Thule reports solid results despite Covid-19 & predicts staycation growth ahead

Like many others, Thule has a strong start to Q1 2020 including increased sales and improved profitability. Then the coronavirus began to impact through lockdowns in Thule’s main markets of Europe and North America, significantly hitting demand levels.

The firm implemented contingency measures to mitigate the impact of the pandemic earlier this month. It has also raised expectations of growth in the ‘staycation’ sector – a market which suits the brand – once lockdown measures ease.

Sales in the quarter decreased 4.9% (7.5% excluding currency effects) by SEK 90 million to SEK 1,744 million. Underlying EBIT was SEK 326 m (2019 Q1: SEK 342m).

By region, Europe sales declined 5.7% in Q1 (currency adjusted). The previously fast growing luggage category obviously declined while those with “the most drastic measures implemented”, including the UK, France, Italy and Spain saw the largest sales declines. Other markets allowed stores to open and more freedom on physical activities, but those too saw declines.

In America, sales declines 13% in Q1, having grown up to mid-March then dropping significantly. Important sales regions like California, New England and Quebec saw some of the strictest lockdown measures. Brazil sales developed well, while the rest of Latin America saw reduction in demand.

Travel bans, more home working, new hygiene and social distancing processes and rules in assembly plants, distribution centres and offices have been implemented.

CEO & President Magnus Welander added: “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 utilizing 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.”