EMPEROR WATCH & JEWELLERY LTD.

Emperor Watch & Jewellery Announces 2016 Interim Results

Sep 27, 2016

SNAPSHOTS

Revenue decreased to HK$1,674.9 million (1H2015: HK$2,419.6 million), primarily due to weakened consumption sentiment in Hong Kong resulting from a strong local currency and falling Mainland China visitor arrivals
Gross profit margin reached 24.9% (1H2015: 24.5%), while it was dragged by watch price cuts in Hong Kong during the first half of 2015
Rental expense was well-managed, along with negative rental reversion and optimisation of Hong Kong retail network
As a result of streamlined Hong Kong retail network and optimised product portfolio, the overall inventory level further reduced to HK$2,935.2 million (30 June 2015: HK$3,531.0 million; 31 December 2015: HK$3,219.2 million)
“Emperor Jewellery” Wechat shop commenced in July this year, aiming to capture massive and ever-growing mobile retail market in Mainland China
Planned to extend store footprint from tourist shopping areas to emerging shopping areas, where consumption is dominated by local demand

 

(Hong Kong, August 31, 2016) Emperor Watch & Jewellery Limited (the “Group” or “Emperor W&J”) (Stock code: 887), a leading retailer of European-made watches and fine jewellery, announces its interim results for the six months ended 30 June 2016 (the “Period”).

 

Amid weakened consumption sentiment in Hong Kong resulting from a strong local currency and falling Mainland China visitor arrivals, the Group’s revenue decreased to HK$1,674.9 million (1H2015: HK$2,419.6 million). The watch segment remained a key revenue contributor, and its revenue inevitably decreased to HK$1,343.1 million (1H2015: HK$1,946.8 million), which accounted for 80.2% (1H2015: 80.5%) of the total revenue. The revenue from jewellery segment decreased to HK$331.8 million (1H2015: HK$472.8 million). 75.1% (1H2015: 79.0%) of the total revenue was supported by the Hong Kong market.

 

Gross profit decreased to HK$417.1 million (1H2015: HK$591.9 million). Gross profit margin reached 24.9% (1H2015: 24.5%), while it was dragged by watch price cuts in Hong Kong during the first half of 2015. Attributable to the weakening sales momentum and decline of gross profit, a net loss of HK$68.6 million (1H2015: HK$54.1 million) was recorded.

As a result of streamlined Hong Kong retail network and optimised product portfolio, the overall inventory level further reduced to HK$2,935.2 million (30 June 2015: HK$3,531.0 million; 31 December 2015: HK$3,219.2 million)

 

Given that the market momentum continued to stay weak during the Period, the Group further streamlined the retail network in Hong Kong. Coupled with rental cut in several retail spaces of the Group, it is expected that it will ease the overall rental pressure. As at 30 June 2016, the Group had 98 stores (31 December 2015: 100) in Hong Kong, Macau, Mainland China and Singapore.

 

During the Period, the Group rolled out Emperor Jewellery “Crown Your Life 12+1” collection, featuring 12 cartoons of Chinese zodiac animals and an iconic cat. To enhance the exposure of “Crown Your Life 12+1” collection, the Group has launched a marketing campaign that integrated social and print media, as well as outdoor advertisements. The Group has earlier introduced “Baby” collection to cover a charming range of gold jewellery items. As China’s nationwide two-child policy has been in place since January 2016, the “Baby” collection has been poised to receive a booming response.

 

Subsequent to the Period, the Group commenced the operation of “Emperor Jewellery” Wechat shop on WeChat Mall, one of the most popular mobile sales platforms among the Mainland Chinese. Such move not only enables the Group to capture massive potentials of China based mobile users, but also marks a significant milestone to extend the Group’s sales coverage beyond the traditional physical stores.

 

Ms. Cindy Yeung, Chairperson & Chief Executive Officer of Emperor W&J, said, “Owing to uncertain economic conditions and currency factors, Hong Kong retail sector has been struggling and there is no exception for Emperor W&J. In order to mitigate the adverse impact on business operations, we have strived to improve the overall efficiencies through tightening cost control and remixing inventory portfolio. Along with rental cut in several retail spaces and optimisation of Hong Kong retail network, rental pressure has already shown signs of levelling off. Despite the tough market conditions, we are seizing opportunities to extend our footprint in emerging shopping areas where consumption is dominated by local demand. These initiatives would help us to defend our market position, maintain our competitive edge and, ultimately, reap the greatest potential when market revives.”

 

Key Financial Figures

HK$’ million

1H2016

1H2015

Changes

Revenue

1,674.9

2,419.6

- 30.8%

Gross Profit

417.1

591.9

- 29.5%

Gross Profit Margin

24.9%

24.5%

+ 0.4pp

Net Loss

(68.6)

(54.1)

- 26.8%

Basic LPS (HK Cent)

(1.00)

(0.79)

- 26.6%

 

- End -

 

 

About Emperor Watch & Jewellery Limited

With long establishment history of over 70 years in Hong Kong since 1942, Emperor W&J (887.HK) is a leading retailer principally engages in the sale of European-made internationally renowned watches, and self-designed fine jewellery products under its own brand, “Emperor Jewellery”. Through its comprehensive watch dealership, unique marketing campaigns and extensive retail network at prime locations in Hong Kong, Macau, the PRC and Singapore, Emperor W&J established a strong brand image amongst its target customers ranging from middle to high income groups worldwide. In recognition of its efforts in investor relations communications, Emperor W&J was awarded with “Best IR Company” and “Best IR Presentation Collaterals” in Small Cap category by the Hong Kong Investor Relations Association in 2016. It is currently a constituent of Hang Seng Composite Index in Consumer Goods sector (HSCICG.IND). For more information, please visit its website: www.emperorwatchjewellery.com.

 

Investor/Media Enquiries

Ms. Winnie Kwong

Group Investor Relations Assistant Manager

Emperor Group

Tel: +852 2835 6791

Email: winniekwong@emperorgroup.com

 

Ms. Anna Luk,

Group Investor Relations Director

Emperor Group

Tel: +852 2835 6783

Email: annaluk@emperorgroup.com

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