Tse Sui Luen Jewellery sales and profit both rose in the first half year – but the company has tempered the good news by expressing concerns about the impact of the US-Sino trade war.
Chairwoman Annie Yau said in a stock exchange filing that the improved retail sentiment in Hong Kong since September last year due to increased numbers of mainland tourists and growing consumption appetite of local customers, the city’s retail market has continued to progress “in an L-shape”.
“However, the recent outbreak and escalation of trade dispute between China and the US has cast some doubts on the economic outlook for both the global and local economies going forward. One consequence has been the devaluation of Renminbi during the period, which could bring certain influence to our business in Hong Kong and Mainland China during the remainder of this financial year.
“While it is still too early to conclude the actual impact on the group’s performance, we will continue to take a cautiously optimistic approach in our major operating regions, namely Hong Kong and Mainland China,” said Lau.
Tse Sui Luen Jewellery sales increased by 10.2 per cent to HK$1.91 billion in the six months to July (the company has changed its financial year to September, so comparative figures are based on the six months to August 31 last year).
Profit attributable to owners of the company increased by 38.9 per cent to $24.3 million.
Sales in Hong Kong and Macau rose by 15.3 per cent during the half year, while same-store sales growth for all businesses in the territories rose 14.8 per cent. Retail rentals in Hong Kong remained static and “at a more reasonable level than that experienced in past years”, allowing the company expand its retail business in the city and enlarge the shop area of some of its existing stores, including those in Times Square in Causeway Bay and Plaza Hollywood in Diamond Hill.
“We will continue to identify other suitable high-traffic shopping arcades and on-street stores in order to further penetrate tourist and residential precincts as applicable,” said Lau. “Nevertheless, the ongoing manpower shortage situation in Hong Kong remains a concern in setting the pace of expansion. In respect to Macau, due to a steady increase in tourists from Mainland China and their spending powers, our business in Macau achieved an increase of 8.7 per cent in turnover during the period.”
In Mainland China, where its self-owned stores account for 37.3 per cent of Tse Sui Luen Jewellery sales, sales rose 4.2 per cent, but fell 3.5 per cent on a same-store basis. The company is expanding its network of franchised stores, adding 25 during the period taking the number to 207. After adding 197 self-run stores, Tse Sui Luen now has 404 outlets on the mainland.
In Malaysia, Tse Sui Luen has five stores, including the latest to open in Genting. Sales rose 13.9 per cent.