India's Aditya Birla Fashion reports first quarterly loss in nearly 2 years

Bengaluru: As surging expenses outweighed demand for its apparel and lifestyle products, Indian apparel retailer Aditya Birla Fashion and Retail Ltd (ABFRL) has reported its first quarterly loss in nearly 2 years.

The company posted a consolidated net loss of 1.87 billion rupees ($22.9 million) for the fourth quarter ended March 31, from a profit of 435.9 million rupees a year ago, citing initial operating losses in unit TMRW and new ethnic businesses. It last reported a quarterly loss in June 2021.

Total expenses jumped 40% to 31.78 billion rupees, outpacing the growth in revenue from operations, which was up 26% at 28.80 billion rupees, the company said in an exchange filing.

Consolidated margins on earnings before interest, taxes, depreciation and amortisation (EBITDA) contracted to 8% from 17.6% a year earlier.

The company also said that on a standalone basis, sluggish sales impacted its quarterly EBITDA margins, coupled with lower retail throughput and negative operating leverage.

ABFRL has invested in a number of new businesses over the past few years, including a number of enterprises that are losing money or are still stabilising. Analysts said that the acquisition of TCNS Clothing Co Ltd in May might add to the list.

Revenue from the retailer's key Madura Fashion and Lifestyle unit, which sells western wear and athleisure casual sports clothing, grew about 30% to 21.56 billion rupees, contributing 75% of the quarterly topline.

Its clothing and accessories business, Pantaloons rose 18%, as it added a net 25 stores to its existing network in the quarter.

"With a long-term rise in discretionary consumption, the apparel industry is primed for significant growth bolstered by premiumization and an accelerated shift from unbranded to branded products," said the company in an exchange filing.

The company's results trailed other sectoral players like Shoppers Stop Ltd which swung to profit in the quarter, while Tata-backed Trent Ltd, which operates Westside, posted a soaring Q4 topline last month. Shares of Aditya Birla Fashion and Retail closed down 0.52%.