EMPEROR W&J ANNOUNCES 2015 INTERIM RESULTS
Aug 28, 2015
(Hong Kong, August 28, 2015) 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 2015 interim results for the six months ended 30 June 2015 (the “Period”).
During the Period, the Group’s performance was adversely affected by various macro headwinds. Market sentiment in Hong Kong stayed weak, in response to the continued austerity initiatives and unfavourable tourism environment following local protests in the previous year. Coupled with the weakening of foreign currencies against the US dollar, and therefore against the Hong Kong dollar, some of the consumption demand has shifted to overseas markets. As a result, the Group’s revenue was HK$2,419.6 million (1H2014: HK$3,066.0 million). In spite of the headwinds, the watch segment remained a key revenue contributor, and its revenue inevitably decreased, by 21.9% to HK$1,946.8 million (1H2014: HK$2,492.5 million), which accounted for 80.5% (1H2014: 81.3%) of the Group’s revenue. The jewellery segment reported a revenue of HK$472.8 million (1H2014: HK$573.5 million). 79.0% (1H2014: 83.5%) of the Group’s total revenue was supported by the Hong Kong market.
Gross profit was HK$591.9 million (1H2014: HK$770.0 million). Due to the watch price cuts in Hong Kong during the Period, the overall gross profit margin decreased to 24.5% (1H2014: 25.1%). Nevertheless, this gross profit margin decline was mitigated by the enhanced mix of the jewellery business.
The Group recorded a net loss of HK$54.1 million (1H2014: net profit of HK$104.7 million). Such loss was mainly attributable to an increase in rental expenses, coupled with the weakening sales momentum and decline of gross profit margin.
The Group monitored the inventory level closely and remixed the product portfolio in line with market responses, to maximise the use of capital and maintain an adequate cash position. As at 30 June 2015, the overall inventory level reduced to HK$3,531.0 million (31 December 2014: HK$3,838.5 million; 30 June 2014: HK$3,811.3 million) and the cash balance enhanced to HK$605.8 million (31 December 2014: HK$443.8 million; 30 June 2014: HK$443.1 million)
During the Period, the Group optimised the coverage for “Emperor Jewellery” stores in the PRC and extended its retail chain in Tier II and III cities, which are experiencing higher economic growth and rapid expansion in jewellery markets. The Group also extended its retail network in Singapore. As at 30 June 2015, the Group had 97 stores (31 December 2014: 88) in Hong Kong, Macau, the PRC and Singapore.
In marketing front, the Group continued to enhance the charisma of its self-designed “Emperor Jewellery” collections to raise brand loyalty. During the Period, the Group newly launched “Signature Series”, “Blooming Heart Series” and “Move My Heart Series” for its “Heartbeat Journey” collections, to boost loyalty of sophisticated customers and target new shoppers in different income groups. Featuring the Group’s “Heartbeat Journey” collections, a holistic advertising campaign has been launched with Ms. Charlene Choi, a renowned artist in Asia.
Ms. Cindy Yeung, Chairperson of Emperor W&J, said, “Against the backdrop of a tough market environment, the Group is planning to streamline the retail network in Hong Kong, in order to reduce rental pressure and enhance the overall efficiency at operating level. Meanwhile, we will strengthen the marketing efforts of the jewellery business, to mitigate the decline of the overall gross profit margin caused by the watch price cuts in Hong Kong. We will promptly react to market changes and take appropriate measures to improve its overall operating efficiency, to stay competitive in the marketplace and, ultimately, ensure it reaps the greatest potential once market momentum revives.”
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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 Presentation Collaterals – Small Cap” by the Hong Kong Investor Relations Association in 2015. It is also one of the constituent stocks on Hang Seng Composite Index in Consumer Goods sector (HSCICG.IND). For more information, please visit its website: www.emperorwatchjewellery.com.
Ms. Winnie Kwong,
Group Investor Relations Assistant Manager