With the luxury sector in Hong Kong stagnant and the China market slowly recovering, turnover and profit have eased for Oriental Watch Holdings over the six months to September 30.
Its unaudited consolidated results show a 2 per cent decrease in turnover to HK$1.545 billion (US$199 million). Gross profit decreased by the same percentage to HK$237 million.
However, the net profit attributable to owners of the company rose to $4 million from $3 million for the same period last year.
While the group says it has had better performance with effective internal control measures, it was still hit by the drop in the number of Mainland China tourists in Hong Kong and Macau, as well as high rental costs from old leasing contracts in Hong Kong.
At the end of September, the group had 69 retail and wholesale outlets (including associate retail stores) in the Greater China region.
The company says the continuous increase in disposable income stimulated China’s retail market. As a result, its same-store-sales growth in China rose 26 per cent.
However, Hong Kong’s retail market remained bleak: Chinese tourists changed their destination preference to Japan, Korea and Europe, the after-effect of social movements remained and tension persisted between Hong Kong and China. Additionally, under the weak macroeconomic conditions, local customers were cautious.
Because of this, Oriental Watch will restructure its product portfolio while implementing strict cost-control measures and enhancing efficiency.
During the first half, the group closed one store in Hong Kong and sold its JV business in Macau.
In terms of overall Swiss watch exports, the market remained stable in China but declined by 39.6 per cent in Hong Kong – the largest contraction over the past 20 months.