Titan Says High Gold Prices Continue To Weigh On Sales
Titan saw a sharp fall in jewellery sales in the second quarter as rising gold prices deterred consumers from buying ornaments.
Titan Company Ltd. said sales growth of its mainstay jewellery business remained muted in the quarter ended September as rising gold prices deterred buyers.
Jewellery sales fell sharply in July but rose 15 percent year-on-year between August and September, the Tata Group company, which owns the Tanishq brand, informed the exchanges. Retail sales, therefore, grew 7 percent for the quarter ended September, it said. The company said its branded collections like ‘Mia Classic’, ‘Smolitaire’ and ‘Sassy Silver’ got a “good response” during the period.
Revenue from Titan’s jewellery segment, however, contracted 2 percent in the three-month period due to adverse impact of the hedges that matured during the quarter.
Titan, according to Motilal Oswal, has targeted 22 percent revenue growth in FY20 in its jewellery segment—which contributes over 83-85 percent of its revenue—adding a weak quarter is likely to make the goal more challenging to achieve.
Watches And Eyewear Segment
- Weak consumer sentiment also led to moderation in growth of the watches division to 7 percent for the quarter and 13 percent between April and September.
- Sales at the company’s multi-brand outlets, however, grew at a faster rate than its exclusive brand outlets; its e-commerce business remained strong.
- Focused digital campaigns during festivals like Durga Puja and Ganeshotsav aided growth.
- Newly launched Titan Clocks sold exclusively on Flipkart was well-received.
- Watches business comprises 15-17 percent of the company’s revenue.
- Eyewear, a relatively small segment, grew 28 percent year-on-year.
Not The Only One
Titan isn’t alone in facing slowing demand. Marico Ltd., the maker of Parachute hair oil and Saffola vegetable oil; and soaps-to-hair colour company Godrej Consumer Products Ltd., too, highlighted muted demand in the last quarter. Marico had said the ongoing slowdown had led to liquidity challenges and lower returns for its wholesale and retail partners.
Godrej Consumer Products, too, acknowledged in its quarterly update that the demand environment was challenging on the back of slowing consumption, though it projected a slight uptick in volumes after a prolonged period of weakness. Automobile sales, which have declined since last Diwali last year, dipped to a 22-year-low in August, prompting production cuts among many companies.