ANNOUNCES 2019 INTERIM RESULTS

Aug 20, 2019

ACHIEVES INCREMENT IN CORE EARNINGS AND RECORD-HIGH GROSS PROFIT MARGIN

Results Highlights: 

*Excluding a depreciation charge of HK$45.7 million (1H2018: Nil) on a self-owned store at Nos.4-8 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong

(Hong Kong, 20 August 2019) Emperor Watch & Jewellery Limited (the “Group” or “Emperor W&J”) (Stock code: 887), a leading retailer of European-made watches and fine jewellery, announced its interim results for the six months ended 30 June 2019 (the “Period”).

The local retail market experienced a downturn amid weakened consumption demand during the Period, mainly attributable to the unstable economic and social environment. The Group’s revenue therefore decreased slightly to HK$2,402.7 million (1H2018: HK$2,454.0 million). Driven by strong market demand for certain luxury watches and corresponding price remained resilient, gross profit grew by 11.9% to HK$757.9 million (1H2018: HK$677.3 million), while the gross profit margin increased to 31.5% (1H2018: 27.6%).

The watch segment remained a key revenue contributor, and recorded revenue of HK$1,884.1 million (1H2018: HK$1,941.5 million), accounting for 78.4% (1H2018: 79.1%) of the total revenue. Revenue from the jewellery business increased mildly to HK$518.6 million (1H2018: HK$512.5 million). By geographical segment, revenue from mainland China increased by 38.2% to HK$285.4 million (1H2018: HK$206.5 million), and accounted for 11.9% (1H2018: 8.4%) of the Group’s total revenue.

As a result of a depreciation charge arising from the self-owned store at Nos. 4-8 Canton Road, Tsim Sha Tsui, Kowloon, the net profit decreased by 25.2% to HK$117.6 million (1H2018: HK$157.2 million). Excluding the depreciation charge of HK$45.7 million (1H2018: Nil), the adjusted net profit increased by 3.9% to HK$163.3 million (1H2018: HK$157.2 million). Despite the decline in total revenue, the downward pressure of adjusted net profit was effectively mitigated by the enhanced gross profit margin and cost control strategy. Reported and adjusted basic earnings per share was HK1.73 cents (1H2018: 2.29 cents) and HK2.41 cents (1H2018: 2.29 cents), respectively. The Board has declared an interim dividend of HK0.35 cent (1H2018: HK0.70 cent) per share.

As at 30 June 2019, the Group had 97 stores (31 December 2018: 95) in Hong Kong, Macau, mainland China, Singapore and Malaysia.

Riding on the solid relationship established with major Swiss watch brand suppliers, a dedicated watch boutique was opened in mainland China and Singapore respectively during the Period, enhancing the Group's market penetration in the region.

The Group has strived to strengthen the presence of “Emperor Jewellery” in emerging shopping areas in recent years, aiming to seize the market potential of local young consumers. During the Period, an “Emperor Jewellery” store was opened in KOLOUR•Tsuen Wan, which is a major shopping and leisure stop for young professionals and young families in the district. At the same time, the Group continued to reinforce its strategic sales network by opening two “Emperor Jewellery” stores in mainland China and one in Singapore during the Period.

Subsequent to the end of the Period, the Group opened two “Emperor Jewellery” stores in Hong Kong – one in Sham Shui Po and one in Yuen Long.

Ms. Cindy Yeung, Chairperson & Chief Executive Officer of Emperor W&J, said, “Owing to the continued global political disputes and the recent social issues which leads to a negative social atmosphere and in turn affects the economic activities, a challenging operating environment is still expected in the second half of 2019. We will closely monitor the market situation and respond as appropriate.”

Ms. Yeung continued, “China remains an important engine of the world’s economic growth. Against the backdrop of a stabilising Renminbi exchange rate, improved transportation links between Hong Kong and mainland China, increasing awareness of product credibility, etc, we believe the luxury sector is poised for healthy growth in the longer term. Looking ahead, we will further reinforce our longstanding relationships with watch brand suppliers, in order to reinforce our leading market position by ensuring a stable supply. We will also continue expanding our business coverage, with an aim of developing a global presence. The Group is confident of overcoming the challenges, and strives to achieve sustainable growth in the long term.”

About Emperor Watch & Jewellery Limited
With long establishment history of over 75 years in Hong Kong since 1942, Emperor W&J (887.HK) is a leading retailer principally engages in the sale of European-made internationally renowned watches, and self-designed fine jewellery products under its own brand, “Emperor Jewellery”. Through its comprehensive watch dealership, unique marketing campaigns and extensive retail network at prime locations in Hong Kong, Macau, mainland China, Singapore and Malaysia, Emperor W&J established a strong brand image amongst its target customers ranging from middle to high income groups worldwide. In recognition of its efforts in investor relations communications, Emperor W&J was granted with “Best IR Company” (Small Cap), “Best IR in Corporate Transaction” (Small cap) and “Best IR Team” (Small cap) in HKIRA Investor Relations Awards 2019 by the Hong Kong Investor Relations Association. For more information, please visit its website: www.emperorwatchjewellery.com.

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