Sincere Watch strengthens distribution network, North Asia

09 Aug '07

3 min read

Sincere Watch Limited the leading watch specialist in Asia, recorded a 34% increase in revenue to HK$150.9 million for the three months ended 30 June 2007 ("Q1/FY08").

The growth was mainly due to increased demand for the company's timepieces from its expanded distribution network and boutiques across the North Asia region.

In particular, the company benefited from Hong Kong's strong economic performance and the increased tourist traffic from the region especially from China.

The Group's net profit attributable to shareholders surged to HK$14.1 million, compared to HK$1.2 million in Q1/FY07.
The surge in net profit was mainly attributable to the unrealized foreign exchange gain of HK$1.4 million against an unrealized foreign exchange loss of HK$17.4 million in Q1/FY07.

While average gross margins softened to 27.4%, the Group enjoyed an overall improvement in gross profit to HK$41.4 million for Q1/FY08. The decrease in average gross margin was principally due to better trade incentives and rebates given to dealers for the period.

The Group embarked on an active expansion programme in Q1/FY08 to take advantage of the rising demand for luxury watches in North Asia.

It incurred an increase in selling & distribution costs, in line with more promotional and marketing activities being held during the quarter.

Administrative expenses which comprised rentals, depreciation and staff costs also increased as the rental rates and depreciation grew as a result of newly opened and enlarged boutiques.

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