High-end segment not bullet-proof, says Hour Glass
THE luxury goods segment is not 'bullet-proof', a senior executive at The Hour Glass said yesterday as he warned of slowing sales in the upmarket watch segment.
Jamie Lee
Thu, Nov 06, 2008
The Business Times
THE luxury goods segment is not 'bullet-proof', a senior executive at The Hour Glass said yesterday as he warned of slowing sales in the upmarket watch segment.
'This situation is going to be prolonged and recovery will be some time away,' executive director Michael Tay told a news briefing.
'Everybody I speak to seems to believe the luxury goods business is bullet-proof to any degree of economic contraction,' he said. 'But it doesn't matter if you have a $100 million or $100 in the bank. The moment consumer sentiment shifts, discretionary spending is crimped.'
A drop in tourists in The Hour Glass's key markets of Singapore and Hong Kong has also dampened the outlook for the business, said Mr Tay.
The Hour Glass will hold its first pre-Christmas sale next week to try to get business moving. 'Usually, we don't spend that much on Christmas because Christmas drives itself,' he said.
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Construction delays at Ion Orchard and Orchard Central have pushed back openings of stores there to after April next year - or in The Hour Glass's new financial year, he said.
He declined to say whether the company has bid for Sincere Watch but said that The Hour Glass is open to M&A. 'I am not at liberty to comment on any market rumours,' he said.
'We always look for new opportunities, whether it is to develop new business (or) to look at aggregation. I fundamentally believe that these 24 to 36 months will have opportunities surfacing. A company like ours, with the balance sheet we have, has a lot of potential.'
The Hour Glass reported yesterday that it had $22.8 million in its coffers for its second quarter ended Sept 30. Its debt-to-equity ratio is 12 per cent.
The company posted a 13.6 per cent rise in net quarterly profit to $7.71 million, up from $6.79 million a year earlier, thanks to lower costs. It cut selling and promotional expenses 13 per cent to $2.63 million. Sales were flat at $114.8 million. Earnings per share for the quarter rose 10.3 per cent to 3.33 cents, from 3.02 cents a year earlier.
The stock closed three cents higher at 50 cents yesterday.