I can think of 3 additional important elements that must be considered: Potential ROE, Sales Growth, and Type of Manager.
Potential ROE: Future growth for Trent depends upon new store addition.
- Non-operating expenses (Interest and Depreciation) will continue to increase, depressing the NPM.
- Fixed assets will continue to increase, depressing Asset Turn.
Due to heavy influence from the above factors, Trent will remain a sub-par ROE business even with immense leverage from ‘Lease Liabilities’.
Sales Growth: From FY18 to FY22, Trent did a sales CAGR of 20% but Nykaa did 60%. Why future will be any different?
Type of Manager: Trent – Hired Hand | Nykaa – Founder as Owner Operator with next generation in the leadership positions.
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