EMPEROR WATCH & JEWELLERY LTD.

EMPEROR W&J ANNOUNCES 2013 ANNUAL RESULTS

Mar 19, 2014

Financial Highlights (For the year ended 31 December 2013 (the “Year”))

Despite the slowdown in high-end luxury consumption, the Group managed to deliver a slight growth in revenue to HK$6,624 million (2012: HK$6,531 million).
As a result of proactive optimisation of jewellery portfolio, its revenue increased by 22.2% to HK$1,481 million (2012: HK$1,211 million), with enhanced mix from 18.5% to 22.4% of total sales.
In response to relatively keen price competition on watch business, the Group implemented sales promotion and hence moved down the gross profit margin to 24.1% (2012: 26.0%). Given that jewellery gross profit margin always performs higher, the enhancement of jewellery business was able to mitigate the adverse effect from the decline of watch gross profit margin, reflecting the beauty of jewellery arm.
Backed by the surge of self-driven consumption of middle income group, the Hong Kong market showed resilience with revenue staying flat at HK$5,545 million (2012: HK$5,520 million) and continued to be the key contributor (83.7%) of the Group’s revenue.
Net profit was HK$290 million (2012: HK$404 million). Such decrease was due to the decrease in gross profit margin and mild increase in rental expenses.
Riding on its effective inventory control, the overall inventory turnover days maintained at 265 days (2012: 267 days).
Achieved a strong cash position with debt-free as at 31 December 2013. Bank balances and cash on hand amounted to HK$657 million (2012: HK$455 million).
Expanded the coverage to Southeast Asia by initiating a presence in Singapore, one of the most popular tourist spots in the region.

(Hong Kong, March 19, 2014) Emperor Watch & Jewellery Limited (the “Group” or “Emperor W&J”) (Stock code: 887), a leading retailer of luxury watch and fine jewellery, today announces its 2013 annual results for the year ended 31 December 2013 (the “Year”). 

 
Basic earnings per share was HK4.2 cents (2012: HK6.0 cents). Emperor W&J recommends the payment of a final dividend of HK0.58 cent (2012: HK0.8 cent) per share. Together with the interim dividend of HK0.68 cent per share, the total dividend per share for the Year was HK1.26 cents (2012: HK1.78 cents).
 
In January 2013, the Group had successfully expanded its coverage from Greater China to Southeast Asia by initiating a presence in Singapore. During the Year, one standalone jewellery store was opened in Venetian Hotel, Macau, one Patek Philippe independent corner and one duplex multi-watch megastore with jewellery section were opened in Tsimshatsui, Hong Kong. The Group’s retail stores in Hong Kong are strategically located at the major high-end shopping places, namely, Russell Street in Causeway Bay, Canton Road in Tsim Sha Tsui and Queen’s Road Central in Central. These streets were labelled as world-class top-ranked most valuable shopping streets. Through its extensive presence in these extremely prime areas, the Group enjoys a high penetration rate amongst the mainland visitors and excellent brand visibility. As at 31 December 2013, the Group ran a total of 74 stores in Hong Kong, Macau, the PRC and Singapore.
 
Emperor W&J continued to enjoy solid and long-term relationship with major Swiss watch brand suppliers and hold comprehensive watch dealership with full collections in Greater China. Dedicated to its full range of timepieces and excellent customer services, the Group was ranked as the Gold Award in “Outstanding QTS merchant Services Staff 2013 (Jewellery & Watches Category)” by Hong Kong Quality Tourism Services Association.
 
After continuous implementation of effective optimisation of jewellery product portfolio, the Group was able to enhance the jewellery segment among the total revenue mix and the overall capital efficiency successfully. With an aim to expand jewellery arm, the Group strengthened its marketing efforts and enhanced brand awareness of “Emperor Jewellery” by utilising various advertising tools, including celebrity endorsements, print advertisements and social media.
 
The Group hosted various jewellery shows for consolidating VIP customers and widening new customer base. During the Year, the Group has successfully launched “Emperor Jewellery Bridal Campaign” by collaborating a series of marketing plan covering promotional events, social media, advertisements as well as the establishment of bridal corners in the Emperor Jewellery stores. Such campaign was awarded by “Yahoo! Big Idea Chair Awards 2013” as the Best Integrated Campaign Merit Award in November 2013.
 
Ms. Cindy Yeung, Chairperson of Emperor W&J, said, “The market had started returning to a normalised development pace with the exit of irrational consumption. Driven by an expanding Chinese affluent middle class and an increasing demand for branded items, luxury market will remain an upbeat, despite a gradual one. To seize the fast-growing jewellery market in Greater China, we are planning ahead to further develop jewellery business which contributes a better margin in the long-run. As an essential part of the plan, we will strengthen efforts to enhance the brand equity of “Emperor Jewellery” and cultivate a strong and trusted image for growing a loyal customer base. Leveraging on the well-established “Emperor” brand and extensive presence on prime locations, we are confident to capture the market potential and achieve long-term business goals.”
 
Key Financial Figures
 
HK$’ million 2013 2012 Changes
Revenue 6,624 6,531 + 1.4%
Gross Profit 1,600 1,697 - 5.7%
Gross Profit Margin 24.1% 26.0% - 1.9ppts
EBITDA1 415 572 - 27.4%
EBITDA1 Margin 6.3% 8.8% - 2.5ppts
Net Profit 290 404 - 28.2%
Net Profit Margin 4.4% 6.2% - 1.8ppts
Basic Earnings per Share HK4.2 cents HK6.0 cents - 30.0%
1 EBITDA represents earnings before interest, taxation, depreciation and amortisation of the Group.
 
- 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 luxurious international branded watches, and self-designed fine jewellery products under its own brand, “Emperor”. 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 group from all over the world. Emperor W&J has become a constituent stock of Hang Seng Composite Index in Consumer Goods sector (HSCICG.IND) since 10 September 2012. It is also included in the investment portfolio of the PureFunds ISE Diamond/Gemstone ETF (GEMS.US), which is freely traded on New York Stock Exchange Arca.
 
For more information, please visit its website: www.emperorwatchjewellery.com.
 
Investor/Media Enquiries
Ms. Winnie Kwong, Assistant Manager,
Investor Relations Department of Emperor Group
Tel: +852 2835 6791
Email: winniekwong@emperorgroup.com
 
Ms. Anna Luk, Director,
Investor Relations Department of Emperor Group
Tel: +852 2835 6783
Email: annaluk@emperorgroup.com

 

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