Watch retailer Stelux expects to slip into red
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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.
Questions & Answers
Q.What are the main reasons Stelux expects to report a net loss?
What are the main reasons Stelux expects to report a net loss?
The company expects a net loss due to higher borrowing costs from convertible bonds and reduced gross profit in Hong Kong, Macau, and Southeast Asia. Weak retail sentiment and an exchange loss of HK$15 million from currency depreciation in Southeast Asia also contributed.
Q.Which specific areas are affecting Stelux's performance negatively?
Which specific areas are affecting Stelux's performance negatively?
Stelux is experiencing a decrease in gross profit and turnover, primarily caused by weak retail sentiment in Hong Kong, Macau, and Southeast Asia. Currency depreciation in Southeast Asia also led to an exchange loss.
Q.What positive financial indicators does Stelux anticipate despite the expected net loss?
What positive financial indicators does Stelux anticipate despite the expected net loss?
Despite the net loss, Stelux expects to report a positive operating profit and an improved gearing ratio. They also anticipate a reduction in bank borrowings of approximately HK$130 million and stable liquidity during the reporting period.
Q.What was Stelux's financial performance in the same period last year?
What was Stelux's financial performance in the same period last year?
In the corresponding six-month period of 2014, Stelux reported a net profit. This profit was recorded at over HK$105 million, in contrast to the anticipated loss for the current period.
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