Luxury timepiece retailer Emperor Watch & Jewellery is implementing an action plan to stay buoyant in the face of reversed fortunes due to the difficult trading environment.
A member of the Emperor Group founded in 1942, the company posted a net loss of HK$120 million (US$15.48 million) for the 2015 financial year, following its $138 million net profit the previous year. Its revenues plunged 25.2 per cent to $4.43 billion from $5.92 billion in 2014.
The company says this was caused primarily by weak consumption sentiment in Hong Kong resulting from a strong local currency and an unfavourable tourism environment.
Store rental cuts, however, and an optimisation of its Hong Kong retail network during the year are expected to ease the rental pressure this year. The company says 78 per cent of its total revenue was supported by the Hong Kong market (83.1 per cent in 2014).
Hong Kong retail space continues to rank as the world’s most expensive, although rents have started to moderate, says the company’s report.
As well as streamlining its retail network in Hong Kong, during the year the group also reshuffled its jewellery business in Mainland China and extended its retail network in Singapore.
It also launched new collections, including an exclusive “Baby” line to take advantage of China introducing a nationwide two-child policy in January.
Synergies with other companies within the Emperor Group were also leveraged, such as leasing prime retail locations from Emperor International Holdings on an “arm’s length” basis. Another synergy is with Emperor Entertainment Group (EEG), which invites VIP guests to its movie premieres and sponsors jewellery for the artistes.
Several strategies to mitigate risk are being implemented in the group’s action plan. Following the optimisation of its retail network in prime districts, the group plans to extend the coverage from traditional tourist shopping areas in Hong Kong to emerging shopping areas with resilient foot traffic.
Other retail network reshuffles planned include expanding retail stores in second- and third-tier mainland cities, adding two stores in Singapore, and studying the feasibility of establishing footprints in Southeast Asian countries.
Emperor also seeks to venture into eCommerce through such shopping platforms as WeChat Mall.
As at December 31, the group had 100 stores (88 in 2014) – in Hong Kong (21), Macau (6), mainland China (67) and Singapore (6).
Inside Retail Hong Kong reported on Emperor Watch slipping into the red in September last year.
