Reliance Retail posts 17% decline in revenues as Covid hits store operations

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July 31, 2020 1:30 AM

“Overall, Reliance Retail’s 1QFY21 performance is resilient considering the adverse operating environment. The performance whilst muted, was well ahead of market,” the company said.

Reliance Retail that operates multi-format stores ranging from neighbourhood to supermarket and manages a clutch of brands managed to open 69 new stores during the quarter. Reliance Retail that operates multi-format stores ranging from neighbourhood to supermarket and manages a clutch of brands managed to open 69 new stores during the quarter. (Representative image)

Reliance Retail on Thursday reported a 17.2% year-on-year decrease in revenues to Rs 31,633 crore on a consolidated basis in the three months ended June as the Covid-19 pandemic impacted store operations.

During the quarter, the company’s Ebitda decreased to Rs 1,083 crore from Rs 2,060 crore in the year-ago period, a decline of 47.4%. Ebitda margin declined to 3.8% in Q1FY21 from 6% in Q1FY20. Ebitda margin was hit due to “fixed costs and adverse mix,”—the most profitable fashion & lifestyle segments bore the brunt of the pandemic, with stores remaining closed for the most part of the quarter. Net profits for the quarter stood at `431 crore “despite complete lockdown for a long period of time and only essential services being operational,” the company said in a statement.

Launch of JioMart to supply groceries, activation of Reliance Digital and scaling up of online fashion portal Ajio helped in making up revenues during the quarter. Ajio doubled business during the period, claimed the firm.

Reliance Retail that operates multi-format stores ranging from neighbourhood to supermarket and manages a clutch of brands managed to open 69 new stores during the quarter. The total store count of the company stands at 11,806 across 7,000 towns in the country. Store expansion remains a “thrust” for the business. Over 250 stores across formats and geographies were in various stages of development before activity was restricted and these will be commissioned in due course, the company said.

“Overall, Reliance Retail’s 1QFY21 performance is resilient considering the adverse operating environment. The performance whilst muted, was well ahead of market,” the company said.

The grocery segment witnessed strong consumer traction. Apart from staples which maintained growth, categories such as hygiene products and packaged food contributed to higher bill values. The Consumer Electronics segment was aided by a shift to work from home as sales of laptops and tablets increased by 2.5 times. The quarter saw 21% y-o-y growth across the operational businesses of grocery and connectivity.

JioMart that has already rolled out pilots in 200 cities and claims to be servicing over 400,000 orders on a single day is gearing up to expand its offerings to cover electronics, fashion, pharmaceuticals and healthcare, Reliance Industries has said at its AGM earlier this month. Reliance Retail’s whose growth model is “based on partnerships with small merchants and shopkeepers said expansion (JioMart) across cities is underway with many more kirana partners being on-boarded and benefiting from the partnership.

JioMart’s partnership with Facebook-owned WhatsApp, that has a user base of more than 400 million in India, gives the company the much needed lever to deepen its network of kirana stores and consumer reach. Analysts had earlier pointed out that JioMart had been facing some issues with getting customers and merchants. With WhatsApp on board, JioMart is now focused on scaling its geographical reach and delivery capabilities.

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