Shares of Aditya Birla Fashion and Retail were down on Wednesday after the firm’s net loss widened in the fourth quarter.

What Happened: The fashion retailer reported a consolidated net loss of ₹230 crore for the March 2024 quarter, compared with ₹194.54 crore a year ago. Despite the challenging market conditions, the company’s revenue grew by 18.3% year on year to ₹3,407 crore. Both figures were better than street expectations.

EBITDA jumped 47.1% to reach ₹284 crore. EBITDA margins also improved, rising 160 basis points to 8.3% in the fourth quarter compared with 6.7% in the same period last year.

Tough Conditions: In a sluggish market, ABFRL’s lifestyle brands segment, its largest unit, experienced a modest 2% growth in Q4, hitting ₹1,564 crore in revenue. This segment, which will be demerged into a new entity called Aditya Birla Lifestyle Brands, recorded an EBITDA of ₹305 crore, marking a 36% increase from the previous year.

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Improved gross margins and cost management contributed to this growth, with EBITDA margins climbing to 19.5% in Q4, up 480 basis points from the previous year. The new unit will also include youth brands like American Eagle and Forever 21, sportswear such as Reebok and the innerwear and athleisure business.

Pantaloons reported Q4 sales of ₹895 crore, reflecting a 10% increase from the previous year. However, like-for-like growth was a mere 1%. Pantaloons, along with StyleUp, ethnic brands, and super-premium brands, will remain part of Aditya Birla Fashion.

The company emphasised its commitment to business growth despite the sluggish discretionary consumption observed over the past six to eight quarters.

"The strategic demerger of ABFRL is creating two separate growth engines, each with a clear capital allocation strategy and a unique path for value creation. Both entities will focus on specific growth areas aligned with their business models to maximise shareholder returns," the company stated.

Price Action: Shares of Aditya Birla Fashion were down 0.6% at ₹284.35 near the start of trade on Wednesday.

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