Trent Ltd, the prominent retail arm of the Tata Group, has carried its dismal performance from 2025 into the new year, leaving investors anxious for a meaningful turnaround. The stock, which was the worst performer in the Nifty50 index throughout 2025, shedding 40% of its value, has declined by an additional 7% in the early days of 2026.
A Disappointing Business Update
The company's recent business update for the December quarter (Q3FY26) offered little comfort to the market. Trent reported a 17% year-on-year decline in its standalone revenue growth. While this figure indicates growth has stabilized compared to the previous quarter, it marks the fifth consecutive quarter of declining revenue growth, highlighting persistent challenges.
Analysts at Bernstein, in a report dated 6 January, noted that the Q3 growth was lower than their expectations. They pointed out that while the revenue growth appears to have bottomed out, Trent would need to achieve an improbable 33% revenue growth in Q4 to meet its full-year FY26 projections.
Store Expansion Masks Underlying Weakness
A deeper look reveals concerning trends beneath the surface. The revenue growth was primarily propelled by aggressive store expansion, which could not fully offset declining sales per store. Motilal Oswal Financial Services highlighted that revenue was driven by a 28% year-on-year increase in store count, but revenue per store fell by approximately 11%.
This indicates continued cannibalization and pressure on store-level sales efficiency. During the last quarter, Trent expanded its footprint by opening 17 new Westside stores and 48 new Zudio stores. As of 31 December 2025, the total counts stood at 278 Westside and 854 Zudio outlets.
Investor Concerns and Future Outlook
Investor worries have been mounting for some time, centered on the retailer's moderating sales growth against a high base. This is compounded by muted consumer demand and rising competitive intensity in the value and fashion retail segments.
In the near term, there is little respite expected for the stock. The weaker-than-anticipated Q3 growth increases the likelihood of continued earnings downgrades by analysts. When the full Q3 results are announced, all eyes will be on the company's profit margins for any signs of strain or improvement.
Ultimately, the stock's recovery is inextricably linked to a sustainable pick-up in growth. The market will be closely monitoring the pace of store additions and, more critically, the ability of Trent to improve sales productivity at its existing Westside and Zudio locations to reignite investor confidence.
