Jeweler Tse Sui Luen Suffers from Hong Kong Slowdown

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Sales and profit at jewelry retailer Tse Sui Luen (TSL) weakened in the past fiscal year, as improved demand in mainland China failed to compensate for sustained sluggishness in Hong Kong.
Revenue fell 3.6% to $438 million in the 12 months that ended February 28, the Hong Kong-based jeweler reported Tuesday. Profit dropped 2.6% to $3 million (HKD 23.2 million).
“A continuing reduction in tourists visiting Hong Kong from mainland China, together with the ongoing instability of both the global and local economic and political environment, conspired to create unfavorable consumer sentiment for the group’s retail outlets during the year,” the company said.
The devaluation of the Chinese yuan, as well as slower economic performance on the mainland — resulting from uncertainty about US trade policy — dented Chinese consumer confidence, the retailer explained. This in turn hampered the Hong Kong tourism industry, it added.
Even so, sales in China jumped 15% to $265.5 million, partially offsetting a 23% slump in revenue from Hong Kong and Macau, which came to $167.1 million. The group had 28 self-operated stores in Hong Kong and three in Macau at the end of February, while its store network on the mainland consisted of 198 self-operated outlets and 132 franchised stores.
Despite the stronger performance in mainland China, the company will take a “prudent” approach there, particularly given the lack of clarity over the US government’s policies, it added. The group plans to keep costs under close control and work to reduce the number of days it takes to replenish inventory.
Questions & Answers
Q.What were the main reasons for the company's financial downturn?
What were the main reasons for the company's financial downturn?
A significant reduction in mainland Chinese tourists visiting Hong Kong, alongside global and local economic and political instability, led to poor consumer sentiment. The devaluation of the yuan and US trade policy uncertainty also impacted Chinese consumer confidence.
Q.How did the performance in mainland China compare to Hong Kong and Macau?
How did the performance in mainland China compare to Hong Kong and Macau?
Sales in mainland China increased by 15% to $265.5 million. Conversely, revenue from Hong Kong and Macau slumped by 23%, reaching $167.1 million, despite mainland China's growth.
Q.What is the company's strategy for its operations in mainland China going forward?
What is the company's strategy for its operations in mainland China going forward?
The company will adopt a 'prudent' approach in mainland China, especially due to uncertainty surrounding US government policies. It plans to manage costs tightly and reduce inventory replenishment times.
Q.How many stores does Tse Sui Luen operate in its key regions?
How many stores does Tse Sui Luen operate in its key regions?
At the end of February, TSL had 28 self-operated stores in Hong Kong and three in Macau. Its mainland China network comprised 198 self-operated outlets and 132 franchised stores.
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