Reduced rents, high-end products help Oriental Watch stay in profit

2 min readUpdated May 19, 2025Jun 30, 202011:02 PM

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Listed Hong Kong timepiece retailer Oriental Watch Holdings has weathered the multiple crises of the last financial year to record a decrease in turnover of just 3.5 percent and a profit of US$12.9 million.

While turnover was down to $303.6 million, gross profit was up by 7 percent to $83.2 million, “mainly due to the group’s positioning at the high-end luxurious watch market where our long-term customers maintain strong purchasing power, as well as our vigorous efforts in the control of inventory,” the company said in its results announcement.

The net profit attributable to shareholders of $12.9 million was down by 27.5 percent, the decline largely due to impairment losses, an increase in the allowance for slowing-moving stock and decreasing sales due to Covid-19 in the first quarter of this calendar year. But the company warned the full impact of Covid-19 had not been represented in the 2020 year results.

Chairman Yeung Ming Biu said the company had introduced “stringent cost-control measures, especially in rent costs” which were down by 15.7 percent to $18.7 million.

“We have successfully negotiated lower rental rates and more flexible leasing terms, and hence lowering the overall rental cost. In addition, we conduct a regular assessment on the performance of all retail stores and close down non-performing ones to improve resources allocation. The Group will continue to closely monitor our stores’ performance as well as rental contracts in order to improve our efficiency and cost structure,” said Yeung

Oriental Watch has 62 luxury watch stores in Greater China, 47 on the mainland, 11 in Hong Kong, three in Taiwan and one in Macau.

By market, Oriental Watch achieved a 17.5-per-cent increase in sales on the mainland to $129.1 million, despite the declining consumer sentiment and the advent of the pandemic. In Hong Kong, year-on-year sales were stable despite the social unrest from June last year until the arrival of Covid-19. As a result, sales fell by 17.3 percent to $154.6 million.

Sales in Taiwan and Macau grew slightly, but recorded a loss largely due to increased allowance for slow-moving stock.

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What this means

Oriental Watch's ability to remain profitable, even with reduced turnover, highlights the strategic value of stringent cost control and a high-end market focus in turbulent times. While its mainland China sales grew robustly, similar to Panpuri's ambitious 16-store Asian expansion or Chagee Holdings targeting Southeast Asia, the reliance on rent reductions echoes broader retail challenges. This move pressures rivals who may not have secured such favourable leasing terms, especially in high-cost cities like Hong Kong where SKIMS opened a flagship. The main risk remains the fluctuating consumer sentiment and potential for further stock impairments. Watch Oriental Watch's next financial report for further store closures and rental cost percentages.

Wei Zhang · Retail News Asia newsroom

Questions & Answers

What is the primary reason for the decrease in net profit despite an increase in gross profit?

Net profit was down largely due to impairment losses and an increase in the allowance for slow-moving stock. Decreasing sales from Covid-19 in the first quarter of this calendar year also contributed to the decline.

How did the company manage to reduce its rental costs?

The company introduced stringent cost-control measures, successfully negotiating lower rental rates and more flexible leasing terms. They also closed non-performing retail stores to improve resource allocation.

Which market saw a growth in sales for Oriental Watch during the last financial year?

Sales on the mainland increased by 17.5 percent to $129.1 million, despite declining consumer sentiment and the pandemic. This was the only market mentioned with sales growth.

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