wallet. That helps to price our products below MRP all year round at its stores and JioMart, the company said.

• Potato from Agra, grapes from Tazgaon, and tender coconut from Mandya are sold at cheapest prices possible shielding the consumers from rising price. In staples, the produce sourced during the harvest seasons ensured that the business sourced at optimum rates.

• The business has been focusing on increasing the share of non-food categories to improve margins at stores. In Q1, the share of non-food categories increased by 470 bps year-on-year.

• JioMart is now live in 268 cities. Revenues are up 2x over last year.

• Tier 2 and beyond markets grew twice as fast as tier 1 markets.

• Daily subscription orders through Milkbasket have doubled over last year as the service is ready for roll out to newer geographies.

• The growth in JioMart Kirana orders is driven by increased merchant penetration and addition of region-specific assortment in commodities. Merchant base grew 4x over last year as the business focused on onboarding HoReCa and institutions in addition to Kirana merchant.

Pharma

• Pharma business nearly doubled over last year on back of stronger store performance as well as digital commerce platform.

• To enhance customer shopping experience, 80% of the store network is now hyperlocal enabled which is helping in faster deliveries to customers.

• Merchant base increased by 50% over trailing quarter as the business is quickly ramping up its presence with reach scaled to over 2,400 towns.