Lindt banking on ‘pent-up’ demand as net profits fall
The maker of Lindor chocolate balls and luxury Easter bunnies said in a statement it is expecting 'pent-up demand' in seasonal sales after the pandemic, as chocolate makers suffer with subdued demand due to consumers buying fewer chocolates during COVID-19.
Lindt has also been hit by the temporary closure of its own stores, and the travel retail sector. But the company said it was convinced that the chocolate market, and in particular the premium segment it operates in, would continue to grow in the future.
In an earnings call to analysts and media, Dieter Weisskopf, Chief Executive Officer, said exceptional demand in the UK, where it overtook Italy for the first time, helped the company offset declines in other markets, with the launch of its Excellence range and a tripling of online sales from the new UK Lindt-e shop.
Digital revenues in general now account for approximately 5% of total group revenues after doubling in 2020.
"If we look at Europe, the single biggest market is clearly Germany, France and then followed by UK, ” said Weisskopf.
“We were clearly hit by the fact that we have roughly 500 stores, depending on the country, depending on the market, that were closed during the most important Easter season but as well during the rest of the year. It was a little bit on and off depending on the lockdowns in each individual market. You can imagine that was hitting us quite heavily. If we go into the product categories, the most positive one is that we were growing with our clear focused products that is Lindor as well Excellence.”
Weisskopf said the biggest hit was is Italy due to the traditional very big Easter business in the country.
“On the product side,we successfully launched Hello Vegan in Germany. And Lindt Squares in Switzerland are just hitting the market. Both products are doing very well according to the first reading of sell-out results.
“Other achievements to mention, include the opening of the biggest Lindt stores here in Kilchberg at the Home of Chocolate and, as well, the acquisition of the Lindt store network of SelecTTrade, our franchise partner in Italy.”
in North America (Canada, USA and Mexico) sales declined by -6.8% while sales in the rest of the world were down 16.1%.
“As in other markets, store closures, seasonal gifting, Easter, Christmas and the Ghirardelli foodservice were impacted most," said Weisskopf. “The good news again is that the market share gains we achieved are very substantial with all brands in all three North American markets.
“Ghirardelli Baking division benefited from the fact that the in-home food preparation, including baking, increased strongly in the market. In the last two- three years, we reported on streamlining of our operations in North America."
The Zurich-based company also announced a new share buyback programme of 750 million Swiss francs from June this year to the end of next year.
Lindt & Sprüngli had already flagged a 6.1% drop in 2020 organic sales in January. The contraction in sales led its operating profit margin to fall to 10.5%, from 13.2% in 2019.
It said the margin should return to 13-14% this year and then to 15% in 2022.
New category for growth
Posted by Gerry Morrison,