Zudio's slowdown may impact Trent's future stock growth

Analysts are expressing mixed views on Zudio, a budget clothing chain under Trent Ltd. This store chain has played a significant role in boosting Trent's stock price from ₹2,000 to ₹8,000 in just over a year. However, some believe that Zudio's performance could also impact any future decline in the stock. Trent, which also owns brands such as Westside, has been one of India's fastest-growing retailers over the past five years. Since the pandemic began in March 2020, its stock has increased nearly 935%. Despite this growth, Trent has struggled recently, with its stock price dropping about 26% this year, causing concern among investors. Trent's growth has primarily been driven by its expansion of Zudio, which has grown from 168 stores in late 2021 to 635 by the end of 2024. However, the rate of store openings and sales growth for both Zudio and Westside has slowed, disappointing many investors. For example, the expected number of Westside stores was revised downwards, revealing fewer new openings than anticipated. The company has also closed some smaller Westside stores, shifting to larger outlets for a better shopping experience. While this strategy may take time to yield results, it could affect current sales performance. Experts like Soham Samanta from Centrum Broking describe Trent as a strong company, but note that Zudio's rapid growth rate has recently cooled down. Zudio now contributes about 55% of Trent’s total sales. Analysts are monitoring multiple factors, including Zudio’s sales and store growth, which could influence Trent’s stock performance further. For now, Trent is focusing on building its own brands and expanding into new areas like beauty products and lab-grown diamonds. Meanwhile, competitors like Aditya Birla Fashion are facing challenges related to acquisitions, and VMart is working on a turnaround strategy.