ANNOUNCES 2016 ANNUAL RESULTS
Mar 17, 2017
|Revenue decreased to HK$3,641.8 million (1H2015: HK$2,419.6 million; FY2015: HK$4,430.8 million; 1H2016: HK$1,674.9 million), primarily due to weakened consumption sentiment in Hong Kong resulting from a strong local currency and falling Mainland China visitor arrivals; however, the situation gradually improved during the second half of 2016;
Gross profit margin was resilient and stayed intact at 25.0% (1H2015: 24.5%; FY2015: 25.0%; 1H2016: 24.9%);
|Rental expenses continued to be well-managed, in tandem with negative rental reversion and optimisation of the Hong Kong retail network;
|Due to gradual improvement of sales momentum and ongoing rental savings, a turnaround in net profit was achieved in the second half of 2016. As a result, net loss for the Year narrowed to HK$64.8 million (1H2015: HK$54.1 million; FY2015: HK$120.1 million; 1H2016: HK$68.6 million); and
|As a result of streamlined Hong Kong retail network and optimised product portfolio, the overall inventory level further reduced to HK$2,646.7 million (30 June 2015: HK$3,531.0 million; 31 December 2015: HK$3,219.2 million; 30 June 2016: HK$2,935.2 million).
(Hong Kong, March 17, 2017) 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 annual results for the year ended 31 December 2016 (the “Year”).
Against the backdrop of various macro headwinds and volatile consumption sentiment, the Group’s total revenue decreased to HK$3,641.8 million (2015: HK$4,430.8 million) during the Year. Despite the signs of a slow recovery in watch consumption sentiment in the latter half of the Year, revenue from the watch segment inevitably decreased to HK$2,856.7 million (2015: HK$3,541.0 million) and accounted for 78.4% (2015: 79.9%) of the total revenue. Revenue from the jewellery segment decreased to HK$785.1 million (2015: HK$889.8 million). 76.8% (2015: 78.0%) of the total revenue was contributed by the Hong Kong market.
Gross profit decreased to HK$909.0 million (2015: HK$1,106.1 million). The gross profit margin was resilient and stayed intact at 25.0% (2015: 25.0%). Due to a gradual improvement in sales momentum and ongoing rental savings, a turnaround in net profit was achieved in the second half of 2016. As a result, net loss for the Year narrowed to HK$64.8 million (2015: HK$120.1 million).
As a result of streamlined Hong Kong retail network and optimised product portfolio, the overall inventory level further reduced to HK$2,646.7 million (31 December 2015: HK$3,219.2 million).
During the Year, the Group successfully enjoyed rental cuts in several retail spaces. These, coupled with the earlier optimisation of the Hong Kong retail network, are expected to ease the overall rental pressure. As at 31 December 2016, the Group had 97 stores (31 December 2015: 100) in Hong Kong, Macau, Mainland China and Singapore.
In recent years, the strong local currency has undermined Hong Kong’s competitive advantage, making it difficult to attract tourists for shopping. However, a gradual rebound of the watch consumption market has been evident since the second half of 2016 – primarily due to: (1) Narrowing of regional discrepancies in watch prices as a result of the bounce back of the Japanese Yen; and (2) Improving consumer traffic in Hong Kong as terrorism incidents occurred in Europe, driving the return of Chinese visitors.
Although luxury consumption as a whole in Greater China was still under pressure, the Group continued to enhance its jewellery segment by optimising coverage of “Emperor Jewellery” stores in Mainland China with more emphasis on Tier II and III cities, which have been experiencing higher economic growth and rapid expansion in jewellery markets. In Hong Kong, the Group launched jewellery stores in emerging shopping areas with resilient foot traffic, which helped with seizing market opportunities in domestic areas.
Ms. Cindy Yeung, Chairperson & Chief Executive Officer of Emperor W&J, said, “The retail market has shown encouraging signs over the past months and this mild upturn presents us a precious opportunity for us to expand in a disciplined approach. Taking a long-term perspective, we are optimistic about our business development on the back of ongoing urbanisation, the ever-growing middle-class, and the continuing increase in disposable income in China. In order to achieve balanced growth, we are pursuing a dual strategy of optimising existing operations within Greater China, and seeking to expand overseas for capturing potential business growth arising from Mainland China robust outbound tourism.”
Key Financial Figures
|Basic LPS (HK Cent)
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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 granted with “Best IR Company” (Small Cap) and “Best IR Presentation Collaterals” (Small Cap), and investor relations representative of Emperor W&J was selected as “Best Investor Relations Officer” (Small Cap), in HKIRA Investor Relations Awards 2016 by the Hong Kong Investor Relations Association. It was also received “Certificate of Excellence in Investor Relations” in the IR Magazine Awards – Greater China 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.
Ms. Winnie Kwong,
Group Investor Relations Manager
Tel: +852 2835 6791
Ms. Anna Luk,
Group Investor Relations Director
Tel: +852 2835 6783