Senco Gold Hit As Price Rally Dampens Demand For Jewellery
The Kolkata-based retail chain said it has taken a slew of measures to combat the demand situation.
Jewellery retail major Senco Gold Ltd. on Friday said the recent sharp spurt in gold prices due to geopolitical reasons has dampened demand, and the industry's first-quarter performance hinges upon ongoing buying propensity during festive and auspicious New Year celebrations.
The Kolkata-based retail chain said it has taken a slew of measures to combat the demand situation, with a push toward diamond-studded gold jewellery and consumer-centric schemes.
However, these may not compensate for the 15-20% de-growth in volume terms witnessed in March and April, a top company official said.
'In the last 30 days, the gold price has jumped about 10%, and in the last six months, it has become costlier by 23-25%. This sharp volatility has hit retail buying sentiment. Volumes have plummeted by 15-20% for the industry,' Senco Gold managing director and CEO Suvenkar Sen said.
Eid, Bengali New Year, Akshay Tritiya, and regional New Year festivities are expected to help bring demand into stores, but cash movement restrictions because of the election model code of conduct might be a hurdle for certain retailers.
Senco had reported a 23% growth in its consolidated net profit at Rs 27.6 crore for the quarter ended June 2023, from revenue expansion of 30% to Rs 1,305 crore.
He, however, acknowledged that in 'value terms,' the market is expected to be flat as gold is hovering around Rs 70,000 per 10 grams.
Sen expects a flattish performance in the year-on-year fourth-quarter sales that ended in March 2024.
The company is in a silent period for results, and thus Sen declined to divulge more specific details.
Senco said that it has introduced a price guarantee scheme for six months under the Marigold scheme, which the industry offers only up to one month until Akshay Tritiya, where a customer books gold and gets immunity from price rise.
The company is also offering discounts in making charges to push sales during this period. The company also has DigiGold, which allows customers to invest in gold for as low as Rs 300.
Sen mentioned that the company is focusing more on diamond-studded gold jewellery, which has either narrowed the gap or even made ornaments less costly as they are made up of 14-carat gold.
He expects diamonds, including lab diamonds, which account for 11% of total revenue, to increase to at least 15% in the next 2-3 years.
The company’s revenue for nine months ended Dec. 24 was Rs 4,104 crore and net profit was Rs 148.8 crore.
