Lindt sales and profit hit by Easter lockdown due to COVID-19

Up to the beginning of March 2020, the company achieved a solid increase in both sales and profit, it said in its half-year results.

But the rapidly introduced global measures in an attempt to contain the coronavirus pandemic during the important Easter business affected its half-year results.

Despite the challenging environment, Lindt said it continued to gain market share in all strategically important markets and “is confident about the future thanks to its solid financial base, strong business model and high liquidity​”.

In the early stages of lockdown confectionery sales suffered across the sector as grocery shoppers focused on stocking up on essential supplies and made fewer impulse purchases.

Easter

Lindt said sales were particularly affected by the restrictions on retail trade and the temporary closure of around 500 of its own shops during the Easter season, which is crucial for the company as its sales profile is extremely high during this seasonal event. The Travel Retail business, along with the gastronomy and B2B business, likewise recorded a drop in sales.

“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 minimize 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​,” it said in a statement to the media.

Europe

Sales in its ‘Europe’ segment were organically reduced by -4.9%, with the important key markets of Germany and France achieving only 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.

North America

Lindt’s ‘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 its own network of shops and the gastronomy products business.

Rest of world

Sales also fell organically by -18.4% in the ‘Rest of the World’ segment, with the effects of the pandemic 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 Lindt-own shops. In addition, sales in South Africa, China and Australia were also negatively affected.

Outlook

Lindt & Sprüngli expects organic sales in the full financial year to be around 5-7% lower than 2019, while the operating profit (EBIT) should be around 10%.