Titan posts pre-tax loss of Rs 335 cr in Q1 as lockdown washes out sales

With the major part of the quarter being a complete washout due to the lockdown and disruptions caused by the Covid-19 pandemic, Titan on Monday posted a pre-tax loss of Rs 335 crore for Q1 of FY21. It had reported a profit before tax of Rs 523 crore in the corresponding quarter of previous fiscal.

The Bengaluru-headquartered company posted a net loss of Rs 270 crore during the quarter. It had a net profit of Rs 371 crore in the year-ago quarter. Titan posted a decline of 62 per cent in consolidated revenue for the quarter with total income declining to Rs 1,862 crore from Rs 4,939 crore in the corresponding quarter of the previous fiscal.

“The lockdowns impacted the company’s operations significantly in the months of April and May 2020 as most stores were forced to shut down. While stores started opening in May, post Unlock 1.0, even as at the end of June 2020, only 83 per cent of all the stores opened and even for stores that opened, many of them were not operating for all days,” said Titan in a BSE filing.

The recovery rate of revenue is seeing a slow improvement and at the quarter ending June, it was 21 per cent for the watches and wearables division, 25 per cent for the eyewear division and 77 per cent for the jewellery division.

“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. 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,” said C K Venkataraman, managing director of Titan.

The jewellery division recorded an income of Rs 1,824 crore for the quarter as compared to Rs. 4,164 crore last year, a decline of 56 per cent. The impact on the watches and eyewear businesses was much higher with the segments recording a revenue decline of 90 per cent and 80 per cent respectively for the quarter. While the watches business recorded an income of Rs 76 crore against Rs 716 crore in the previous year, the eyewear business posted an income of Rs 30 crore as against Rs 149 crore last year.

The company’s employee expense was up by Rs 23 crore during the quarter. The company had renegotiated with certain landlords on the rent reduction/ waiver due to Covid-19 pandemic. Advertising expenses were slashed by 86 per cent to Rs 21 crore during the quarter.