Trent's Q2 update disappointed Street, but outlook still bullish

Trent's update for July-September quarter (Q2) of FY26 led to some selling, with the fashion and lifestyle retailer reporting year-on-year (Yo-Y) sales growth of 17 per cent, which was a moderation from 20 per cent Yo-Y sales growth reported in the April-June quarter (Q1) of FY26.

- DEVANGSHU DATTA

Growth in Q1FY26 itself had slowed from earlier 25 per cent due to one-off factors such as the early monsoon, drop in footfall during the India-Pakistan conflict, and one-off sourcing disruptions, per management. The further slowdown in Q2 indicates headwinds.

Trent's Yo-Y store growth accelerated vs Q1. With Westside adding 13 stores, Yo-Y store growth was 15 per cent in Q2 vs 9 per cent in Q1. Zudio added 40 stores with Yo-Y store growth of 40 per cent in Q2 vs 37 per cent in Q1. The overall store growth was 32 per cent Yo-Y in Q2FY26 vs 27 per cent Yo-Y in Q1. The total is now 806 Zudio and 261 Westside stores. Investors should note that there is a high base effect which tends to underestimate Yo-Y growth.

The moderation in sales growth has come despite store additions. This may indicate like-for-like (LFL) growth of negative single digits (it was positive low single digit growth in Q1FY26). It also implies lower sales throughput in stores in Tier-II+ cities that Zudio entered in the last 12 months.