Inditex Trent, its joint venture with Tata that runs 21 of Zara stores in India, saw revenue fall to 1,126 crore and slipped into a net loss of Rs 41 crore last fiscal, according to Trent’s annual report released on Thursday. A year ago, it had net profit of Rs 104 crore, and was one of the most profitable apparel retailers in the country.
“The financial year under review started with significant economic uncertainty relating to the fallout from the Covid pandemic,” said the annual report. “The operating profit ratio has been impacted by drop in sales and resultant profits due to Covid related closures and trade restrictions.”
Trent also has a separate association with the Inditex group to operate Massimo Dutti stores in India. The entity saw revenues drop by half at Rs34 Crores in FY21 on a net loss of Rs8 crore.
While malls started operating in many parts of the country in June last year, top markets including Delhi and Mumbai allowed reopening of malls only a month later. With stores being shut for most of the first quarter and customers apprehensive to step out throughout the year, ecommerce sales picked up but could not compensate for sales loss at their brick and mortar stores.
Zara has also been facing increasing competition from global rivals in the clothing market that is increasingly cluttered. The Spanish brand shut one store last year and has just opened two stores over the past four years. “The incremental store openings for Zara continue to be calibrated with focus on presence only in very high-quality retail spaces ,” said the report.
Zara has been a runaway success since its arrival in the country a decade ago. While it has larger stores and slightly premium pricing, it rakes in Rs 54 crore per store on an average, although it has come down significantly over the years. With restrictions due to Covid-19 and consumers shying from discretionary products, the clothing segment could take a hit.
On a consolidated level, Trent also runs Trent Hypermarket, an equal joint venture between Tata and British retailer Tesco, to run 52 Star hyper and supermarkets. The retailer that competes with Big Bazaar and Reliance Fresh, posted total sales of Rs 1,185 crore, a decline by 4%, although losses narrowed to Rs 92 crore.
