Emperor Watch said last Friday revenues for fiscal 2016 fell to 17.8% to HK$3,641.8 million, on the back of weak consumer sentiment in Hong Kong, compelling the group to consider markets further abroad in 2017.
The Hong Kong-based retailer of European-made watches and fine jewellery did, however, record a turnaround in net profit in the second half of 2016. As a result, net loss for the year narrowed to HK$64.8 million.
The group also said it had “streamlined its Hong Kong retail network and its optimised product portfolio” for the year ended 31 December 2016, which saw it close three stores, taking its total to 97 stores across Hong Kong, Macau, Mainland China and Singapore.
During the year, the group said also it managed to make rental cuts in several retail spaces.
“These, coupled with the earlier optimisation of the Hong Kong retail network, are expected to ease the overall rental pressure,” said the group, in a press release.
In recent years, Hong Kong’s strong local currency and lacklustre consumer sentiment, due to the diminishing tourism, has seen this once burgeoning retail market lose its shine. In 2016, Hong Kong retailers saw the biggest decline in annual sales in nearly two decades, with sales slumping 8%.
However, a gradual rebound of the watch consumption market has been evident since the second half of 2016. This primarily due to a narrowing of regional discrepancies in watch prices as a result of the bounce back of the Japanese Yen, and a lift in tourism traffic due to terrorism incidents in Europe, driving the return of Chinese visitors to Hong Kong.
“The retail market has shown encouraging signs over the past months and this mild upturn presents us a precious opportunity for us to expand in a disciplined approach,” said Cindy Yeung, chief executive officer, Emperor W&J.
“Taking a long-term perspective, we are optimistic about our business development on the back of ongoing urbanisation, the ever-growing middle-class, and the continuing increase in disposable income in China. In order to achieve balanced growth, we are pursuing a dual strategy of optimising existing operations within Greater China, and seeking to expand overseas for capturing potential business growth arising from Mainland China robust outbound tourism.”
In the last 12 months, Emperor Watches opened stores in mainland China with more emphasis on Tier II and III cities, which have been experiencing higher economic growth and rapid expansion in jewellery markets. Domestically, the group launched jewellery stores in emerging shopping areas with strong traffic and lower retail rents including Tuen Mun and Sheung Shui.
The group is also scanning the Malaysian and Thai markets for a point of entry. “We have slowed our plans in these places because of political and currency factors. Now, we are doing some market research,” Yeung told Nikkei Review, without giving further details.
Emperor Watchers is majority controlled by the family of Hong Kong entertainment mogul Albert Yeung Sau-shing.