A slowdown that’s hard to ignore
What’s weighing on the retailer is a visible deceleration in growth at a time when discretionary demand remains under pressure. Quarterly same-store sales growth, once firmly in double digits through early FY25, has cooled to low single digits in the first half of FY26. Kotak Institutional Equities, factoring in the moderation, has trimmed its FY26–28 revenue forecasts by around 2%.
According to Saurabh Mukherjea of Marcellus Investment Managers, Trent’s SSSG was running in the high teens six–seven quarters ago but has now slipped to high single digits, a slowdown he believes alone explains why the stock has halved. Even so, he maintains that Trent remains structurally stronger than apparel peers such as ABFRL and Reliance Retail.
But the broader concern goes beyond the headline slowdown. The overall consumption environment remains subdued, competition is intensifying, and Trent’s expansion into Tier-2 and Tier-3 markets is raising fears of cannibalisation and margin stress.
Brokerages turn cautious as momentum cools
Sentiment across brokerages has turned tempered, if not outright wary. Citi Research recently downgraded the stock to Sell, slashing its target price to Rs 4,350 from Rs 7,150 earlier. The brokerage cut its revenue estimates for FY26–28 by 6–19% and EBITDA estimates by 2–12%, besides lowering its target EV/EBITDA multiple to 40x from 50x.HDFC Securities echoed the caution with a Reduce rating and a target of Rs 4,300, pointing out that growth fatigue is now clearly visible across formats. Standalone revenue rose 17.1% YoY to Rs 47.24 bn, but SSSG slipped into low single digits for the first time in over three years. Goldman Sachs, while maintaining a Neutral stance, also lowered its target price to Rs 4,920, signalling that concerns are broad-based.The only real cushion for the company so far has been its margins, supported by operational efficiencies from RFID-enabled automation. Trent has benefited from meaningful employee cost savings and faster merchandise handling, and Kotak expects the full benefit of these efficiencies to play out in FY26. However, the brokerage also warns that margin upside could flatten afterwards as easy gains taper off.
Star business remains weak
The Star business, Trent’s FMCG and grocery vertical, continues to struggle. Revenue declined 2% YoY, following a steeper 7% fall in the previous quarter. The store count remained stagnant at 77, with one opening offset by one closure. Annualised revenue per sqft dropped 14% YoY to Rs 30,000, a sharp contrast to DMart, which posted a 1.5% YoY increase to Rs 36,600 and a 1% YoY rise in revenue per store to Rs 1.51 bn. Own-brand products remain the backbone of the Star format, contributing around 73% of revenue, but that hasn’t yet translated into a sustained turnaround.
What’s in it for long term investors?
Despite the near-term slowdown, there are still reasons why many market participants remain constructive on Trent’s long-term outlook. Management is confident that demand for discretionary lifestyle categories will improve over the medium term. Emerging categories including beauty and personal care, innerwear and footwear already account for 21% of standalone revenue and continue to gain traction. The company’s heavy investments in technology, automation and a largely variable cost structure provide resilience and the capacity to scale efficiently once demand recovers. Crucially, Westside and Zudio continue to enjoy strong brand equity and customer recall.
Some analysts, such as those at Axis Direct, argue that the long-term growth drivers remain intact. They cite Trent’s strong private-label strategy, consistent outperformance in sales productivity, rapid expansion footprint and new growth avenues such as the UAE market, Zudio Beauty and the company’s entry into the LGD jewellery segment as factors that could reinvigorate growth over time.
For now, Trent faces a challenging phase in its growth journey. The combination of slowing like-for-like sales, muted consumer sentiment and premium valuations has created a difficult backdrop, and investors may need to temper expectations after years of extraordinary compounding.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
