Aditya Birla Fashion & Retail (ABFRL) has reported mixed financial results for the quarter ended June 30, showcasing revenue growth but increased losses following a significant corporate restructuring.

Revenue Growth

The company announced a 6.5% year-on-year increase in revenue, reaching ₹1,831.46 crore for the quarter, up from ₹1,719.48 crore in the same period last year. This growth indicates a positive trend in the company's top-line performance despite challenging market conditions.

Widening Losses

However, ABFRL's bottom line faced pressure as net losses from continuing operations widened to ₹233.73 crore, compared to ₹160.92 crore in the previous year. This increase in losses highlights the challenges the company is facing in maintaining profitability during its restructuring phase.

Corporate Restructuring

A key development for ABFRL has been the completion of the demerger of its Madura Fashion & Lifestyle business into Aditya Birla Lifestyle Brands Limited. This strategic move is aimed at streamlining operations and potentially unlocking value for shareholders.

Financial Position

The company's financial metrics as of the reporting date show:

The interest service coverage ratio stood at -3.52, indicating challenges in covering interest expenses with current earnings.

Strategic Investments

ABFRL has also made strategic moves to strengthen its position in the fashion retail sector:

1. Increased stake in Finesse International Design Private Limited to 65.50%
2. Raised shareholding in House of Masaba Lifestyle Private Limited to 59.16%

These investments suggest the company's commitment to expanding its portfolio and market presence in the premium fashion segment.

Outlook

While ABFRL faces short-term challenges reflected in its widening losses, the revenue growth and strategic restructuring initiatives indicate the company's efforts to position itself for long-term success in the competitive fashion retail market.

Aditya Birla Fashion & Retail (ABFRL) has announced its financial results for the first quarter of fiscal year 2026, showcasing resilient growth amidst a challenging market environment.

Revenue Growth and Profitability

ABFRL reported a consolidated revenue of ₹1,831.00 crore for Q1 FY26, marking a 9% increase from ₹1,674.00 crore in the same quarter last year. The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) saw a significant jump of 38% year-on-year, reaching ₹169.00 crore compared to ₹123.00 crore in Q1 FY25. This robust performance led to an EBITDA margin expansion of 200 basis points, improving from 7.3% to 9.3%.

Segment Performance

The company's growth was primarily driven by its ethnic wear and digital-first brands:

• Ethnic businesses grew by 25% year-on-year, with the designer-led brand portfolio showing an impressive 79% growth.
• TMRW, ABFRL's digital-first fashion portfolio, delivered a strong 38% year-on-year growth.
• The Pantaloons segment reported a marginal decline in revenue, primarily due to store closures over the past year and the shift of Eid festivities.

Profitability Improvements

ABFRL's focus on operational efficiency yielded positive results across its portfolio:

• The ethnic brands segment saw a significant margin improvement of approximately 1600 basis points, turning EBITDA positive this quarter.
• Pantaloons and TMRW maintained their margins compared to the previous year.

Network Expansion

The company continued its retail expansion strategy, adding over 30 stores during the quarter. ABFRL's total retail area now spans 7.4 million square feet, representing a year-on-year addition of about 260,000 square feet.

E-commerce Growth

ABFRL's e-commerce sales grew by over 20% year-on-year, excluding TMRW. When including TMRW, the growth in e-commerce sales stood at over 28%, highlighting the company's strong digital presence.

Key Brand Highlights

• Sabyasachi and GFPL (Goodview Fashion Private Limited) delivered approximately 40% Like-to-Like (LTL) growth.
• TASVA, the men's premium ethnic wear brand, saw a 72% year-on-year sales growth and an impressive 39% LTL growth.
• The Collective, ABFRL's luxury multi-brand retail format, maintained double-digit profitability.

Management Commentary

Ashish Dikshit, Managing Director of ABFRL, stated, "The quarter marked a positive shift in momentum, supported by a vibrant wedding season and strong brand performances that continue to fuel our growth engine. Having maintained profitable growth over multiple quarters, we are confident in continuing this trajectory."

Future Outlook

ABFRL remains focused on delivering sustainable, profitable growth by building market-leading brands and fostering innovation. The company aims to stay ahead in the evolving fashion and lifestyle market through agile, digitally enabled business models driving its consumer-centric proposition.

In a significant development, ABFRL's tech-led venture TMRW received its first external investment of approximately ₹437.00 crore from ServiceNow Ventures. This investment is expected to enhance TMRW's tech platform with ServiceNow's AI and automation capabilities.

As ABFRL continues to navigate the dynamic fashion retail landscape, its diverse portfolio and strategic initiatives position it well for future growth and market leadership.