Shares of Tata Group retailer Trent Ltd. declined on Friday despite the company reporting a 66 percent year-on-year jump in overall sales.
The drop in shares come courtesy the narrowing of EBITDA margin for the quarter, which fell nearly 500 basis points compared to the same period last year.
For the quarter, EBITDA margin fell to 13.1 percent from 17.8 percent during the same period last year.
Sales for the quarter are also aided by a low base as brick-and-mortar shopping remained subdued last year post the second wave of Covid-19.
The drop in margin can be attributed to a 70 percent jump in overall expenses and a 21 percent rise in finance costs for the company. Higher expenses also meant that Trent's net profit for the September quarter remained flat compared to last year.
Online revenues through westside.com and Tata Platforms contributed to 6 percent of Westside's topline. Across Westside and Zuido, the company has a portfolio of over 500 stores.
The company had also made investments in Tata Unistore Ltd. who has now restructured its business strategy. The fair value of Trent's investments has been reassessed at Rs 24 crore. As a result, compared to the actual investment, the company had to recognize a loss of Rs 62 crore.
Emerging categories now contribute 15 percent to the overall topline.
Founded in 1998 as part of the Tata Group, Trent operates leading chains of fashion retail store Westside and value fashion showrooms Zudio as well as Trent Hypermarket, which caters to food, grocery and daily needs segment.
Shares of Trent are trading 4.1 percent lower at Rs 1,409.90.
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