Listed Hong Kong timepiece retailer Oriental Watch Holdings has weathered the multiple crises of the last financial year to record a decrease in turnover of just 3.5 per cent and a profit of US$12.9 million.
While turnover was down to $303.6 million, gross profit was up by 7 per cent to $83.2 million, “mainly due to the group’s positioning at the high-end luxurious watch market where our long-term customers maintain strong purchasing power, as well as our vigorous efforts in control of inventory,” the company said in its results announcement.
The net profit attributable to shareholders of $12.9 million was down by 27.5 per cent, the decline largely due to impairment losses, an increase in allowance for slowing-moving stock and decreasing sales due to Covid-19 in the first quarter of this calendar year. But the company warned the full impact of Covid-19 had not been represented in the 2020 year results.
Chairman Yeung Ming Biu said the company had introduced “stringent cost-control measures, especially in rent costs” which were down by 15.7 per cent to $18.7 million.
“We have successfully negotiated lower rental rates and more flexible leasing terms, and hence lowering the overall rental cost. In addition, we conduct regular assessment on the performance of all retail stores and close down non-performing ones to improve resources allocation. The Group will continue to closely monitor our stores’ performance as well as rental contracts in order to improve our efficiency and cost structure,” said Yeung.
Oriental Watch has 62 luxury watch stores in Greater China, 47 on the mainland, 11 in Hong Kong, three in Taiwan and one in Macau.
By market, Oriental Watch achieved a 17.5-per-cent increase in sales on the mainland to $129.1 million, despite the declining consumer sentiment and the advent of the pandemic. In Hong Kong, year-on-year sales were stable despite the social unrest from June last year until the arrival of Covid-19. As a result, sales fell by 17.3 per cent to $154.6 million.
Sales in Taiwan and Macau grew slightly, but recorded a loss largely due to increased allowance for slow-moving stock.