Retail arm logs 123% jump in net profit

Reliance Retail on Friday reported a 123 per cent jump in profit after tax (PAT) for the April-june quarter (Q1) on a low base. Net profit for the quarter stood at ~962 crore, up from ~431 crore in the corresponding quarter last year.

Earnings before interest, tax, depreciation and amortization (Ebitda) at ~1,941 crore, recorded a 79 per cent year-on-year growth, but plunged 46.3 per cent over the previous quarter. Its operating revenue grew 19 per cent to ~33,566 crore over ~28,197 crore that it had posted last year. However, revenue declined 18.7 per cent sequentially from ~41,296 crore in March.

Footfalls at outlets during the quarter were at 46 per cent of precovid levels and were comparable to the same period last year. In the March quarter, footfalls had surged to 88 per cent of pre-covid levels. Further, stores and digital commerce could sell only essential items during most of Q1.

“Covid-related restrictions on store operations during the quarter impacted our retail business operations and profitability. This is a temporary phenomenon. We remained focused on ensuring supplies of necessities, including food, grocery, health & hygiene products, through a combination of online-offline channels,” said Mukesh Ambani, chairman and managing director, Reliance Industries.

He said the company stepped up its efforts in creating partnerships with small merchants and digital engagement with consumers. “This is creating a newer and inclusive model of growth,” he said.

Its focus on scaling up digital commerce and merchant partnerships helped partially alleviate the loss of business

due to store closures. During the quarter, these streams contributed 20 per cent of retail sales.

In Q1, consumer sentiment remained cautious with a hint of revival in the second half of June. Reliance Retail’s operating efficiency was impacted due to the restrictions across the network as stores were operating for 70 per cent, 25 per cent and 38 per cent of normal working hours during April, May and June, respectively.

Its store opening plans were also impacted and it managed to launch 123 outlets during the quarter, taking the total store count to 12,803. However, once curbs are lifted it has over 700 outlets in the pipeline.