Reliance Retail profit drops as digital expansion weighs on margins
Reliance Retail reported higher first-quarter revenue but falling profit as heavy investments in e-commerce infrastructure compressed operating margins for a third consecutive quarter.
Reliance Retail’s first-quarter revenue grew, driven by double-digit underlying growth in grocery, fashion, and consumer electronics, but profitability declined. Operating margins contracted for the third straight quarter as the company absorbed higher fixed costs from its expanding digital infrastructure. The growing share of online sales in its overall mix is directly pressuring near-term earnings.
The shift toward digital is accelerating rapidly across the business. JioMart, the grocery e-commerce platform, saw average daily orders jump 116% year-on-year, with online sales now making up 13.4% of consumer grocery revenue. In fashion, e-commerce accounted for 27% of apparel and footwear sales, a 490-basis-point increase from a year ago.
Quick-commerce is becoming a primary growth vector for the retailer. The Ajio Rush platform reported a 136% quarter-on-quarter surge in orders. Furthermore, the relaunched Shein application has surpassed 30 million downloads, indicating strong consumer appetite for fast digital fashion. For investors, this signals that management is prioritizing market share capture over immediate margin preservation.
Reliance’s newer consumer products arm is scaling quickly but remains opaque on profitability. Reliance Consumer Products more than doubled gross revenue to Rs 8,600 crore, though EBITDA and profit figures were withheld. Daily essentials under the Independence brand generated Rs 3,200 crore, while the resurrected Campa beverage line contributed Rs 2,900 crore.
The company is pushing Campa into international markets, with launches in Australia this month and Africa next quarter. RCPL executive director Ketan Mody also noted the conversion of a beverage joint venture with Sosyo into a majority-owned subsidiary and the construction of a new edible oil plant in West Bengal.
Despite the digital focus, the physical store network continues to expand. Reliance opened 252 stores during the quarter, bringing its total footprint to 20,169 locations across 78.4 million square feet. “Our continued investment in digital commerce underscores the transformative power of our digital platforms,” executive director Isha M. Ambani said.
Consumer electronics revenue increased 16% year-on-year, helped by brand partnerships that navigated global supply constraints. Fashion revenue grew 4%, supported by store upgrades. The overall picture is of a retailer aggressively funding a transition from physical to omnichannel, a strategy that will require sustained capital tolerance from shareholders.
