Jeweler Tse Sui Luen (TSL) saw revenue and profit slide in its first fiscal half as China’s Covid-19 lockdowns canceled out the impact of improved consumer sentiment in Hong Kong.
Sales at the Hong Kong-based jeweler fell 11% year on year to HKD 1.25 billion ($159.7 million) for the six months ending September 30, the company said Wednesday. Profit for the period dropped 32% to HKD 1.8 million ($229,241).
Revenue in mainland China, TSL’s biggest market, decreased 21% to HKD 899.6 million ($115.1 million) as the government implemented more stringent social-distancing rules to curb continued Covid-19 Omicron outbreaks. The situation also dented domestic demand and consumer sentiment, TSL noted.
In Hong Kong and Macau, sales spiked 19% to HKD 290 million ($37.1 million), while domestic spending grew amid a stimulus program the government implemented to support retail. The easing of quarantine restrictions for tourists and the lower price of gold also boosted sales in the municipality.
“Instead of returning to pre-Covid-19 growth paths, the global economy took another hit…driven by the Omicron variant at the beginning of 2022,” the company explained. “China’s economy inevitably slowed down, resulting in sluggish retail sales growth as strict containment measures were reimposed during the period. On the positive side, Hong Kong and Macau governments implemented new phases of their respective consumption-voucher schemes, which helped to boost local economies.”
TSL managed to offset some of the negative Covid-19 impacts by beefing up its e-commerce offering, and it will continue to do so, the retailer said. However, it sees a challenging future in the near term.
“In response to the gloomy economic outlook and the decline in consumer sentiment caused by the prolonged epidemic, persistent political tensions and aggressive interest-rate hikes, [TSL] endeavored to enhance its product offering and customer service across the different market segments,” it noted. “Given the global economy clouded by uncertainties, the group [will] maintain prudent management and keep a close track of the market situation in order to be able to quickly adjust its business strategies as and when the circumstances [require].”
Image: A TSL store in Hong Kong. (Naoniaum21)