Trent, a prominent retail stock, has experienced a sharp fall in investor confidence as its share price declined by 43.38 percent in the past year. The slowdown comes despite the company reporting steady top-line growth and strong expansion plans.
Analysts are now concerned that the company’s growth trajectory may moderate from its earlier highs, particularly given the high valuation multiples at which it trades.
Trent, part of the Tata Group, has a market capitalization of Rs. 1,64,839.54 crore and its shares are currently trading at Rs. 4,637. The stock has seen a steep decline of 43.38 percent over the last 12 months.
Headquartered in Mumbai, Maharashtra, Trent operates diverse retail chains including Westside, Zudio, Zara, Massimo Dutti, and Utsa, selling apparel, footwear, cosmetics, electronics, and more through both physical stores and e-commerce platforms.
Aggressive Store Expansion Strategy
Trent Ltd.’s recent share price decline has been attributed to concerns over its aggressive store expansion strategy, particularly the rapid rollout of its Zudio brand. While this expansion initially contributed to significant growth, it has raised questions about the company’s ability to maintain profitability and sustainable growth.
In the quarter ended September 30, 2025, the company opened 53 new stores, bringing its total store portfolio to 261 Westside outlets, 806 Zudio stores (including three in the UAE), and 34 stores across other lifestyle formats.
Growth Momentum Shows Signs of Slowing
Trent, the retailer behind Westside and the value fashion brand Zudio, was one of the strongest-performing retail stocks in 2023 and early 2024. Its rapid ascent was fueled by aggressive expansion of Zudio outlets and competitive pricing, with many products priced below Rs. 1,000, reshaping the affordable fashion segment. However, over the past year, the stock has entered a corrective phase as investors adjusted their expectations.
In its operational update for Q2 FY26 and the first half of FY26, Trent reported standalone revenue of Rs. 5,002 crore for the quarter, up 17 percent year-on-year, while first-half revenue increased 19 percent compared to the previous year. As of September 30, 2025, the company operated 261 Westside stores, 806 Zudio outlets, including three in the UAE, and 34 stores across other lifestyle concepts.
Despite these figures, brokerages have signaled a moderation in growth. Goldman Sachs attributed the slowdown partly to lower sales throughput from newer Zudio stores in Tier-2 and smaller cities, prompting a 5 percent cut in its FY26-28 EPS estimates.
UBS noted that Q2 revenue growth of 17 percent continues the deceleration observed since Q4 FY25, describing the current period as a cyclically weak phase, while also suggesting that a potential rebound in growth could boost the stock.
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Valuation Pressure and Strategic Diversification
Trent’s valuations, which at their peak traded at more than 100 times forward earnings, have come under pressure amid a broader sector rotation away from high-PE consumption stocks toward cyclical segments like defence, PSUs, and capital goods since late 2024. Weaker discretionary spending, intense competition in value fashion, and moderating margins have further dampened investor sentiment.
Despite the recent correction, Trent continues to be a major player in India’s fashion retail market. Emerging categories such as beauty, personal care, innerwear, and footwear now contribute over 21 percent of the company’s revenues, reflecting its push to diversify its product offerings.
“The business delivered steady performance during the quarter. We remain focused on evolving our differentiated consumer proposition that appeals to a wider audience across diverse markets.
Not withstanding continuing competitive intensity and interim trends, we believe an unwavering focus on being relevant to our customers and building resilience with our business model choices will, over time, enable us to deliver significant value,” said Noel Tata, Chairman of Trent, commenting on Q1 earnings.
Competition and Industry Challenges
Trent operates in a highly competitive retail landscape with pressure from both organized and unorganized players, including brick-and-mortar and online channels. Being a discretionary retailer, its revenues are sensitive to macroeconomic conditions.
The company also faces inherent risks related to inventory management, such as obsolescence or damage. However, investments in warehouse management technology and analytics have helped reduce inventory days over time.
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Financial Snapshot
Quarter-on-Quarter (QOQ): Trent’s sales increased from Rs. 4,217 crore to Rs. 4,883 crore, up 15.8 percent. Operating profit rose from Rs. 651 crore to Rs. 848 crore, up 30.3 percent. PBT grew from Rs. 416 crore to Rs. 565 crore, a rise of 35.8 percent, while net profit improved from Rs. 312 crore to Rs. 425 crore, up 36.3 percent.
Year-on-Year (YOY): Compared to the same quarter last year, sales grew from Rs. 4,104 crore to Rs. 4,883 crore, up 19 percent. Operating profit increased from Rs. 613 crore to Rs. 848 crore, a jump of 38.4 percent. PBT rose from Rs. 501 crore to Rs. 565 crore, up 12.8 percent, while net profit increased from Rs. 391 crore to Rs. 425 crore, a rise of 8.7 percent.
Conclusion
Trent’s 43 percent stock decline over the past year reflects a combination of factors including slower growth in core markets, high valuation multiples, stiff competition, and sensitivity to economic cycles.
While aggressive expansion into smaller cities and multiple retail formats provides a long-term growth avenue, the market remains cautious as the company navigates a period of moderated growth expectations.
Written By Manan Gangwar
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