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Analyst Day: Outlook in line with Street expectations

Trent shared its strategy around building brands, categories, and new geographies during its annual analyst meet. It aspires to deliver medium-term CAGR of ~25%, by leveraging its impeccable back-end infra to incubate new brands (portfolio gaps), scale-up new categories (Innerwear, Footwear, Beauty), and explore opportunities in new markets (including International). To improve brand accessibility and recall, Trent targets pursuing a micromarket strategy, which may have a near-term impact on its SSG, although margin is expected to be stable, with investments in RFID, SAP (HANA/RISE), and design automation. The mantra of success in fashion is retaining relevance/culture, and Trent leads in this space with best-in-class supply chain (weekly drops and own brands/channels), strongest value proposition, and unparalleled flexibility around store optimization. The Street is currently factoring-in 25-30% revenue/PAT CAGR – largely matching Trent’s aspiration.

Hard choices of own brand and own distribution lead to strong brands creation

Having started as a retail-focused organization, Trent has gradually shifted toward nurturing own brands and followed a disciplined distribution approach, only via its own channels. This strategy has helped improve its LT relevance, as own brands/channels have allowed it to offer the latest fashion at a competitive product-value proposition. Trent plans leveraging this impeccable back-end infra toward incubating new brands (portfolio gaps), scaling-up new categories in existing stores (Innerwear, Footwear, Beauty), and exploring opportunities in new markets (incl international). Trent rules out acquisitions, as it retains focus on organic growth, which offers a better risk-reward.

Star/Samoh/emerging categories incremental growth drivers

After experimenting with multiple store formats, Trent’s ‘Star’ business is increasingly being anchored on a store proposition, offering a curated range of fresh produce, groceries, exclusive brands, FMCG products, and home-care across 18,000-24,000sqft. Food & Grocery in India is tough to crack, albeit Trent has managed to zero-in on a scalable format, helped by a differentiated offering of a high mix of own brands (~73%). It intends to further improve the private label share to 80-85%. Emerging categories like Beauty, Innerwear, and Footwear are also seeing strong traction (50-60% CAGR), with ~20% mix in the fashion business. Samoh, a premium ‘Ethnic’ offering, is leveraging Trent’s existing infra to offer luxurious/designer trends at a strong value proposition.

Tech and automation, the backbone of continued growth

Trent has the strongest supply chain, enabled by its own brands/channels and significant tech investments. It has a complex supply chain with ~10,000 live SKUs, which need to be available in the right size, across its over 1,000 store network. Trent has undergone a complete tech rejig over the last 2-3Y, with adoption of new SAP software (RISE/HANA), RFID, warehouse automation, and design automation.

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