Emperor Watch Group rebounded into profit last year as the Hong Kong luxury market began to recover.
After a loss of HK$64.8 million(US$8.3 million) in 2016, improved sales, enhanced gross profit margin and rent savings helped the group achieve a net profit of $159.7 million last year.
After trimming its store network by nearly 20 per cent last year, the company now plans to seek opportunities to expand its store count in Hong Kong, Macau and the mainland “and continue to eye further expansion opportunities beyond greater China.” It says it wants to tap the growth potential from growing ranks of outbound Mainland Chinese tourists.
Group sales last year increased by 11.9 per cent to $4.075 billion, driven by the recovery in consumption sentiment. Revenue from the watch segment, which accounts for 79.5 per cent of the business, grew 13.4 per cent to $3.239 billion, while jewellery sales rose 6.5 per cent to $836.5 million. Three-quarters of group sales were in the core Hong Kong market.
Emperor Watch ended last year with 24 stores in Hong Kong, six in Macau and 44 in the mainland, along with six in Singapore. That’s 80 in all, 17 fewer than at the end of 2016 as the company streamlined its network, cutting rent costs.
The company is bullish about it prospects this year as the luxury market continues to recover.
“With the growing wealth among Chinese consumers, who remain the group’s major customer
group, the overall consumption sentiment is expected to be buoyant. Taking into account the strong fundamentals, coupled with ongoing urbanisation, expansion of the middle-class and rising income, the group is positive regarding the market demand for luxury items in greater China,” it said in an earnings filing.
“The increase in disposable income, in particular among Chinese women, and the rising women’s job market participation rate, are the strong forces behind gem-set jewellery consumption. The group aims to lead branding and marketing activities in an effective and efficient manner, to maximise the exposure of Emperor Jewellery.”
Emperor Group says it plans to broaden its range of fashionable and affordable jewellery
products suitable for wearing in the workplace, to cater to the trend towards popularisation of jewellery consumption and to attract middle-class customers.
