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Tag: City Chain

  • City Chain sales down as store network shrinks

    City Chain sales down as store network shrinks

    City Chain sales plunged 20 percent across Greater China in the three months to June.

    Hong Kong-headquartered parent Stelux International – which spun off its eyewear business last year – said the watch-retailing chain’s poor performance was due to a 14.8-per-cent contraction of its store network and “softened consumer demand”.

    Group-wide turnover fell 18.8 percent to HK$235.3 million for the June quarter.

    City Chain sales in Greater China reached $167.1 million in the quarter, down 20.1 percent, with the store network down from 135 at the end of June last year to just 102.

    Sales in Southeast Asia fell 15.3 percent to $68.2 million with the store network down 36 over a year to 208.

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  • City Chain parent records another loss

    City Chain parent records another loss

    Same-store sales by watch retailer City Chain improved last year – but parent Stelux Holdings still recorded a loss of HK$34.6 million (US$4.4 million).

    That deficit would have been a lot higher but for the one-off gain of $111.8 million ($15.2 million) from the sale of the company’s optical business in June last year. The company says without the gain, and various other one-off adjustments, the company would have lost $117.5 million ($15 million). However, both figures were lower than the previous year’s loss of $123.7 million. On the positive side, inventory fell 16.6 per cent to $559.8 million ($71.7 million) as of March 31.

    Group turnover for the last financial year was down 3.4 per cent to $1.458 billion ($186.8 million).

    The City Chain Group operates around 220 stores in Hong Kong, Macau, Mainland China, Singapore, Thailand and Malaysia together with on-line stores under the City Chain and Solvil et

    Titus brands. It also has exclusive rights to the Seiko and Grand Seiko watch brands in Hong Kong, Singapore and Malaysia.

    Stelux International sold its Optical 88, Egg and Thong Sia Optical businesses last year for $400 million ($51.2 million). The purchaser was an entity controlled by Stelux CEO and chairman Joseph CC Wong, also known as Chumphol Kanjanapas.

    Wong said the company achieved same-store sales growth and profit in the first half of the financial year thanks to a refresh of the City Chain branding and house brand portfolio, store closures and cost reductions. However this was undermined in the second half as the trade dispute between China and the US intensified, Renminbi remained weak, tourist and domestic spending in regions where the company operates slowed down and consumer sentiment took a dive.

    For the full year, City Chain’s turnover fell 5 per cent to $1.167 billion ($149.5 million) as its store network reduced by 13 per cent.

    Turnover at City Chain’s Greater China business fell by 6.5 per cent, with a 19 per cent reduction in store numbers. Pre-tax loss there grew from $53 million ($6.8 million) last year to $98.9 million ($12.7 million) this year.

    “Despite the challenging operating environments in the second half, year-on-year same-store sales in Hong Kong and Macau remained stable,” said Wong. Operating costs fell by 9.8 per cent.

    Despite a generally weaker market environment, City Chain’s operations in Southeast Asia reported an increase in sales per shop of 8.9 per cent, with turnover remaining relatively stable, despite a 5.4 per cent reduction in the store network. However currency depreciation against a strong Hong Kong dollar say pre-tax earnings down from $4.2 million ($538,000) last year to just $800,000 ($102,000) this year. Excluding exchange losses the result was $3.4 million .

    Wholesale division turnover (including Seiko) grew 3.5 per cent to $291.2 million ($37.3 million) and together with improved operational efficiencies contributed to a profit of $40.1 million, a substantial improvement on the previous year’s loss of $4.6 million.

    Wong says that while uncertainties surround the completion of a trade deal between China and the US, retail sentiment is likely to remain subdued for the remainder of the 2020 year.

    “Refreshment of stores will continue and capital expenditures will be prudently managed.

    However, as part of the group’s long-term strategy to improve its competitiveness to adapt to changes in the consumer landscape, the group has prioritised investment in infrastructure and brand development to enhance customer interaction through omni channels so as to improve synergies between the online and offline businesses of the City Chain Group.”

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  • Stelux Holdings warns of annual loss

    Stelux Holdings warns of annual loss

    Stelux Holdings International has warned shareholders of an impending loss due to slow sales through its store network and narrower margins.

    The Hong Kong-listed retail company, which operates the Optical 88 and Egg eyewear chains and City Chain jewellers, said the closure of underperforming stores and a reduction of overheads has eased the loss, which it expects to be less than that recorded last financial year.

    It did not release an estimate.

    In the company’s half-year results, reported last November, Stelux’s turnover was down by 6.9 per cent to HK$1.3 billion (US$166.4 million) and gross profit margin fell from 59.6 to 58.1 per cent. Its first-half loss was down 15.2 per cent to $62 million.

    Stelux says it will report its full, March-year figures on June 21.

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  • Stelux Holdings slows down the bad trend

    Stelux Holdings slows down the bad trend

    While turnover and gross profit margin slid for watch/optical company Stelux Holdings International for its first half, it managed to cut back on its net loss.

    Group turnover was down by 6.9 per cent (6.3 per cent foreign-exchange neural) to HK$1.3 billion (US$166.4 million) and gross profit margin fell from 59.6 to 58.1 per cent. Group net loss reduced by 15.2 per cent to $62 million.

    Given the fragile retail environment, the group says it continued with consolidation measures to improve shop productivity. While group turnover fell by 6.9 per cent, largely because of an 11.3 per cent drop in shop number, same-store sales improved, particularly in Mainland China. Sales also stabilised in Hong Kong and Southeast Asia. Gross profit margin remained under pressure at 58.1 per cent, compared to 59.6 per cent in the same period last year.

    City Chain Group

    Turnover fell 11.1 per cent for the City Chain Group, with a loss before interest and tax (LBIT) of $37.7 million from $49.4 million. The group has about 260 stores in Hong Kong, Macau, Mainland China, Malaysia, Singapore and Thailand together with three online stores.

    The drop in turnover from $668.5 million to $594.4 million was because of a 17.9 per cent decrease in shop numbers.

    In response, the chain is undergoing a major transformation to attract both a younger and local clientele. New store layouts have been introduced in Hong Kong, Guangdong, and Thailand.

    Turnover for the chain in greater China fell by 12.5 per cent to $439.8 million while LBIT was down 11 per cent to $34.8 million.

    Same-store sales growth has also resumed in Hong Kong and Macau since August with a freshed store image and enriched brand portfolio. The closure of loss-making shops and the positive impact from the expiry of high rental leases contributed to a 19 per cent fall in operating costs. City Chain tapped into the e-commerce business in Mainland China a few years ago, with the turnover of its watch e-commerce business increasing by more than 60 per cent compared to the corresponding period last year.

    With store consolidation in Southeast Asia, turnover fell 7 per cent to $154.5 million. There was a 16.5 per cent drop in shop numbers. Nonetheless, LBIT narrowed significantly to $2.9 million from $10.3 million.

    EBIT for Malaysian stores more than tripled while LBIT in Singapore fell by 79 per cent. With sustained recovery in Thailand, both turnover and same-store sales growth were “satisfactory”.

    Optical 88 Group

    Optical 88 Group turnover decreased by 2.9 per cent with EBIT rising to $32 million from $15.2 million. The group has 194 shops throughout Hong Kong, Macau, Mainland China, Malaysia,  Singapore and Thailand delivering professional eyecare/eyewear products and services, as well as hearing products and services.

    Turnover eased by 2.9 per cent to $504 million with 7.6 per cent fewer shops. EBIT more than doubled from $15.2 million to $32 million.

    In greater China, Optical 88 had a marginal 0.7 per cent decline in turnover to $414.2 million, with 4.1 per cent fewer shops. EBIT rose by 16.8 per cent to $38.2 million.

    Southeast Asia business had a 11.7 per cent drop in turnover to $89.8 million with 10.2 per cent fewer outlets delivering a narrowed LBIT of $6.2 million.

    Turnover rose 13.5 per cent of Egg Optical Boutique with LBIT widening from $7.1 million to $13.6 million. There are more than 80 stores in Hong Kong, Mainland China and Southeast Asia
    together with an online store.

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  • City Chain parent warns of loss

    City Chain parent warns of loss

    City Chain parent Stelux Holdings has warned shareholders of a worsening loss for the latest half year.

    Stelux, which also owns the Optical 88 and Egg eyewear chains, says that current information shows the loss for the six months ended September 30 will exceed that of the same period last year.

    But the result appears to be impacted by extraordinary events rather than poor trading in its store network, which spans greater China and Southeast Asia.

    The loss is mainly because of non-cash impact including a one-off gain from the redemption of convertible bonds of HK$75.9 million (US$9.7 million), the amortisation of a share-based payment of convertible bonds of $9.3 million, and an increase in the liability component of convertible bonds of $41.2 million.

    Last July, in advance of the release of final first-quarter data, Stelux reported a year-on-year sales decline of 9.5 per cent (reduced to 8.4 per cent on a foreign-exchange neutral basis) to HK$624.7 million for the June quarter. However, it pointed out that was an improvement on the 16.2 per cent decline for the full financial year to March 31.

    Chairman/CEO Joseph Wong says this has not been reviewed or audited by the company’s
    auditors and is based on the board’s preliminary review of the unaudited consolidated management accounts of the group.

    The group’s results for the half-year may vary, and the interim results will be published next month.

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  • Stelux sales slide in third quarter

    Stelux sales slide in third quarter

    Stelux Holdings International has reported a 12.7 per cent slide in sales in the three months to December 31.

    A large component of the decline was the exchange rate – on a fiscally neutral basis, sales fell a more modest 8.8 per cent, the company has reported to the Hong Kong stock exchange.

    Turnover totalled HK$850.8 million for the quarter, down from the $974.6 million of the same period last year.

    “Our Mainland Optical 88 operations saw turnover growth of around 8 per cent in local currency terms, and the growth momentum from our eGG business in Greater China was sustained, but other business units within the group generally saw turnover decline,” the company reported.

    The main contributor of the decline would appear to be the City Chain jewellery and watch operation which has been hit by changing tourist spending patterns in Hong Kong and weak consumer sentiment in Malaysia, Singapore and Thailand. Stelux did not release figures for that subsidiary.

    The unaudited consolidated turnover of the Group for the nine months to December 31 was HK$2.637 billion, a decrease of 11.4 per cent, or 8 per cent on a foreign exchange neutral basis.

    “The group maintains stable liquidity with reduction of inventory by around 7 per cent and 15 per cent against that as at the end of September 2015 and March 2015 respectively,” the statement concluded.

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  • City Chain to close stores

    City Chain to close stores

    Hong Kong headquartered watch retailer City Chain plans to close more stores as sales slid 12.1 per cent and profits crashed by 86.4 per cent in the first half year to just HK$15.7 million.

    Parent Stelux says turnover was “sluggish” in Hong Kong, Macau and Southeast Asia, with a narrowed gross margin. But inventory reduced by 16 per cent compared with the end of March.

    The City Chain Group operates stores in Hong Kong, Macau, Mainland China, Singapore, Thailand and Malaysia together with online stores at City Chain Tmall and Titus Tmall. Turnover for the six months to September 30 was $957.9 million.

    “We are rationalising our store portfolio based on shop profitability when considering shop renewal or relocation to achieve lower rental to turnover ratios,” the company said, without providing any indication of how many stores are likely to be culled.

    Already stores have been closed in Singapore and Thailand.

    Sales in Hong Kong and Macau fell 14.2 per cent to $646.6 million due to reduced tourist spending, shop consolidation measures and a high comparable base last year, when the group achieved record breaking monthly sales. That triggered a 56.5 per cent drop in pre-tax earnings to $67.9 million.

    “A combination of factors, namely, a decrease in turnover, narrowed gross profit margin due to stock rationalisation and the time lag in containing operating costs such as shop rentals led to the decline. Operating costs other than shop rentals decreased by around eight per cent despite inflationary pressure. The group continues to tighten operating expenses to adapt to existing turnover levels to improve performance,” Stelux said in its earnings statement.

    It was a rosier picture in Mainland China, now considered “a key market” for the group, which is pursuing a long term growth strategy there.

    First half sales rose 11.2 per cent to $113.2 million despite the slowing economy, driven mostly by positive same store sales growth especially in the Eastern (around 27 per cent) and Southwest regions (around 40 per cent).

    “Due to aggressive price cuts by competitors and a change in stock management strategy, gross profit margins came under pressure. Stock clearance initiatives have proven successful and we are on track towards maintaining a healthier and more competitive inventory balance. Losses, standing at $28.6 million, remained similar to that of last year since most of the uplift in sales was offset by the drop in gross profit margin. Notably, the loss posted by existing operations in Northern China fell by around 57 per cent compared to the same period last year due to restructuring efforts taken in Quarter 2,” the company said.

    “We expect to accelerate network expansion, increasing penetration in regions where we have a presence, and also setting up in multiple second and third tier cities where we do not yet have a presence to achieve economies of scale.”

    Southeast Asian first half sales were adversely affected by weakening economic fundamentals, with poor consumer sentiment and weak local currencies. Turnover dropped by 15.7 per cent to $198.1 million. But in local currency terms, turnover dropped by just four per cent.

    The Southeast Asian operations recorded a loss of $23.6 million, but a large part of that was attributed to the sharp depreciation of the Malaysian ringgit. On an exchange neutral basis the loss would have been $13.2 million, compared with $12.5 million during the same period last year.

    “The retail sector in Malaysia was severely affected by the introduction of GST in April 2015 and the depreciation of Malaysian ringgit. Despite this, turnover in local currency terms remained stable due to successful restructuring and re-merchandising measures adopted.

    “In Singapore, store consolidation and productivity enhancement measures have been very successful and we have seen sales per shop month improving significantly by 22.5 per cent and at the same time operating costs have fallen by 19.6 per cent. This has helped to narrow the loss by 33.6 per cent to $8.3 million.

    “The unstable political situation in Thailand and high household debt ratio has resulted in very low consumer confidence which has continued to fall since January 2015. Due to this, our Thai operations, posted a 24.2 per cent (FX neutral: 18.8 per cent) decline in turnover. We have implemented aggressive store consolidation measures with over 10 non-performing stores closed, and these store consolidation efforts will continue in the second half. Cost control measures were also implemented reducing our operating costs by 22 per cent.”

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  • Stelux warns of looming loss

    Stelux warns of looming loss

    Hong Kong headquartered watch retailer Stelux has warned shareholders it expects to post a loss in the first half year.

    Stelux owns the City Chain network of watch stores along with eyewear brands eGG and Optical 88.

    In the first quarter of this year the company reported a 7.1 per cent decline in sales. But despite a decrease in turnover due to a decline in tourist spending in Hong Kong and Macau, the company achieved an 85.8 per cent increase in sales of its fashion eyewear chain eGG in the China Mainland, a 23.4 per cent increase in City Chain sales there, and a more modest 0.2 per cent gain in its Optical 88 chain.

    Fast forward to last Friday, however, and it warned interest charges, exchange rate losses and weakening Hong Kong and Macau sales will see it record a loss for the full six months.

    It reported “a decrease in turnover and gross profit caused by weak retail sentiment… particularly in Hong Kong, Macau and Southeast Asia (with moderate turnover growth recorded in Mainland China).”

    In the six months to September 30 last year it posted a profit of more than HK$105 million (about US$13.5 million).

    “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,” the statement concluded.

  • Stelux China sales soar

    Stelux China sales soar

    Listed Hong Kong eyewear and watch retailer Stelux Holdings has reported a 7.1 per cent decline in sales in the first three months of the 2015 financial year, compared to the same period last year.

    However Stelux China proved a standout in the trading results for the three months to June 30.

    The company says despite a decrease in turnover due to a decline in tourist spending in Hong Kong and Macau, the company achieved an 85.8 per cent increase in sales of its fashion eyewear chain eGG in the China Mainland, a 23.4 per cent increase in City Chain sales there, and a more modest 0.2 per cent gain in its Optical 88 chain.

    The company says its total sales reached HK$860.7 million in the period, compared with $926.4 million in the same quarter of 2014.

    Turnover in Southeast Asia – where it has stores in Singapore, Thailand and Malaysia – decreased by 16.9 per cent.

    “Excluding currency effects, the turnover would have decreased by nine per cent due to weak retail sentiment in Thailand and Malaysia,” the company said in a stock exchange filing on Monday.

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