Thule reports “solid quarter” despite negative effects of COVID-19

Thule has reported a “solid quarter” for Q1 2020 despite the negative effects of COVID-19 as of mid-March, the company has said in its latest financial report.

The group said it had started the year “very strong” with increased sales, improved profitability and more efficient use of capital. However, when COVID-19 lockdowns were implemented in its main markets in Europe and North America, it said it saw a “significantly reduced demand and needed to act quickly in a completely new reality”.

Sales in the quarter decreased by SEK 90 million to SEK 1,744 million, a decrease of 4.9%. Underlying EBIT in the quarter was SEK 326 million.

The COVID-19 outbreak and the reduced travels in Asia led to the previously growing luggage category declining in the quarter. In Europe, all markets grew until mid-March, to then encounter different levels of decline, directly related to the degree of lockdowns in the markets, the group said, with store closures and stay at home orders.

Sales dropped “significantly” in the markets with the “most drastic” measures implemented, such as France, Italy, Spain and the UK. The Active with Kids category grew in the quarter, driven by the launch of the new Thule Spring stroller, but also by good development in the other two stroller models.

In America, sales decreased by 13 % in the quarter. Sales grew in North America until mid-March and then dropped “significantly”, the group said. Sales in Brazil developed well, while the rest of Latin America experienced a reduction in demand at the end of the quarter. The Active with Kids category developed best, with strong growth in the quarter driven by the new Thule Spring city-stroller and the Thule Urban Glide 2 jogging stroller.

“We have since the COVID-19 outbreak focused on the health and safety of our employees,” said Magnus Welander, CEO and president. “Measures implemented include travel bans, opportunities to work from home as well as the implementation of new hygiene and social distancing processes and rules in our assembly plants, distribution centres and offices.

“At the same time, we have acted to ensure that we can cost-efficiently run the business in a short-term situation of significantly decreased demand. We have therefore at all our operating units implemented various levels of short-term furloughs and other cost-reducing initiatives.

“It is currently not possible to estimate how the effect will be in the short-term and we are therefore implementing measures to meet a short-term challenging financial reality in 2020. However, we are also ensuring that this is done in balance with the drive to meet our long-term strategic agenda and targets. We are committed to our communicated long-term strategy that focuses on utilising a strong financial position to drive significant initiatives of sustainable product development of fantastic products. We also continue the building of a strong global consumer brand as well as driving efficiency improvements in our supply chain.

“The underlying long-term positive market trends in the segments we operate in and the company’s leading position in products for an active life close to home, with a clear exposure to ‘staycation’, makes me optimistic once we come through this current challenging period.”

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