Indian apparel retailer Trent (TREN.NS) posted its slowest quarterly profit growth in at least 10 on Wednesday, as muted urban demand and early monsoons hit in-store shopping.

The Tata group company, which owns the popular affordable fashion chain “Zudio”, reported a net profit of 4.3 billion rupees ($49.03 million), up 9.5% from a year ago.

Trent’s first-quarter consolidated revenue grew 19%, its slowest since the quarter ended March, 2021, further fueling concerns among analysts that the company’s operating performance is set to slow down from its peak even as valuations remain firm.

The company’s Zudio-led focus on young adults who regularly open their wallets for trendy but affordable styles has yielded a compounded annual revenue growth rate of more than 35% in the past five years.

The growth led to more than a five-fold rise in Trent’s stock value from 2023 to 2024 and drove its inclusion in the benchmark Nifty 50 index last year.

Trent attributed the quarter’s slowdown to a high base of growth last year, a prolonged weakness in urban demand amid high living costs, supply chain disruptions in certain areas, and an early monsoon curbing in-store shopping.

Its first-quarter same store sales grew in “low single digits”, compared to a “double-digit” percentage growth last year, Trent said.

However, its earnings before interest and taxes (EBIT) margin improved to 11.4% from 10.6% a year ago, benefiting from better merchandise sourcing and investments in automation.

Analysts pinned their hopes of Trent’s next phase of growth to its ongoing expansion in smaller Indian cities, where the adoption of fashion trends is slower than metros, but growing fast.

($1 = 87.6950 Indian rupees)

News Credits- Reuters