Titan Expects Profit Hit from India Lockdown

Jun 2, 2020 7:58 AM By Rapaport News

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RAPAPORT... Titan Company anticipates a negative impact on its profit in the first half of the year amid “very marginal” sales due to the coronavirus-related lockdown in India.

Government measures forced the jeweler to shut all its stores and manufacturing facilities from March 17 until the first week of May, when the restrictions were gradually eased. The shutdown hit operations “substantially,” Titan warned last week. During the period, the company was only able to sell through e-commerce, which accounts for just 2% of total revenue, it noted.

A large portion of the company’s sales occur in April, with the Akshaya Tritiya holiday considered a very auspicious day for buying gold jewelry. This year, it lost almost all sales from the April 26 event. The company also noted a shortfall from wedding-season purchasing, which is generally strong in April and May, as nuptials during those months were postponed, Titan said. The jeweler delayed the launch of two of its collections until most of its stores fully reopen, it added.

Titan has reopened about 43% of its stores since lockdown restrictions were lifted, with revenue from those outlets at around 50% of their normal state. The company expects to open mall locations in non-containment zones — areas less impacted by Covid-19 — within the next few weeks, depending on how the government’s instructions change, it noted.

The company has resumed manufacturing at most of its facilities, but does not expect production to return to normal in the short term. It will adjust its operations according to current inventory levels and its estimate of market demand.

“These are early days and the company is not in a position to gauge with certainty the future impact on operations, but expects normalcy to be achieved only after a quarter,” it noted. “Customer sentiment pointing to reduced [spending] on discretionary items might impact demand for most of the company’s products.”

Image: Titan jewelry. (Titan Company)

Tags: COVID-19, Rapaport News, Titan, Titan Company