Jeweller Tse Sui Luen is projecting a loss of HKD 80 million (US$10.3 million) for the year to March – a stark reversal from last year’s net profit of HK$54 million ($6.96 million.
In a profit warning issued to the Hong Kong stock exchange, the company said its estimate was based on a review of the accounts for the first 11 months of the financial year, and other information available.
Sales in February fell by 88 per cent as Hong Kong’s borders all but shut, and without the benefit of Lunar New Year turnover, which last year largely fell in February.
“Such expected loss is mainly attributable to the sluggish retail sales since July,” the company’s chairman Annie Yau On Yee said.
“The coronavirus outbreak in January 2020 has taken a heavy toll on the retail industry, dealing a severe blow to the Hong Kong and Mainland China economies already hampered by the prolonged local social unrest in Hong Kong and escalated US-Sino trade tensions.”
Yau said Tse Sui Luen was mitigating the economic fallout from the social unrest in Hong Kong and the global coronavirus epidemic, with measures such as negotiating rent relief with landlords, which “have helped improve the group’s cost effectiveness to a large extent”.
“We have also streamlined our business operation to minimise all costs and expenses, and are restructuring our retail store network including store closures for maintaining profit contribution at a sustainable level,” she said.
“The board believes that we are well-positioned to weather the current unfavourable environment.”
Full-year results are scheduled for release in late June.