Hong Kong jeweller TSL’s first-half profit sinks 94 per cent as it is hit by a double whammy of protests and trade war
- Tse Sui Luen Jewellery International’s net profit for the six months ended September fell to HK$1.57 million from HK$24.27 million a year earlier
- Company does not expect the situation to improve for the city’s retail sector
Tse Sui Luen Jewellery International is in talks with landlords on rent reduction and is looking to expand its online shopping presence to counter a 94 per cent decline in net profit for the first half because of the US-China trade war and ongoing anti-government protests.
The company said net profit for the six months ended September fell to HK$1.57 million (US$200,600) from HK$24.27 million a year earlier, 4 per cent lower than what the company had predicted during its profit warning last month. Revenue declined 13.6 per cent to HK$1.65 billion from HK$1.91 billion, in line with its estimates.
“In August and September, the [turnover] drop was about 45 to 55 per cent [year on year]. And actually, this range has been quite consistent throughout October and even now,” said Annie Tse Yau On-yee, chairwoman of TSL.
“We don’t think the situation will improve,” she said, adding that the hardships faced by the retail industry will be pretty much the same in December and early next year.
TSL said in a statement accompanying the results announcement that the outbreak of citywide protests and social unrest in since Hong Kong combined with the downward economic pressure being felt from the protracted US-China trade tension and yuan depreciation “conspired to devastate our retail business in Hong Kong”.
The company, which has more than 400 stores in Asia, generated 65.4 per cent of its first-half revenue from the mainland, with the rest from Hong Kong and Macau. Revenue from the mainland fell 8.5 per cent in the first half from a year earlier, while revenue from Hong Kong and Macau slipped by 23.9 per cent in the comparable period.
To combat the sales downturn, the company plans to discuss rent reduction with landlords, open more stores on the mainland, especially in the Greater Bay Area, and expand its online shopping presence as e-commerce revenue grew 27.7 per cent year on year.
TSL’s outlets in the protest hotspots of Causeway Bay, Tsim Sha Tsui and Mongkok, and shopping centres such as New Town Plaza, were most affected as the jewellery retailer had to close them on a few occasions because of the social instability, said Tse.
Hong Kong’s retailers have taken a beating because of the protests, with sales of jewellery and watches slumping 40.8 per cent to HK$3.63 billion in September from a year earlier, according to the latest data from the Census and Statistics Department.
TSL’s shares, which closed at HK$1.39 on Tuesday, have lost 27 per cent of their value in the past 52 weeks.
