Hongkong Jewelry Performance Plunged Into Mire Xie Ruilin Jewelry Performance Poor

Hongkong Xie Ruilin jewellery (International) Limited released its 2015/16 annual report today. The company's operating income fell 8.6% last year to HK $3 billion 539 million, while its profits plunged 40.6% to HK $23 million 600 thousand.

Jewellery business is almost in the mire of performance in Hongkong. Zhou Dafu Jewelry Group has also issued a profit warning recently. Because of the further weakening of consumer demand, the total profit in the 2015 fiscal year may be half of that in the same period last year. Zhou Dafu announced that in the third quarter ended December 31st, turnover fell by 11%, of which 6% in mainland China and 20% in Hongkong and Macao.

The weak performance of Zhou Dafu and Xie Ruilin is only a microcosm of Hongkong's overall retail industry. As of March, Hongkong's retail sales have declined for thirteenth consecutive months, while sales of jewellery, watches and clocks and valuable gifts have declined for 19 consecutive months. Hongkong, as a shopping destination, continues to weaken the attractiveness of consumers in mainland China.

Some analysts said that Zhou Dafu or will continue to close shop to reduce operating costs, Zhou Dafu, chairman of the board of directors Zheng Jiachun told the media that in the first half of 2015, Hongkong has closed three branches.

　　 tsl It is pointed out that the main reason for the sharp drop in profits last year was due to the decrease in the number of visitors to the mainland of China and the continued instability of Hongkong's politics and the depreciation of the renminbi. Consumer Confidence and purchasing power declined. Last year, sales in Hongkong and Macao declined by 21.9%, while sales in the same store fell 24.3%. Last year, Hongkong opened 3 new shops and closed 2 stores. Up to now, the number of self operated shops in Hongkong and Macao was 28 and 3 respectively.

However, Xie Ruilin vigorously expanded franchised business in mainland China last year. The number of shops in mainland China has increased rapidly, and the sales network has been expanded to make up for the loss of performance in Macao, Hongkong. The group stressed that the high rent in Hong Kong and Macao had not been adjusted accordingly, but in the face of high rent, last year the group could still control the overall gross profit margin from only 46.5% from 1% to 45.5%.

Xie Ruilin's retail business in mainland China recorded a 2.3% growth last year. Same store sales The growth rate is 1.5%, and the proportion of the group's turnover in the mainland is 40%. The group said it plans to accelerate the pace of opening stores in the mainland so as to effectively contact and serve consumers in the mainland. At the end of last year, the total number of self operated shops in the mainland was 187, with 34 to 49 new shops joined. Now the group has 270 shops covering 108 cities in the mainland, and the company said it will continue to tap the market potential in China's two or three tier cities.

As of February 29, 2016, due to the pressure of performance, Xie Ruilin group laid off 130 employees last year. In addition, jewelry retail sales accounted for more than 80% of the total turnover of Zhou Shengsheng, last year's jewelry retail business static profit fell 20% over the previous year; Lufu group in the first quarter of this year, the same store sales fell 27%, the same period last year's decline of 20%.

In terms of e-commerce strategy, in addition to Tmall and Jingdong platform, the group joined vip.com sales platform last year, and its total online sales volume surged 584%.

For the product category, Xie Ruilin group said that last year's market consumption pattern has been spanformed from luxury jewelry products and high priced goods to popular products popular in the market. In order to adapt to the market spanformation, the group introduced the finger phrase series to attract young new generation of consumers, and at the same time, the series has also achieved good results in promoting social media users.

Insiders said that the mainland tourists' visit to Hongkong is not expected to recover in the short term. The stagnation of the property market in Hongkong and the relatively weak stock market have also led to a decline in consumption in Hong Kong. Looking forward to the whole year of 2016, the negative factors in the whole year are expected to be eliminated in the short term, and the jewelry retail industry in Hongkong will continue to decline.