Lazurde Company for Jewelry (Lazurde) announced its businesses were affected by the COVID-19 pandemic and related precautionary measures taken the Saudi government, as well as by governments of other countries where the company has significant operations.
The company detailed in a bourse filing the following various reasons that impacted business:
-Temporary closure of retail showrooms in Saudi Arabia and UAE
-Temporary reduction of opening hours of its subsidiaries’ retail showrooms in Egypt
-Closing all activities within shopping malls except supermarkets and pharmacies in Saudi Arabia
-Suspension of all internal and international flights which impacted travel sales and airports outlets
-Full and partially imposed curfew from March 23 to June 21, 2020
-Production operations affected due to reduction of working hours and headcount
On other hand, Lazurde benefited from government’s initiatives to support the private sector that includes:
-Sanad system where the government bears 60% of the salaries of Saudi employees
-HADAF program to support 30% of salary or SAR 3,000, whichever is less to support Saudi employees who were employed in the private sector from July 2019
-Reducing employee’s wages in proportion to the actual number of working hours according to Labour law updates
Meanwhile, the company highlighted the financial impact of the global pandemic on its business in H1 2020 as follows:
-Total revenues, including gold metal value, were SAR 804.6 million in the first six months of 2020, a 33.4% decrease year-on-year (YoY), while operating revenues stood at SAR 163.3 million, down 42.9% YoY
-Net loss for H1 2020 amounted to SAR 67.8 million, compared to net profit of SAR 24.1 million in H1 2019, due to lower operating revenues mainly due to the effect of unprecedented
COVID-19 outbreak and related sharp increase in gold prices. The company also reported a one-off cost of SAR 34.7 million related to the recall of some high value products.
-Net cost savings from various governmental initiatives to support private sector amounted to SAR 2.5 million
The financial impact of the pandemic may extend up to Q1 2021, the statement said, adding presently it is difficult to determine full financial impact given the current situation.
Additionally, Lazurde’s management took proactive measures to mitigate COVID-19 impacts on operations, including:
-Developing Miss L’ fashion jewelry line to its full potential through retail points of sales, e-commerce and 3rd party retailers in modern trade
-Expanding Lazurde’s retail business in Egypt through new points of sales and a stronger assortment
-Optimizing the traditional wholesale business selling jewelry by weight through working capital reduction, and costs efficiencies
-Scaling the fast growing e-commerce business through more investments in technology and infrastructure systems
-Expanding the TOUS global franchise business in Saudi Arabia through e-commerce and more investments in marketing and products assortment.
-Leveraging solid customers’ network in the traditional gold jewelry market to launch Lazurde jewelry line sold by piece
-Maintaining strong cash position and banking relationships to support the company’s transformation
-Continue to operate in accordance with government public health and safety guidelines
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