Tse Sui Luen warns of loss due to Covid-19 outbreak
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Tse Sui Luen (TSL) has warned it will report a loss for the fiscal year, with sales hampered by a sluggish retail environment in greater China.
The Hong Kong-based jeweler expects a loss of at least HKD 80 million ($10.3 million) for the year ending March 31, it said last week. That compares with a profit of HKD 54 million ($7 million) the previous year. The company based the projection on its performance during the first 11 months of the fiscal year.
The slowdown, which began in July, is the result of a number of factors including the US-China trade war and prolonged social unrest in Hong Kong, TSL said. The COVID-19 outbreak has also impacted sales.
“The coronavirus outbreak in January 2020 has taken a heavy toll on the retail industry, dealing a severe blow to the Hong Kong and mainland China economies,” the company noted. “The group’s turnover was [affected] further by the weakest overall sales in February 2020, the traditional peak season of the retail industry…which is expected to drop by approximately 88% year on year.”
In an effort to cut costs, TSL has negotiated rent reductions with landlords, and plans to close some of its stores, it added.
The company will publish its full-year results by the end of June.
Questions & Answers
Q.What is the primary financial concern Tse Sui Luen (TSL) has highlighted for the current fiscal year?
What is the primary financial concern Tse Sui Luen (TSL) has highlighted for the current fiscal year?
TSL expects to report a loss of at least HKD 80 million for the fiscal year ending March 31. This is a significant downturn compared to the HKD 54 million profit reported in the previous year.
Q.What factors have contributed to TSL's anticipated financial loss for the year?
What factors have contributed to TSL's anticipated financial loss for the year?
The company attributes the loss to a sluggish retail environment, the US-China trade war, prolonged social unrest in Hong Kong, and the severe impact of the COVID-19 outbreak, particularly affecting February sales.
Q.How significantly has the COVID-19 outbreak impacted TSL's sales during a key trading period?
How significantly has the COVID-19 outbreak impacted TSL's sales during a key trading period?
The COVID-19 outbreak in January 2020 led to an 88% year-on-year drop in sales for February 2020. This month is traditionally a peak season for the retail industry, making the impact particularly severe.
Q.What measures is TSL taking to mitigate the financial difficulties it is facing?
What measures is TSL taking to mitigate the financial difficulties it is facing?
TSL is taking steps to cut costs by negotiating rent reductions with its landlords. The company also plans to close some of its stores to further address the financial challenges.
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