Titan defers launch of jewellery collections, expects demand to be muted

Company says Covid-19 situation to adversely affect profitability during the first half of this year

Due to the lockdowns and restrictions imposed on economic activities to prevent Covid-19 spread, jewellery-to-watches maker Titan has deferred the launch of two of its jewellery collections till a time that most of the stores are re-opened.

While the company has opened around 43 per cent of its stores across all businesses till date, all the mall stores continue to be closed, said the Bengaluru-headquartered company in a BSE filing on Tuesday. “Based on representations being made by various industry associations, the company is hopeful that malls will also be opened in the next few weeks in non-containment zones along with High Street stores,” it said. 

The sales in stores that have opened up are at around 50 per cent of that in normal period, but the situation is improving gradually. “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,” said Titan.

According to Titan, customer sentiment to reduce spends on discretionary items is also likely to impact demand for most of the company’s products including watches, jewellery, perfumes and accessories. 

In the last 2 months, the company said its operating cash flow was negative due to virtually zero sales during the first 6 weeks of lockdown, increase in mark-to-market cash outflow on gold hedge due to rising gold prices and committed costs being incurred. However, it expects this cash outflow to be recovered when sale of jewellery restarts. “Thus, the Covid-19 situation is expected to adversely affect the profitability during the first half of this year,” said Titan.

While manufacturing activities have restarted gradually in most of the facilities, production ramp up will be based on current inventory levels and the Company‟s estimate of demand. A top company executive had earlier told Business Standard that it does not have the urgency to begin production in its flagship Hosur factory but bring back the rhythm of the manufacturing unit.

On the supply side, vendors have re-started their production and are ready to provide required supplies, it said. “Supplies from international vendors for watch business, eyewear business and for accessories have commenced,” informed the company.