Emperor Watch posts fall in Macau sales

2014/8/28

From：Macau Business Daily

The Hong Kong-listed luxury watch and jewellery retailer’s drop in first half earnings here reflects general sluggish retail sentiment

Retailer Emperor Watch & Jewellery Ltd posted a fall in its first half year income from its Macau outlets and a group-wide net profit decline, a result reflective of the more sluggish luxury retail sentiment of the period.
Net income from Emperor Watch & Jewellery’s six Macau outlets for the first six months of this year declined 15.9 percent year-on-year to HK$26.4 million (US$3.4 million) the company said in unaudited results submitted to the Hong Kong Stock Exchange after trading hours yesterday.
The revenue from the retailer’s Macau operation also dropped by 16.4 percent year-on-year to HK$195.5 million for the first half, a fall in sync with the overall decline in sales of jewellery and watches in the city during this period.
For the first half of this year, sales of jewellery and watches here reached 9.58 billion patacas, down 5 percent compared to a year ago. The jewellery and watches sales in the second quarter has shown a sharper year-on-year drop of 22 percent to 4.2 billion patacas, data from Statistics and Census Service shows.
The retailer’s overall first half net profit declined by 33.2 percent to HK$104.7 million from HK$156.7 million a year earlier, a fall that is mainly due to ‘an uprise of rental pressure’, the firm said in the filing.
Gross profit of the retailer decreased by 3.6 percent to HK$770 million with gross profit margin improved to 25.1 percent.
Accounting for the enhanced gross profit margin, the retailer said that it was attributable to the fact that ‘the pricing environment of watches has been gradually stabilised’, and that ‘the price hikes of several watch brands were exercised’.
The operation in Macau accounted for about 6.4 percent of the company’s revenue at HK$3.07 billion in the first half, of which the Hong Kong market is the company’s key earnings driver.
‘Despite the sluggish demand in luxury consumption, the watch segment was relatively resilient and its revenue decreased slightly by 2 percent to HK$2.49 billion (1H2013: HK$2.54 billion) which accounted for 81.3 percent of the group’s revenue and continued to be the key revenue contributor’, the retailer remarked in the filing.
As at the end of June, the retailer said it had no bank borrowings, and it had ‘available unutilised banking facilities’ of about HK$852.8 million – a debt-free position that allows it to ‘retain high flexibility for future development’.
The retailer announced an interim dividend of HK$0.40 per share which is payable by September 26 – an issuance that shows a decline from the HK$0.68 per share of a year earlier.

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