L'azurde Company for Jewelry announces latest development regarding Covid-19 pandemic (Coronavirus) and its impact on the company businesses.
|Announcement Detail||L’azurde Company for Jewelry announces that the company’s businesses were affected by the global pandemic Covid-19 (Coronavirus) and its related precautionary measures that have been taken to contain the spread of this pandemic by the government of the Kingdom of Saudi Arabia, and the governments of other countries where L’azurde Company has significant operations. |
The reasons that caused L'azurde to be affected by these pandemic and related precautionary measures are as follow:
1- Temporary closure of L’azurde retail showrooms in Saudi Arabia and UAE.
2- Temporary reducing opening hours of its subsidiaries' retail showrooms in Egypt.
3- Closing all activities within shopping malls except supermarkets and pharmacies in Saudi Arabia.
4- Suspending all internal and international flights which impact L’azurde Travel sale and airports outlets.
5- Full and partially imposed curfew from 23 March to 21 June 2020.
6- The production operations have been affected due to the reduction of working hours and headcount.
On other hand, L'azurde has benefited from some governmental initiatives to support the private sector companies, especially the following initiatives:
1- Sanad system where the government bears 60% of the salaries of Saudi employees.
2- HADAF program to support 30% of salary or SAR 3,000 which of them is less to support Saudi employees who were employed in the private sector, from the beginning of July 2019.
3- Reducing the employee's wages in proportion to the actual number of working hours according to Labour law updates.
The financial impact of the global pandemic on the company's business until the end of the first six months of 2020 is as follow:
1- Total revenues, including gold metal value, were SAR 804.6 million in the first six months of 2020, a decrease of 33.4% compared to SAR 1,207.3 million in the same period of last year while operating revenues for the first six months of 2020 of SAR 163.3 million have decreased by 42.9% compared to SAR 285.8 million in the same period of last year.
2- Net loss for the first six months of 2020 amounted to SAR 67.8 million compared to net profit of SAR 24.1 million in the same period of last year due to lower operating revenues mainly due to the effect of unprecedented COVID-19 outbreak and related sharp increase in gold prices which pushed the Company to take inevitable decision to accept one-off cost of SAR 34.7 million related to the recall of some high value products. The purpose of this decision to rationalize and optimize Company’s investment in gold working capital in order to reduce finance costs.
3- Net of the cost savings which the company benefited from due to governmental initiatives taken by the government of the Kingdom of Saudi Arabia to support private sector is amounted to SR 2.5 million riyals.
The financial impact of this global pandemic Covid-19 (Coronavirus) may extend up to Q1 2021 but due to the uncertainty of current circumstances and prospective future, the Company cannot presently determine its full financial impact.
L’azurde’s management has proactively taken a series of measures to mitigate Covid-19 impacts on its operations and, including:
1. Developing the fast growing Miss L’ fashion jewelry line to its full potential through our own retail points of sales, E-Commerce and 3rd party retailers in Modern trade.
2. Expanding our successful L’azurde retail business in Egypt through new points of sales and a stronger assortment.
3. Optimizing the traditional wholesale business selling jewelry by weight through working capital reduction, and costs efficiencies.
4. Scaling our promising fast growing E-Commerce business through more investments in technology, infrastructure, systems and a state of the art experienced digital organization.
5. Expanding the TOUS global franchise business in KSA through e-commerce and more investments in marketing and products assortment. We plan to grow our KSA users’ base and turn TOUS into a strong household brand name in KSA, similarly to what we did with L’azurde.
6. Leveraging our solid customers’ network in the traditional Gold jewelry market to launch L’azurde jewelry line sold by piece. As the market leader L’azurde will help reshape and transform the traditional Gold jewelry segment by offering a new jewelry line meeting the consumers’ latest trends and offering retailers a very attractive commercial offer.
7. Maintaining our strong cash position and great banking relationships to support the Company transformation.
8. Continue to operate in accordance with government public health and safety guidelines.
The Capital Market Authority and the Saudi Stock Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.