Aditya Birla Fashion & Retail reports net loss in Q2 on sluggish demand; shares fall 3%

Aditya Birla Fashion & Retail shares slipped 3 percent in trade on November 10 as the company posted a consolidated net loss of Rs 200.3 crore for the quarter ended September FY24.

ABFRL reported a net profit of Rs 29.4 crore in the same period last fiscal year, despite a higher topline impacted by weak operating numbers.

The consolidated revenue from operations increased by 4.9 percent YoY to Rs 3,226 crore in Q2FY24, and new businesses primarily contributed to this growth. Consolidated EBITDA for the quarter stood at Rs 369 crore, down 4 percent YoY and EBITDA margin was at 11.4 percent.

Shares of the company were trading at Rs 214.2, lower by 0.37 percent on the NSE at 10.20 am.

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The sales of lifestyle brands declined 6 percent YoY due to fewer wedding dates and a shift in festivals. Wholesale channels were flat, while retail channels declined 4 percent YoY and Pantaloons sales fell 7 percent year-on-year to Rs 1,021 crore.

Factors impacting top-line

The company stated that the muted revenue growth was on account of sluggish market conditions and the shift of the festive period to Q3. Overall, the slowdown in consumption continued, impacting discretionary categories across the board.

Fewer wedding dates, resulting in a lean wedding calendar, led to a decline in wedding-related purchases. There was also heightened competition in value fashion, as a result of aggressive foray by both established and new retail chains in the value fashion segment.

“Our businesses demonstrated notable resilience amid the overall slowdown and added challenges of a shift in the festive season and fewer wedding dates. Net profit for the quarter was affected by negative operating leverage resulting from subdued sales in a weak demand environment. Continued growth investments in new businesses also had an impact on profitability for the quarter,” said the company in a regulatory filing.