Lazurde Company for Jewelry generated positive cash flows from operations in 2019 despite challenges, the company said during its full-year 2019 financial results earnings call on March 23.
The company further explained that it was able to maintain its gross profit margins while reducing operating expenses despite challenging market dynamics.
In response to wholesale revenues being negatively impacted by the sharp increase and fluctuation in the gold price, the company launched new products to meet the changing consumer taste and budget. In addition, it accepted the return of gold jewelry from customers with excess inventory and slow payment to reduce credit risk.
Lazurde said it has laid stronger foundations for “TOUS” business and is gearing for significant growth in the coming 3 years by investing in a well-trained and incentivized female workforce, strong marketing campaign, and new IT system.
Furthermore, cancellation of the free trade agreement between Saudi Arabia and Egypt impacted the flow and cost of gold jewelry manufacturing, the company added.
On the other hand, the company managed to protect and grow its successful and profitable wholesale and retail businesses in Egypt, and took the long pending decision to wind down the retail business in Saudi Arabia, which was suffering losses for years by retaining just 4 profitable shops, reducing operating expenses and inventory as well as allocating sufficient provisions for any expected future losses.
The company also halted exports to Iraq and UAE to reduce credit risk and enhance working capital.
It is worth noting that Lazurde’s operating revenues from the Kingdom, which amounted to 53% of the total operating revenues, increased 16% year-on-year (YoY) to SAR 256.6 million in 2019.
|
Revenues by Region |
|||
|
Region |
Operating revenue (SAR mln) |
Stake |
Variation from 2018 |
|
Saudi Arabia |
256.6 |
53.3% |
+16.0% |
|
Egypt |
208.8 |
43.4% |
+26.0% |
|
Exports |
15.8 |
3.3% |
(15.0%) |
|
Total |
481.2 |
100.0% |
+18.4% |
Lazurde reported a net loss after Zakat and tax of SAR 17.5 million for the fiscal year 2019, compared to a net profit of SAR 17.7 million a year earlier.
The company said it has taken proactive measures to deal with the coronavirus crisis by setting up an emergency team to follow the developments on a day-to-day basis and review its initiatives to manage the crisis.
Meanwhile, Lazurde launched an e-commerce platform for its line, “Miss L” and will launch an e-commerce platform for other brands by March-end.
The company has suspended all hiring since March 1, 2020, discretionary spending and capital expenditures and is focusing on tight cash management.
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