Retailer Stelux eyes dealmakers to turn around China business

Chairman will appoint two experienced dealmakers to help bring profit to its optical and watch stores on the mainland

PUBLISHED : Tuesday, 04 December, 2012, 12:00am
UPDATED : Tuesday, 04 December, 2012, 3:10am

Shares of Stelux Holdings, a Hong Kong-based retailer of mid-priced glasses and watches, climbed yesterday after the company chairman said he would bring in two heavyweight executives to turn around the company's performance in China.

Stelux's shares advanced nearly 14 per cent at one point and firmed up 10 per cent yesterday to HK$2.53, after Joseph Wong said he plans to nominate Mary Ma and Alex Wong of Boyu Capital, as non-executive directors responsible for Stelux's expansion plan on the mainland.

Boyu Capital, a private equity firm specialising in China investment, was set up by former Ping An president Louis Cheung and Ma, a former chief financial officer at Lenovo and executive at US-based Texas Pacific Group.

Earlier, Boyu bought HK$371 million of convertible Stelux bonds with a 3.5 per cent semi-annual coupon.

"We expect to shortly announce the appointments of [Ma and Wong] to our board of directors, which should provide meaningful synergies to our existing business within a month," Joseph Wong said at briefing.

He added that the dealmakers' experience in China should add to the company's finance and operations strengths.

Wong said Stelux, which owns the Optical 88 and City Chain stores, was still losing money in the highly competitive China market.

He believes that Ma and Wong would control costs with the aim to break even in fiscal 2015.

Before joining Texas Pacific Group, Ma had a long career at Lenovo, the world's second-largest maker of personal computers, where she played a key role in Lenovo's acquisition of IBM's personal computer and laptop business in 2005.

Wong said the recent slowing in sales on the mainland should be "cyclical" and should improve with a growing middle class which will have more disposable income.

Stelux plans to spend up to HK$80 million per year to open new stores and renovate old ones. The number of stores on the mainland has fallen to 93 from 101 from March this year, reflecting the tough operating conditions in all the major cities such as Guangdong, Shanghai and Beijing.

Sales in China were little changed at HK$78 million in the six months ended September, compared with HK$80 million in the same period a year earlier.

Losses widened to HK$33 million from HK$19 million, according to the company's financial statement submitted to the Hong Kong stock exchange.

The company also plans to hire a chief operating officer for the China business.