Worse to come, says TSL as profit plunges 94pc

Business | Tereza Cai 20 Nov 2019

Tse Sui Luen Jewellery (International) (0417) yesterday reported that its interim net profit for the six months ended September 30 plunged 94 percent year-on-year to HK$1.57 million, due to weak consumer sentiment amid the ongoing political unrest and Sino-US trade war, and said the worst is yet to come.

No interim dividend was declared for the first time in 12 years.

Turnover during the period fell 14 percent to HK$1.65 billion from a year before. Basic earnings per share were 0.6 HK cents plummeting from 9.8 HK cents a year ago.

Its Hong Kong and Macau revenues slumped 24.58 percent to HK$537.13 million, while business in the mainland also saw a 7.5 percent drop in revenue to HK$1.08 billion. Same-store sales growth of minus 26.4 percent was recorded in Hong Kong and Macau.

The outbreak of citywide protests in Hong Kong in June has combined with the downward economic pressure felt by the protracted US-China trade tensions and yuan's depreciation, all of which has "conspired to devastate our retail business in Hong Kong," the company said adding that the hardship the local retail industry is facing is likely to persist or even worsen in the remainder of the financial year.

"Amid the difficult business environment, the group will manage the risks with effective cost-saving measures in a prudent manner, and stay alert and respond to any future market changes as and when they occur," TSL said in the statement.

It explained that tourist numbers dropped immediately and local consumers became more cautious with their spending, particularly for luxury goods, resulting in the plunge of sales in Hong Kong.

TSL plans to optimize store networks and to implement more cost-saving initiatives including requesting landlords to provide rental reduction or relief for its retail stores and reducing operating expenses.

The group opened three new stores in Hong Kong during the six months, which are located at Mirador Mansion in Tsim Sha Tsui, Citygate Outlets in Tung Chung and V Walk in Nam Cheong.

However, its retail business in Macau remained stable during the period.

In the mainland, a turnover decrease of 8.5 percent and same-store sales growth of minus 7.5 percent were mainly attributed to the protracted US-China trade war. Seven new self-operated stores and 41 new franchised stores were opened during the six months, resulting in a net increase in the total number of stores in the mainland to 448.

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