Coats sales decline as it takes hit from Covid-19

Industrial thread maker Coats Group reported a slump in sales on Wednesday as it took a hit from the coronavirus pandemic.

In an update for the period from 1 January to 30 April, group sales fell 17% year-on-year. April sales were down 50%, meanwhile, as the company had estimated in its base scenario, "due to demand and supply impacts from Covid-19 which included circa 15 manufacturing sites under enforced government closure".

There was a 23% drop in revenue in Apparel & Footwear as brands and manufacturers cancelled or deferred orders from mid-March, which significantly impacted demand into April. In addition, Coats said enforced government closures of its facilities affected some of its major apparel and footwear markets throughout April, for example India and Bangladesh, which remained closed for the month.

However, Coats said it has started to see a number of these closures being lifted and currently only two of its 50 manufacturing sites around the world are subject to enforced closure, compared with 15 at the time of the March trading update.

The company said it expects the like-for-like operating cost base to decline by 40% year-on-year due to management actions and lower activity levels.

"The board remains confident in the group's ability to successfully manage through the current challenging environment," it said. "We enter this phase of our 250+ year history in robust shape and as a market leader with an unrivalled global footprint. Alongside our enhanced operational agility this leaves us well placed to benefit from the acceleration in demand and emerge as a stronger business once Covid-19 passes."