Hong Kong luxury watch retailer Asia Commercial has effectively halved its store network in a year it posted a loss of HK$35.027 million.
The company operates retail stores under the Time City brand, selling Rolex, Tudor and Vacheron Constantin brands, among others.
But the company remains optimistic about its future prospects, especially the potential of new Rolex and Tudor stores it will open with a Mainland China partner in the Hangzhou Tower this month. Asia Commercial describes the tower as “one of the most important strategical retail locations in China”.
Having closed nine of its 18 stores last financial year, (and opened one in Shanghai), Asia Commercial’s turnover fell 26 per cent, from $967 million to $719 million. Gross profit margin dropped slightly from 22 per cent to 21 per cent due to intense market competition.
Sales from Mainland China decreased 26 per cent to $343 million while average same store sales in China were decreased eight per cent. Sales in Hong Kong decreased 26 per cent to $374 million due to the closure of two non-profitable stores during the year.
Its $35 million loss for the year compares with a relatively insignificant $153,186 loss in 2014.
Asia Commercial now has three stores in Beijing, three in Shanghai, two in Chengdu and one each in Hong Kong and Shenyang.
Despite reporting a financial loss, the group says it generated a positive cash flow of $25 million from operating activities.
The group has now closed all its non-core stores in China and cut corporate overheads.
“Barring unforeseen circumstances, the financial performance of China retailing unit will further improve,” the company says.
“The group is determined to rebuild its financial strength and confidence to turnaround its business.”