Titan Co, India’s largest jewelry company, said its mainstay jewelry business saw retail sales that were in line with expectations for the October-December period, but there was a slight slowdown in sales to franchisees.
It also said its pilot stores for special occasion ethnic wear are doing well and it may open a few more stores soon.
The company, which has been posting results well above Street expectations for some time, issued a quarterly update that suggests that results for the Oct-Dec quarter will be strong as well.
“The festival season this year did not disappoint for both jewellery and watches divisions..The division had a good festival season with a double digit retail growth over the festival dates in the previous year,” it said.
“The retail growth for the quarter has been healthy and in line with internal management expectations, despite Dussera being celebrated in the previous quarter,” the management said.
This is on top of a strong comparison period last year. Tanishq had reported a growth of 15% for the corresponding quarter of 2016.
However, said the company, there was a bit of slowdown in its sales to its franchisees, or primary sales.
“The primary growth for the quarter however was lower due to the higher franchisee billing of about Rs 250 cr which happened towards the end of the previous quarter.
“The market share gains of Tanishq continue unabated along with the strengthening of the brand health metrics,” it added.
The quarter started on a good note this year, with suspension of the applicability of the Prevention of Money Laundering Act to the jewellery industry in India.
The Act required the stores to collect KYC for all sales in excess of Rs 50,000 and file certain returns as applicable and was imposed in the wake of attempts to launder black money after a government crackdown on tax evaders.
“The suspension (of the Act) led to resurgence in sales in Tanishq stores, in time for the festival season,” Titan said.
The government mandated requirement for PAN card for any transaction above Rs 200,000 and cash ban on all purchases above Rs 200,000 continue to be in force.
Another favorable regulatory change was in the GST rate for Watches and Eye Wear.
The GST on watches and sunglasses has been revised to 18% from 28%. The GST rate on frames has been revised from 18% to 12% which is in line with the GST levy on a complete spectacle. Both the divisions undertook a price correction, commensurate to the reduction in the GST rate.
The division added a total of 34 Tanishq stores adding up to about 101,000 sq feet including 20 Gold Plus stores which have been converted year to date.
The company said the watches division also had a good festival season and quarter.
The Titan end of season sale started towards the end of the quarter and is likely to further boost sales, it said.
“All the retail formats of the watches division experienced a healthy same store growth during the quarter and the online channel continued to outperform the traditional channels of sales in terms of growth.”
The division added 21 World of Titan stores, 16 Fastrack and 19 Helios stores adding upto 27,500 sq feet in FY17-18.
The company said the prescription eye wear business continues to show a healthy retail growth in Q3 but the sunglasses business continued to underperform.
“The sunglasses business has a very high component of distribution and the distributors/dealers continue to remain vary about stocking this category on account of changes in the GST rate,” it said.
The GST rate on Sunglasses was revised from 28% to 18% and the division expects the business to pick up in the last quarter.
“Continuous efforts are being made to add more dealers to the distribution network to increase the points of sale for this category.”
The division introduced ultra thin acetate frames under the Titan Eye Plus brand and introduced a new category of ready for sale products called Computer Glasses to promote eye protection while using electronic devices.
The division added 34 Titan Eye Plus stores in FY 17-18, adding up to about 24,000 sq feet of retail space.
The company said its perfume business is growing at a “very exciting pace”.
“Our brand “Skinn” is already the largest selling perfume by volume and value in all of the departmental store chains that it is available in,” it said.
Fragrances business has many interesting product introductions lined up for the near future which will give a further boost to the volume and value of the business, Titan promised.
It also said it has taken calibrated steps for entry into the “Special Occasion Ethnic Wear” business.
The business is in a pilot phase at this time and has two stores in Bangalore with the brand name “Taneira”.
“Both the stores are doing very well and the company may open a few more stores in other metro cities to assess the market potential there.”