Titan Company, the largest organised jewellery retailer in India, took a hit on its revenues during March due to the ongoing lockdown in the country.
Revenue for jewellery division declines 5% after first two months growing at 16.5%, while watches sales grew 1%. Eyewear division revenue declined 20%. Other, smaller businesses grow 42% on a low base.
On Wednesday, Titan said its growth in Q4FY20 was mostly in line but the coronavirus outbreak had hurt sales.
Because of the shutdown of shopping malls and trade centres, the retail stores of the company — Tanishq, CaratLane and World of Titan — have also been closed in many places.
It has underlined the fact that the Jan-Mar quarter commenced well with the growth largely in line with our targets till the beginning of March.
However, sales started dipping sharply in March, particularly in the watches segment, due to COVID-19.
However, the Titan share price climbed over 8% to Rs 987.05 on NSE.
Jewellery division took a massive hit. Though, the company update suggest 5% decline in the Jewellery division sales, considering the 16.5% revenue growth for Jan & Feb, the implied decline in March sales can potentially be in the range of 30-40%.
Meanwhile, the diamond-studded activation in the quarter did well and wedding jewellery sales continued to be good till the disruption.
During the year, the division added 40 Tanishq stores, 1 Zoya store and 8 Mia stores for the year to date on a net basis, with the retail space addition being nearly 1,51,000 sq ft.
The watches and wearables division grew by 1% despite the significant loss of sales in the month of March.
In the eyewear segment, growth was subdued in the quarter primarily due to the decline in trade channel but the disruption in March led to a 20% decline in revenues for the quarter. Growth for January and February months was flat.
With Titan closing down most of its manufacturing units and retail stores amid the Covid 19- led lockdown, the company’s growth for the fiscal is likely to fall way short of its earlier guidance. The growth for FY21 is also expected to recover only gradually.
Overall we expect the Covid-19 crisis is expected to materially dent the performance of India’s retail and consumer discretionary sector across all distribution channels. The gradual closure of malls and standalone stores from mid-March onwards to April 14 will negatively impact the performance in Q4FY20 and Q1FY21
FY20 has been a challenging period for Titan’s jewellery division, mainly owing to a significant surge in gold prices and weak consumer sentiments impacting higher discretionary items.
The management had earlier guided to exit FY20 with revenue growth of 11-13%.
However, with closure of stores and postponement of wedding dates, we expect the jewellery division to report revenue de-growth significant lesser than the management guidance in the near term.
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