Reliance Retail Q2 results: Profit declines 14%, revenue flat

Mumbai: Reliance Retail posted a 14% decline in operating profit while revenue remained flat as many shoppers stayed indoors or preferred local shops and online buying instead of crowding large retail stores.

Reliance’s retail division, which runs 12,000 stores selling products across groceries, consumer electronics and apparel, posted sales of Rs 41,100 crore with earnings before interest, taxes, depreciation and amortization (EBITDA) at Rs1,986 crore. The growth, however, was strong compared to sequential quarter revenues growing 30% and EBITDA increase 85% against the June quarter. During the second quarter, the company opened 232 new stores and said it will accelerate further as operating curbs are being lifted.

"The operating environment continues to remain challenging, although it is clearly better off than last quarter, Store functioning continues to be impacted and we had about 15% of our stores shut right through the quarter. The balance 85%, half of them operated fully and the remaining half, partially," Dinesh Thapar, group chief financial officer said. "We are well positioned at this point of time to restore momentum to pre-covid levels assuming all goes well and directionally operations start to ease out."

The country's biggest retailer raised about Rs37,710 crore from over half a dozen global investors over the past few months including Rs7500 crore during the quarter ended September.

In August, Reliance Retail Ventures agreed to buy the retail assets of Future Group in a deal that will see five listed entities, including Future Retail, folded into Future Enterprises Ltd (FEL), which currently houses the group’s retail back-end infrastructure. The retail business will then be transferred to Reliance in a slump sale for nearly 25,000 crore. However, Amazon which has an indirect stake in FRL has contested the deal and has even received a ruling in their favour from the Singapore International Arbitration Centre (SIAC) to halt the deal.

"Currently, we are going through the process of seeking regulatory approvals on the deal," said Thapar.

This deal requires approvals from Securities and Exchange Board of India (Sebi), Competition Commission of India (CCI) and National Company Law Tribunal (NCLT) in addition to no objection certificates from creditors and minority shareholders.

Reliance also said they are expanding its e-commerce venture Jiomart into newer categories, which at present is restricted to grocery segments. "we are really looking to build the fullness of the assortment and go horizontal. We are looking to launch electronics, fashion and lifestyle and pharma in the next few months itself so it can serve a broad spectrum of customer needs," added Thapar.