Tata's Trent to outshine Indian peers as low-priced apparel attract young buyers

By Rama Venkat and Praveen Paramasivam

BENGALURU/CHENNAI (Reuters) - Tata's Trent is expected to have outperformed other Indian apparel chains last quarter, overcoming sluggish demand and restrained consumer spending by rapidly opening more of its youth-focussed, low-priced stores.

Zudio, which sells everything from dresses to perfume at less than 999 rupees ($12), attracts young consumers looking to regularly refresh their wardrobes on a tight budget.

In comparison, peers have been forced to raise prices to counter higher costs, with shoe chain Metro Brands even taking footwear below 1,000 rupees off its shelves. The price hikes are an even bigger dampener on sales, considering consumers remain discerning about their expenses due to sticky inflation.

"For Trent, a good performance makes it a star but at the same time the kind of companies it competes with directly or indirectly have been performing poorly," said Arvind Singhal, chairman at business management consultancy Technopak Advisors.

Three analysts polled by LSEG expect revenue at Trent, which also runs Westside department stores, to jump 46.1% to 31.90 billion rupees for the March quarter, marking the 11th consecutive quarter of outperformance.

"Organic growth in apparel and footwear, excluding Trent, remains soft," HDFC Securities said in a note earlier this month.

Other apparel sellers, including Shoppers Stop and Tommy Hilfiger-licensee Arvind Fashions, have in recent quarters reported smaller growth compared with Trent, which launched Zudio in 2016.

Since then Zudio has opened 460 stores across India, taking Trent's overall store count to 715, as of Dec. 31.

In comparison, Shoppers Stop had 105 department stores, Pantaloons-owner Aditya Birla Fashion and Retail had 4,753 and Unlimited-operator V-Mart Retail had 454 stores.

Technopak's Singhal said Trent's rivals tried experimenting with too many formats instead of staying focused on one goal, while Zudio is taking it "one step at a time" by adding footwear only after having established in clothing.

Analysts do not expect the launch of new stores by Reliance Industries and Aditya Birla selling low-priced apparel to affect Trent's growth trajectory.

"Trent would continue to report strong double-digit (percentage) growth on its expansion plans as newer players would likely grab market share from independent stores, which make up most of Indian apparel sales," Axis Securities analyst Preeyam Tolia said.

($1 = 83.3347 Indian rupees)

(Reporting by Rama Venkat in Bengaluru and Praveen Paramasivam in Chennai; Editing by Eileen Soreng)