Hengdeli Holdings Ltd., the retail partner of Swatch Group AG in China, posted a 47 percent jump in 2011 profit as increasingly affluent Chinese spent more on luxury and fashionable watches.
Net income increased to 815 million yuan ($129 million) in the year ended Dec. 31, beating the 762 million yuan average of eight analysts’ estimates compiled by Bloomberg.
Hengdeli, a distributor of the Omega and Rolex brands, is expanding by adding stores to grow in China’s luxury market estimated by Bain & Co. at 212 billion yuan last year. The rising number of millionaires in China is boosting demand for luxury goods in the country. Wealthy Chinese consumers own about four high-end watches on average, according to the Hurun Wealth Report.
Hengdeli, whose shareholders include Swatch and LVMH Moet Hennessy Louis Vuitton SA, has 405 stores, an increase of 55 outlets, it said in a statement to the Hong Kong Stock Exchange yesterday. Sales climbed 38 percent to 11.4 billion yuan in 2011, according to the statement.
Shares of Hengdeli dropped 3.8 percent to HK$3.32 in Hong Kong. They have jumped 31 percent this year, outperforming the benchmark Hang Seng Index’s 13 percent gain.
Consumers in Asia bought more than half of the Swiss timepieces sold abroad last year, while China became the third-biggest destination for watch exports. Shipments to Hong Kong, the biggest market, jumped 28 percent.