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maintains strong momentum

Demand trends: Mixed consumption environment with demand

moderating from mid-May after a strong Apr’26

Retail channel checks across the MMR region indicate that discretionary demand trends remain mixed, with consumers continuing to exhibit selective spending behavior. Brands with strong value propositions and differentiated offerings such as Zudio, Westside, Style Union, Burnt Toast, and Lenskart continued to witness healthy customer traction and are expected to gain market share despite the broader softness in consumption. In contrast, several mid-premium and occasionled categories experienced weaker footfalls and deferred purchase decisions during May and early June, as consumers postponed spending ahead of the upcoming EOSS. The softness in demand became more visible during May and early June due to seasonal factors such as Adhikmaas, lack of weddings, school vacations, and heightened consumer caution amid the rising inflationary pressures. Nevertheless, brands with stronger merchandise, superior customer engagement, and compelling value propositions continued to outperform the broader retail landscape, resulting in an increasingly polarized demand environment.

Trent: Healthy customer traction continues across formats

Trent's portfolio continues to demonstrate strong momentum, with channel checks indicating healthy footfalls, robust customer engagement, and strong merchandise acceptance across formats. Zudio is expected to continue gaining market share, supported by its compelling value proposition and successful category expansion (BPC, kidswear, etc.). Importantly, the cannibalization effect on certain mature stores has moderated, while newer stores are witnessing healthy customer acceptance and delivering mid-to-high single-digit LFL growth. Westside, on the other hand, remains the most resilient brand across our channel checks, benefiting from stable demand trends, strong brand equity, and healthy customer engagement. Burnt Toast, despite being at an early stage of its growth cycle, is experiencing encouraging traction with consistent target achievement and positive customer feedback. This success gives management greater confidence to accelerate its expansion plans.

Branded apparel retailers: Demand momentum moderates after strong Apr; premium brands continue to outperform

Performance across apparel retailers remained uneven, with premium brands such as Louis Philippe (LP) and Tommy Hilfiger (TH) continuing to outperform on the back of relatively resilient demand and strong brand equity. Allen Solly (AS) and Park Avenue (PA) delivered stable to moderate performance despite localized challenges, while Peter England (PE) witnessed higher demand volatility amid softer footfalls. Raymond Lifestyle and Manyavar continued to face a challenging demand environment due to weaker discretionary spending and a lack of weddings due to Adhikmaas

Several brands also encountered location-specific challenges, including weaker mall traffic and structural changes impacting walk-ins in certain catchments. While Apr’26 witnessed healthy demand with expectations of a high single-digit LFL growth across several apparel brands, momentum began to soften from mid-May. The weakness has persisted into June due to seasonal factors, school vacations, and cautious consumer spending ahead of the EOSS. Consequently, we expect brands such as AS, LP, and TH to report mid-single-digit LFL growth on a YTD basis, with the softer trends in May and June partially offsetting the stronger performance seen in April. Overall, brands with stronger positioning, superior execution, and differentiated product offerings continue to outperform the broader apparel market.

Footwear: Mixed demand trends; recovery hopes intact

Our channel checks indicate a mixed demand environment across footwear retailers. Bata continues to witness stable to improving trends supported by better footfalls (location-specific), while Metro Brands has seen some moderation in demand since May after a strong start to the year, with store managers citing softer discretionary spending and increased consumer caution. Conversely, Foot Locker is showing improving momentum MoM, driven by better inventory availability and product launches. In comparison, demand trends for Campus remain relatively softer, with channel feedback indicating slower traction in newer SKUs following recent price hikes, although established styles continue to perform relatively better. Overall, store managers across brands remain constructive on growth prospects, aided by seasonal demand (Crocs, Floatz) and expectations of a gradual recovery in consumer spending.

Our take

* Discussions suggest demand was healthy in April, but momentum started moderating from mid-May and remained soft in June. Key reasons cited by managers include consumers delaying purchases ahead of EOSS, school vacations, cautious discretionary spending, and relatively weaker white-collar consumption.

* Value-led formats such as Zudio and Westside continued to exhibit strong customer traction and are likely to outperform during the quarter. Based on our channel checks, we expect Trent to deliver mid-to-high-single-digit LFL growth, supported by continued traction and strong brand pull.

* Branded apparel retailers witnessed mixed trends, with a strong April followed by weaker momentum in May and June. Nevertheless, we expect brands such as AS, LP, and TH to deliver mid-single-digit LFL growth. Demand trends remained relatively stable for footwear retailers with flat to mildly positive growth, while Lenskart stood out with potential double-digit LFL growth driven by product differentiation, service-led customer engagement, and strong brand pull.

* Overall, we continue to prefer differentiated and value-led players such as Trent and Lenskart, which are expected to deliver relatively stronger performance. While moderation in Zudio's cannibalization trends is encouraging, its impact amid ongoing network expansion remains a key monitorable.

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