Jeweler stares at $50m loss amid weak demand

Tse Sui Luen Jewellery (0417) warned it may swing to a net loss of at least HK$50 million for the six months ending in September from a net profit of HK$2 million a year ago, the worst in 18 years.

The jewelry retailer blamed the loss on weak consumer demand and the depreciating yuan.

Though Chinese authorities are rolling out a series of supportive measures, TSL expects that it will take time for the luxury market to recover.

TSL said sales in mainland China during the April-September period gradually improved, mainly due to an increase in 24-karat gold jewelry sales but with lower profit margins, and amid continuous pressure from the weakening yuan and interest rate hikes.

The turnover in Hong Kong, Macau and Malaysia increased steadily as more tourists returned and foot traffic picked up post-Covid.

Looking ahead, TSL said it will remain cautious and keep preserving cash given macro headwinds and geopolitical tensions.

Meanwhile, Luk Fook (0590) said its same-store sales in the three-month period ending in September grew 31 percent yearly as the economy has been recovering and average gold prices rose 11 percent from one year ago.

Hong Kong and Macau have become major drivers with a 41 percent jump in sales, but sales in mainland China dropped 8 percent amid weaker consumer sentiment.