TSL jewelry shines with profits up 79%

Updated: 2008-06-19 07:25

By Karen Cho(HK Edition)

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The mainland's booming consumer market helped buoy the earnings of jewelry retailer Tse Sui Luen by 79 percent in the last fiscal year.

It's a bit of good news for the company, which has had to deal with losses of company executives who were arrested and found guilty of illegal activities. That included founder Tse Sui Luen.

The Hong Kong-based jewelry retailer reported net profits of HK$99 million in the fiscal year ending in February. That's compared with the previous year's HK$55.5 million.

Robust earnings bolstered earnings per share in the company to HK$47.90 each.

TSL jewelry shines with profits up 79% 

Hong Kong-based gold retailer TSL saw its earnings jump to HK$99 million in the last fiscal year. Trading of the stock may resume soon, as a trial involving the company's founder and his son ended in April. China Daily

"Let bygones be bygones. The business of the company remains sound," said Erwin Huang, TSL's new chief executive officer, at the company's results announcement yesterday.

Huang replaced Tommy Tse, the son of Tse Sui Luen, after the two were found guilty of paying illegal rebates to travel agents and sentenced to jail in April.

Huang told reporters that the strong growth in both Hong Kong and on the mainland serves as proof that TSL remains a sound brand. "We view that goodwill as very important, and we will strive to protect it," he said.

TSL sales in Hong Kong grew by 18 percent last year, while its mainland business saw a bigger jump of 32 percent, bringing the group's total sales turnover to HK$1.9 billion - a 27 percent gain over the previous fiscal year.

The group said its growth engine is in the rosy performances of both its tourist showroom business and mainland outlets.

To further capture the increasingly affluent mainland market, TSL plans to increase its number of outlets this year by as many as 30, potentially bringing the total to 150.

Huang said most of the growth will occur on the mainland, noting that Hong Kong is already a saturated market.

The group's chief financial officer, Lawrence Lai, said that the capital expenditure for TSL this year is about HK$50 million.

Steep challenges ahead

Higher rent, rising staff costs and soaring raw-material expenses are challenges that the middle- to high-end jewelry retailer has to face in the coming year.

Huang admits that overall pricing pressure exists, but he said that transferring all the additional costs to customers isn't the answer.

Instead, the company will continue to look at streamlining and boosting efficiency to save money.

Recent natural disasters on the mainland may also affect sales.

"Certainly the prevailing sad moods can affect the sales of jewelry," Huang said.

TSL, which has 10 stores in Sichuan, said that business there was temporarily suspended in the earthquake aftermath, but the impact was mild.

"April and May have historically been slow months for the industry," he said.

Trading in TSL shares have been suspended since 2005, which is when the ICAC court case surfaced. But Huang said that trading looks to resume soon, as the trial ended in April.

"We are in discussions with the stock exchange and other consultants," he said, declining to give a possible timeline.

(HK Edition 06/19/2008 page2)