Reliance Retail reports a second consecutive quarter of declining profits

Jul 22, 2022, 20:52 IST

Mukesh Ambani, chairperson and MD of Reliance Industries Limited (RIL)BCCL

Reliance Retail has reported its “best quarter ever” with its gross revenue crossing ₹58,000 crore mark for the second time this year.
However, the company’s profit has declined for the second consecutive quarter due to inflationary pressures.
The company reported a consolidated gross revenue of ₹2 lakh crore in the financial year 2022 that ended in March.

Reliance Retail — a subsidiary of Reliance Industries Limited (RIL) — has reported its best quarter ever with its gross revenue crossing ₹58,000 crore (over $7 billion) mark once again in the April to June 2022 quarter. However, its net profit declined for the second time this year too, with high input costs weighing it down.

Reliance Retail reported a gross revenue of ₹58,554 crore in the last three months, representing nearly 52% hike from the April-June quarter of last year. Its net profit stood at ₹2,061 crore, representing a hike of 114% from last year.

“In the retail business, we continue to focus on enhancing our consumer touch-points and building a stronger value proposition for our customers. Our strong supply chain infrastructure and sourcing efficiency is helping us maintain competitive pricing for daily essentials, thereby insulating consumers from inflationary pressures,” Mukesh Ambani, chairperson and MD of Reliance Industries Limited (RIL) said.

Even though its revenue increased by ₹537 crore compared to the previous quarter, its net profit actually declined by ₹78 crore. This is the second sequential fall in net profit – the retail giant reported a similar decline in the March quarter as well, despite marginal increases in revenue.

Reliance Retail has managed to navigate the inflation storm so far

Despite a challenging macro environment, the marginally higher revenue suggests Reliance Retail has maintained its topline.

“Reliance Retail delivered a strong performance with its best-ever quarterly revenues in a macro environment that remained challenging,” the company said in a statement.

Even though inflation has been hitting the customers’ demand, discretionary spendings have largely been immune to the negative consumer sentiment.

According to a report by ICICI Securities, customers’ shopping bags got heavier this year and all retail brands like Reliance Retail, Shoppers Stop, Bata, Pantaloons and Lifestyle are reaping its benefits.

“Despite various headwinds, fashion retailers displayed a resilient show with demand picking up pace in the latter part of the second half of FY22. Revenue recovery rate for most apparel and footwear players surpassed pre-Covid levels (100- 105%) from Q3FY22 onwards,” the report said.

Reliance Retail has been adding more stores in order to cash in on immunity from inflation.

Reliance Retail now owns a network of 15,866 physical stores, out of which 792 were added in the last three months. The company added 2,566 stores in the last fiscal year itself.