Reliance Retail Q1 FY27: Profit Falls 14.2% Despite 8.2% Revenue Growth; Digital Business Targets Higher Margins in 2 Years

Reliance Retail Ventures Ltd (RRVL), the retail arm of Reliance Industries, reported a mixed performance for the first quarter of FY27. While revenue continued to grow at a healthy pace, profitability came under pressure due to higher investments in digital commerce and related infrastructure. The company said it is now shifting its strategy from rapid market share expansion to profitable and sustainable growth, with expectations that its digital business will deliver stronger margins and generate cash over the next two years.

For the quarter ended June 2026, revenue from operations increased 8.2 per cent year-on-year to Rs 79,745 crore from Rs 73,720 crore. Gross revenue rose 7.4 per cent to Rs 90,408 crore compared with Rs 84,171 crore in the corresponding quarter last year. Excluding the demerger of Reliance Consumer Products (RCPL), gross revenue grew 11.6 per cent.

Despite higher sales, net profit declined 14.2 per cent to Rs 2,806 crore from Rs 3,271 crore a year ago. EBITDA stood at Rs 6,309 crore, while the EBITDA margin narrowed by 80 basis points to 7.9 per cent from 8.7 per cent. EBIT fell 6.9 per cent to Rs 4,529 crore from Rs 4,866 crore, reflecting higher fixed costs arising from continued investments in digital commerce.

Deputy Chief Financial Officer Dinesh Taluja said Reliance Retail is entering the next phase of its digital journey by prioritising profitability over aggressive expansion. The company is concentrating investments in micro-markets where there is a clear path to positive unit economics.

Management expects the scale achieved this year to improve margins and strengthen cash generation over the next two years. Growth will continue to be funded through internal profits, while investments will be curtailed in markets that do not meet the company's financial return thresholds.

The company's digital business continued to expand rapidly during the quarter. Digital transactions surged 46 per cent year-on-year to 568 million from 389 million, significantly outpacing revenue growth. Reliance attributed the increase to a sharp rise in grocery orders, which typically have lower average order values.

JioMart recorded a 116 per cent year-on-year increase in average daily grocery orders and now serves nearly 5,500 pin codes across more than 2,500 cities. More than 2,500 Digital and Fashion & Lifestyle stores are integrated with two-hour delivery services, strengthening the retailer's omnichannel network. Reliance Retail's fulfilment network includes over 3,100 multi-format stores and more than 800 dedicated dark stores, providing operational advantages for faster deliveries and improved customer service.

The company has outlined a three-year strategy aimed at improving profitability rather than pursuing growth at any cost. Its focus areas include increasing repeat purchases, improving order density, enhancing delivery reliability, lowering fulfilment costs and boosting contribution margins per order. Reliance also plans to improve profitability by increasing the share of private-label products, expanding marketplace income and strengthening customer retention. Investments will continue only in markets capable of delivering sustainable returns.

Reliance Retail added 252 stores during the quarter, taking its total store count to 20,169 with a retail footprint of 78.4 million square feet. Its registered customer base grew 10.6 per cent year-on-year to 396 million. Customers using both online and offline channels spent 2.7 times more than those shopping only through physical stores, highlighting the growing importance of the company's omnichannel strategy.

The grocery business posted 7 per cent like-for-like growth, supported by regional festivals and category-led promotional campaigns. Consumer electronics sales increased 16 per cent, driven by demand for air conditioners, laptops, smartphones and small appliances. The Fashion & Lifestyle segment recorded 4 per cent growth, aided by refreshed merchandise and store upgrades.

Online channels continued to gain traction, with digital sales accounting for 27 per cent of apparel and footwear revenue, an increase of more than 490 basis points from the previous year. Ajio Rush reported 136 per cent sequential growth in orders, while the Shein app crossed 30 million downloads. The resQ after-sales services business also delivered 27 per cent year-on-year revenue growth.

Reliance Consumer Products more than doubled its gross revenue to Rs 8,600 crore during the quarter. The Independence brand contributed Rs 3,200 crore in sales, while Campa generated Rs 2,900 crore.

The company also announced plans to expand Campa internationally, with launches scheduled in Australia this month and Africa in the following quarter. In addition, Reliance has converted its beverage joint venture with Sosyo into a majority-owned subsidiary and is establishing a new edible oil manufacturing facility in West Bengal, further strengthening its FMCG portfolio.

Disclaimer: The article is for informational purposes only and not investment advice.