Aditya Birla Fashion and Retail posts 13% Q2 revenue growth amid challenging market

Aditya Birla Fashion and Retail Limited (ABFRL) reported robust growth in its Q2 FY25 financial performance, with revenue rising by 13% year-over-year, reaching ₹3,644 crore. Despite a challenging consumer environment, the company maintained momentum by expanding its emerging high-growth segments, particularly in ethnic and luxury categories. This growth reflects ABFRL’s strategic focus on a diverse portfolio, including luxury retail and digital-first brands, contributing significantly to a promising outlook.

Ethnic and Luxury Brands Fuel Strong Q2 Growth

In the recent Q2 financial results ending September 2024, Aditya Birla Fashion and Retail Limited showed resilience with revenue increasing by 13% compared to last year. The company attributes this growth primarily to its high-performing ethnic and luxury brands, as well as the integration of popular labels like TCNS and Tarun Tahiliani into its portfolio. Experts noted that the strategic addition of these brands positioned ABFRL favorably in India’s competitive retail landscape, aligning with consumer demand for premium, homegrown brands.

A senior Aditya Birla Fashion and Retail Limited representative highlighted that the ethnic segment witnessed an impressive threefold growth, particularly driven by premium labels under the House of Masaba and Tarun Tahiliani. The beauty line from House of Masaba alone expanded tenfold, emphasizing the growing appeal of designer-led products in India’s fashion market.

Digital-First Ventures: TMRW and E-Commerce Expansion

In addition to its ethnic and luxury offerings, Aditya Birla Fashion and Retail Limited continued to capitalize on digital trends, experiencing over 30% growth in e-commerce sales during the quarter. TMRW, ABFRL’s digital-first brand portfolio, doubled its year-on-year performance, benefiting from the rising demand for e-commerce in the fashion sector. TMRW’s success underscores the company’s strategic pivot toward digital channels, a crucial growth lever as consumers increasingly opt for online shopping.

An analyst pointed out that ABFRL’s investment in TMRW not only enhances customer reach but also diversifies the company’s revenue streams, creating a strong foundation for sustained digital growth. By leveraging this digital-first strategy, Aditya Birla Fashion and Retail Limited positions itself as a modern, omnichannel fashion retailer poised for continued expansion.

Profitability Challenges: Impact of Interest and Amortization

Despite solid revenue figures, ABFRL’s profitability took a hit due to increased depreciation and amortization costs associated with its brand acquisitions and higher interest expenses from elevated borrowings. The company reported a consolidated net loss of ₹215 crore for Q2 FY25, a decline from last year’s performance. According to ABFRL’s financial review, the profit downturn is partly due to investments in expanding its luxury and ethnic brand portfolios, which are expected to drive long-term profitability.

Established Brands and Distribution Network Expansion

ABFRL’s established brands, including popular labels such as Louis Philippe, Van Heusen, and Pantaloons, also showed stable growth. Pantaloons, in particular, achieved an EBITDA increase of 65%, reaching a margin of 15% for Q2 FY25. Additionally, Aditya Birla Fashion and Retail Limited expanded its retail footprint with 4,538 stores spanning 12 million square feet across India, reinforcing its omnichannel strategy with more touchpoints for consumers.

A company spokesperson highlighted that these expansions are part of a broader effort to build market resilience by reaching diverse consumer segments through both physical and digital channels.

Outlook: Strategic Priorities Amid Market Challenges

Looking ahead, Aditya Birla Fashion and Retail Limited remains focused on leveraging its brand portfolio and digital capabilities to navigate current market uncertainties. The company’s leadership expressed confidence in its strategic approach, aiming to build a competitive advantage through brand strength, extensive distribution networks, and a robust product offering.