LUXURY watch retailer The Hour Glass reported on Thursday (May 25) a 5 per cent decline in net profit for its second half despite a slight increase in revenue, as costs and expenses rose.

Net profit for the six months ended Mar 31, 2023 fell to S$87.8 million from S$92.1 million in the same period a year earlier. On a per share basis, earnings fell 1 per cent to S$0.1333 from S$0.1344. The board has recommended a final dividend of S$0.06 per share, unchanged from a year earlier.

Revenue for the second half rose 1 per cent on year to S$567.5 million, but the group also incurred higher operating expenses due to increased advertising and promotion activities. The group also said it wrote off in full the balance of S$5.5 million of goodwill arising from its acquisition of the New Zealand business unit.

For the full year, The Hour Glass revenue rose 9 per cent on year to S$1.1 billion, exceeding the S$1 billion threshold for the second consecutive year, which the group said was “a reflection of continuing demand in the specialty watch sector”.

Net profit for the full year was up 11 per cent to S$172.4 million, while gross margins in FY2023 improved to 33.6 per cent from 32.7 per cent in FY2022.

Michael Tay, group managing director of The Hour Glass group, said: “The group’s performance reflected developments in the watch market during an extraordinary period. With economic activity and consumer behaviour now returning to pre-pandemic norms, a sense of balance and moderation appears to be returning to the high-end watch industry.” 

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In terms of outlook, The Hour Glass said global uncertainties and the negative economic outlook is expected to dampen consumer sentiment. However, it still expects to continue to be profitable in the next financial year.

Net asset value per ordinary share for the group rose to S$1.18 as at end-March 2023, up from S$1.10 a year earlier.

Shares of The Hour Glass fell 0.9 per cent on Thursday to close at S$2.09 before the earnings announcement.