Watch retailer Stelux expects to slip into red

Hong Kong-listed watch and eyewear retailer Stelux Holdings International Ltd. said the company is expected to record a net loss for the six months ended September 30 this year, mainly hurt by the increase in borrowing costs of convertible bonds and less gross profit earned in Hong Kong, Macau and Southeast Asia.

The company is known for its City Chain watch retail operation in both Hong Kong and Macau.
The anticipated net loss is primarily attributable to a decrease in turnover and gross profit caused by weak retail sentiment, especially in Hong Kong, Macau and Southeast Asia, Stelux explained in its latest filing.

An exchange loss of about HK$15 million (US$1.94 million) due to depreciation of currencies in Southeast Asia has also contributed to the expected net loss, the company said. ‘Despite the anticipated loss, the group is expected to report a positive operating profit; an improved gearing ratio (with a reduction in bank borrowings of approximately HK$130 million) and stable liquidity in the reporting period,’ Stelux said in the filing.
Regarding the corresponding period in 2014, Stelux earned a net profit of over HK$105 million.