EMPEROR WATCH & JEWELLERY LTD.



ANNOUNCES 2020 INTERIM RESULTS

Aug 27, 2020

Results Summary

HK$ million

(unaudited)

For the six months ended 30 June

 Changes

2019

2020

Revenue

2,403

931

- 61.3%

Gross profit

758

305

- 59.8%

Gross profit margin

31.5%

32.8%

+ 1.3pp

Adjusted earnings (loss) BIT *

223

(44)

N/A

Net profit (loss)

118

(114)

N/A

Earnings (loss) per share

HK1.73 cents

HK(1.68) cents

N/A

* depreciation charge on the self-owned flagship store, which reflects the Group’s core operating performance

 

(Hong Kong, 27 August 2020) Emperor Watch & Jewellery Limited (the “Group” or “Emperor W&J”) (Stock code: 887), a leading retailer of European-made watches and fine jewellery, announced its interim results for the six months ended 30 June 2020 (the “Period”).

 

During the Period, the COVID-19 pandemic (“Pandemic”) hit around the globe and caused mass cancellations of individual and business travel plans. Hong Kong’s retail market experienced unprecedented challenges due to the crash in visitor numbers. The economic outlook remains gloomy and shrouded in uncertainties, and the general luxury consumption sentiment remained weak. As a result, the Group’s total revenue decreased to HK$930.6 million (2019: HK$2,402.7 million). Gross profit inevitably decreased to HK$305.2 million (2019: HK$757.9 million), while the gross profit margin increased by 1.3 percentage points to 32.8% (2019: 31.5%).

 

As a result of falling visitor arrivals and dampened consumption sentiment, revenue from the Hong Kong market dropped to HK$503.7 million (2019: HK$1,751.1 million), which accounted for 54.1% (2019: 72.9%) of the total revenue. On the other hand, the Pandemic situation has eased off slightly in the mainland China and local consumption has been picking up gradually, revenue from the mainland China market thereby decreased by 14.7% only to HK$243.4 million (2019: 285.4 million), accounting for 26.2% (2019: 11.9%) of the total revenue. Considering revenue breakdown by product, the sales revenue of watch and jewellery decreased to HK$701.9 million (2019: HK$1,884.1 million) and HK$228.7 million (2019: HK$518.6 million) respectively, accounting for 75.4% (2019: 78.4%) and 24.6% (2019: 21.6%) of the total revenue.

 

The Group incurred a net loss during the Period amounting to HK$113.7 million (2019: net profit of HK$117.6 million) as a result of the revenue slump and operating deleverage. Adjusted loss before interest and tax was HK$44.0 million (2019: adjusted earnings before interest and tax of HK$222.7 million). Basic loss per share was HK1.68 cents (2019: basic earnings per share of 1.73 cents).

 

In the face of a tough business operating environment, the Group has actively taken all necessary measures to mitigate the adverse financial implications. The Group strived for decrease in rental expenses by negotiating with landlords for short-term rental relief or one-off rental cuts for shops before or upon lease expiries; staff cost reductions by streamlining workflows and implementing a flexible human resources strategy; and boosting sales by enhancing customer engagement activities and adjusting the product range.

 

As at 30 June 2020, the Group had 102 (31 December 2019: 104) stores in Hong Kong, Macau, mainland China, Singapore and Malaysia.

 

During the Period, the Group launched “Fortune Bracelet”, comprising a rice-shaped gold charm on a traditional Chinese cord bracelet. Each piece of gold rice is delicately engraved with the Chinese characters for “peace”, “health”, “happiness” or “luck”, to symbolise love and fortune, as well as a better future. As consumers refrained from making physical shop visits due to public health concerns, the Group will further develop online business by enhancing social media engagements and online sales platforms.

 

Ms. Cindy Yeung, Chairperson & Chief Executive Officer of Emperor W&J, said, “We believe that the business environment of tourism related sectors and the retail market landscape in Hong Kong will remain challenging in the near term. As soon as the travel restrictions and health quarantine measures upon arrival are eased, the Group expects that the suppressed desire for tourism and pent-up consumption demand will be unleashed, resulting in an obvious rebound in the number of visitor arrivals, driving the recovery of the retail market. The Group will adhere to its prudent approach, promptly react to market changes, and take appropriate measures to improve its overall operating efficiency.”

 

- End -

 

About Emperor Watch & Jewellery Limited

With long establishment history of over 75 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, mainland China, Singapore and Malaysia, 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 granted with “Best IR Company” (Small Cap), “Best IR in Corporate Transaction” (Small cap) and “Best IR Team” (Small cap) in HKIRA Investor Relations Awards 2019 by the Hong Kong Investor Relations Association. In November 2019,  and , which have been recognised as well-known to the relevant public

in mainland China, obtained cross-class protection by the National Intellectual Property Administration, affirming their wide recognition and brand value in China. For more information, please visit its website: www.emperorwatchjewellery.com.

 

Investor/Media Enquiries

Anna Luk

Group Investor Relations Director

Tel: +852 2835 6783

Email: annaluk@emperorgroup.com

 

Janice Au

Group Investor Relations Manager

Tel: +852 2835 6799

Email: janiceau@emperorgroup.com

 

 

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