Titan Q1 results: Firm reports first-ever quarterly loss of Rs 270 crore amid coronavirus crisis

Homegrown consumer goods company Titan on Monday reported first-ever quarterly loss in over 16 years due to the disruption caused by the COVID-19 pandemic. The watch-to-jewellery maker posted a standalone net loss of Rs 270 crore for the first quarter ended June 30, 2020, against a profit of Rs 371 crore in the year-ago period.

Total income of the Tata group company fell 62 per cent to Rs 1,901 crore as against last year's income of Rs 4,996 crore due to the complete loss of sales in April, while limited numbers of stores were operational during May and June in wake of coronavirus pandemic.

"Revenues included sale of bullion worth Rs 601 crore done to reduce inventory given the low level of sales due to the disruptions in activity," Titan Company said in a regulatory filing.

The company said that sales were deeply affected due to lockdown. Revenue growth in May and June stood at about 15 per cent and 63 per cent, respectively, against the revenue seen in corresponding months of previous year (excluding bullion sale). Number of stores that were reopened during June quarter stood at 83 per cent, and 97 per cent till date. All stores are still not operating on all days in all states due to intermittent lockdowns and local restrictions, Titan said.

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Following the decline in revenues, Titan cut down advertisement expenses to Rs 16 crore as compared to Rs 134 crore in the same period last year. The company said that decline in advertisement expenses was in  line with the low level of activity, while it plans to scale up with improvement in situation.

"With the negative consumer sentiment prevailing in the quarter, discretionary spends were very low, and specifically impacted our watches business and diamond-studded jewellery in the jewellery business," the company said.

CK Venkataraman, Managing Director of the company, said, "The severity of the disruption in business due to the pandemic impacted the company's performance resulting in an unprecedented loss for the company. The recovery in business, particularly in the jewellery business is encouraging and we expect to get back to normalcy by the fourth quarter of this year."

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"The company's reassessment of its cost structure during this period and inherently strong balance sheet, will help it to create a stronger base for a sustainably higher profit margin business," he added.

Segment wise, Titan's jewellery business recorded a decline of 71 per cent in revenue at Rs 1,182 crore versus Rs 4,047 crore in the same quarter last year. The income from watches was merely Rs 75 crore in Q1 FY21, registering a sharp decline of 90 per cent over last year on account of weak sales. The company' eyewear business declined by 80 per cent to Rs 30 crore against Rs 149 crore in the year ago period. Other businesses of the company, comprising Indian dress wear and accessories, registered a slump of 84 per cent at Rs 13 crore as compared to Rs 85 crore in the corresponding quarter last year. As of June 2020, the company owned a total number of 1,736 retail chain stores.

Of the subsidiaries, Titan Engineering and Automation Ltd (TEAL) saw revenues declining by 19 per cent to Rs 76 crore and profit before tax at Rs 7 crore, registering a fall of 51 per cent. CaratLane, being in the consumer discretionary space, was hit by the pandemic and ended with a revenue of Rs 42 crores (decline of 68 per cent) and a net loss of Rs 19 crore for the quarter.

Going ahead, the company expects recovery rate to improve quarter after quarter with revenue in the fourth quarter to atleast reach pre-COVID levels.

Ahead of Q1 results, shares of Titan Company ended Monday's trade at Rs 1,107.80, up 1.57 per cent, against previous closing price of Rs 1,090.70 on the BSE.