Lindt & Sprüngli records dip in performance amid coronavirus, despite strong start to 2020
The Swiss-based Lindt & Sprüngli confectionery group has stated that despite a promising start to the year, its sales for 2020 are anticipated to be down between 5-7% due to trading conditions amid the coronavirus pandemic.
According to the company’s latest half-year results, the business had seen notable rises in sales until the beginning of March, but the enforced closure of around 500 of its shops during the prime Easter season had dented its fortunes.
The first-half results for 2020 showed an organic sales decline of 8.1%, recording revenues of CHF1.53 billion, with a total net income for the six-month period of just under CHF 20 million, which was slightly up year-on-year despite the pressures the sector has faced this year.
As the firm noted, the group put in place appropriate measures to ensure business continuity preserve business continuity and to protect the health of its employees, consumers and all its commercial partners. Despite the challenging environment, the company said it continued to gain market share in all strategically important markets, stating that its strong business model and financial base had given confidence for the remainder of the year.
According to the company, sales were particularly affected in both its high street retail operations, as well as its travel retail, gastronomy and B2B businesses, which likewise recorded a drop in sales. The sudden change in the behaviour of consumers and customers in this unfamiliar environment required rapid and flexible adjustments, which the company believed it had navigated successfully.
In a statement, the company said: “Thanks to the enormous and tireless dedication of all employees, Lindt & Sprüngli was able to maintain production and day-to-day operations, as well as meet customer demand. To minimise the effects on the annual results as much as possible, the company has initiated cost-cutting and efficiency programs across the entire group with the intention of emerging from the crisis stronger than ever. At the same time, investments in advertising continue to ensure profitable growth in future.
“In addition, the business has launched numerous entrepreneurial initiatives to counteract the effects of the restrictions already mentioned. Examples include the rapid launch of home deliveries or pick-up services. Online trading through existing local shops was also swiftly expanded to include new online shops. The online business achieved double the level of sales recorded in the same period last year.”
During the crisis, the business said that it had set up donation projects worldwide as a gesture of gratitude to everyone who has shown untiring commitment to public welfare, including the gifting of Easter products to hospitals and care homes in many countries, as well as a donation of one million Swiss francs to Glückskette, a local charity providing immediate social support across all of Switzerland to anyone affected by the pandemic.
Sales in the “Europe” segment organically reduced by -4.9%. In this difficult environment, the important key markets of Germany and France achieved slight sales growth. Sales in the important UK market were stable year-on-year, Spain and Russia reported a small increase in sales, in the lower single-digit range, while Scandinavia managed to achieve double-digit growth. By contrast, the home market of Switzerland, along with Austria and Poland, was significantly impacted by fallout from the pandemic. The market most affected was Italy, where the closure of a large number of small shops in the traditional retail business during Easter severely impacted seasonal sales.
The “North America” segment saw organic sales drop by -8.2% in the first half of the year. The consequences of the measures to contain the coronavirus especially affected the own network of shops and the gastronomy products business.
Sales fell organically by -18.4% in the “Rest of the World” segment. Here the effects of the pandemic were particularly severe on the performance of the Travel-Retail business, as well as on the markets of Brazil and Japan, which all have an extensive network of own shops. In addition, sales in South Africa, China and Australia were also negatively affected.