Tse Sui Luen profits plummeted in the first half as Hong Kong protests took their toll, especially during the September quarter.
The company, which operates stores under the TSL banner, has reported a 14 per cent year-on-year decline in sales to HK$1.6552 billion ($US211 million) while Tse Sui Luen profits attributable to shareholders fell by 94 per cent to just $1.6 million ($204,000).
Chairman and executive director Annie Lau said the year to date has been challenging for all businesses operating in Hong Kong, where TSL’s sales fell by 23.9 per cent in the half year and same-store sales were down by 26.4 per cent.
“The outbreak of citywide protests and social unrest in Hong Kong in June has, when combined with the downward economic pressure being felt from the protracted US-China trade tensions and Renminbi depreciation, all conspired to devastate our retail business in Hong Kong.”
She said the depreciation of the Renminbi has reduced spending by mainland visitors, impacting Hong Kong sales, and shrunk earnings from Mainland China businesses in Hong Kong dollar terms, (where the company is listed).
“While the US and China have resumed trade talks, the economic outlook remains gloomy and shrouded in uncertainties as a trade consensus continues to appear beyond reach.”
Lau said the social unrest since June has weakened local consumer sentiment and the protests have made it challenging for retailers to operate.
“The hardship the local retail industry is facing is likely to persist or even worsen in the remainder of this financial year.”
She said the company was continuing to optimise its store network in Hong Kong and work with landlords to reduce its rental costs.
In Mainland China, TSL sales through self-operated stores were down by 8.5 per cent overall and same-store sales fell by 7.5 per cent, “mainly attributed to the protracted US-China trade war with tit-for-tat tariffs”.
During the six months, seven new self-operated stores and 41 new franchised stores were opened, taking the Mainland China network to 448.
“Going forward, we will take a cautious approach and optimise our retail network in Mainland China with the volatile market conditions being taken into consideration,” said Lau.
Meanwhile, TSL has now expanded its Malaysia store network to six after opening at Mid Valley Southkey Megamall in April. Sales there were up 16.5 per cent.
On a more positive note, TSL’s e-commerce business grew by 27.7 per cent year on year.
“We believe that this sector will grow to be a significant source of revenue for the group going forward,” said Lau. “Encouraged by the great response received from the group’s official website for Mainland China, we are working on developing an official website for Hong Kong and establishing our online presence on e-business platforms in order to further facilitate the online-to-offline and offline-to-online retail practice.”