Photographer: Michele Limina/Bloomberg

Hengdeli Sees Increased Luxury Watch Demand for Chinese New Year

  • Luxury-watch retailer seen to swing to profit this year
  • Trend of discounting has slowed, executive director says

Luxury-watch retailer Hengdeli Holdings Ltd. is boosting orders for the upcoming Chinese New Year, expecting stronger demand from shoppers in Hong Kong.

“Last year, we were quite conservative, but this year we’re more optimistic,” Stan Lee, executive director at Hengdeli, said in an interview in Hong Kong on Tuesday, without providing specifics. “The demand curve is going up, and the stock level has to be matched with the demand curve.”

The outlook comes after a 4.1 percent increase in Swiss watch shipments to Hong Kong in the first nine months. That bodes well for high-end watch brands like Swatch Group AG’s Breguet, Cie. Financiere Richemont SA’s Vacheron Constantin and LVMH Moet Hennessy Louis Vuitton SE’s Hublot. Returning strong appetite for expensive timepieces has helped the industry out of a four-year slump in Hong Kong.

Hengdeli will swing to a profit this year, Lee said. The company posted a loss in 2016, as well as for the first six months of this year. Shares of Hengdeli have declined about 63 percent this year in Hong Kong, compared with the 32 percent jump in the benchmark Hang Seng Index.

The retailer, which disposed of its mainland China business this year, now focuses on selling timepieces with price tags ranging from HK$30,000 ($3,844) to about HK$3 million, Lee said.

Hong Kong traditionally attracts mainland China tourists for shopping during the Chinese New Year season, which kicks off in February. The inventory levels at Hengdeli have come down from the highest levels on record during the downturn, and the trend for discounting has slowed, Lee said. Richemont, the owner of Cartier jewelry and IWC Schaffhausen watches, spent the previous year buying back unsold stock from retailers.

“The luxury watch and jewelry sales are rebounding from the bottom, we can see the strong performance during the Golden Week holiday in October,” said Michael Cheng, Asia Pacific & Hong Kong/China retail and consumer partner at PwC Hong Kong. “The booming stock market has created a good wealth effect, and China’s economy continues the upside trend, all helping boost the retail sales in Hong Kong.”

Lee said consumers feel better about purchasing luxury goods again and there’s a more positive mood all around.

“A few years ago, I couldn’t see the end of the tunnel, it was a long, long struggle,” Lee said. “Now it seems I can take a small, but deep breath.”

— With assistance by Daniela Wei

    Before it's here, it's on the Bloomberg Terminal.