Oriental Watch Holdings achieved a turnaround for its latest financial year, mainly because of an improved watch market in China, a changing product mix and reduced rents in some of its Hong Kong shops.

Gross profit margin remained stable, and net profit attributable to the owners of the company for the year ending March 31 was HK$16.4 million (US$2.1 million), compared to an attributable net loss of $15.5 million last year.

Turnover grew by 3.6 per cent to $3.142 billion and gross profit increased by 4.5 per cent to $508 million.

While luxury goods spending in both Mainland China and Hong Kong continued to slow down, with economic uncertainty dampening consumer confidence, the group says it saw good recovery late last year followed by positive growth in luxury goods sales to both locals and tourists.

At the end of March the group had 64 retail and wholesale points, including associate retail
stores, in the greater China region. There were 47 stores in China, 13 in Hong Kong,  three in Taiwan and one in Macau.

During the year, the group closed one store in Hong Kong and sold its Macau business.

Stronger sentiment in luxury spending, offsetting the long-term impact of the anti-corruption campaign, saw the group’s same-store-sales grow 29 per cent in China.

Hong Kong’s retail market has also been slowly recovering, says the group, and while luxury goods purchases remained lacklustre there was moderate year-on-year growth in retail sales in March, driven by the recovery of visitor arrivals and the gradually improved spending appetite among locals.

Lowering high rental costs has been a priority of the group since 2014. During the latest year, the group’s aggregate rental cost fell by 5.7 per cent to $214 million, accounting for 42.3 per cent of overall operating expenses.