Hengdeli shifts focus to mid market
Chinese watch retailer and wholesaler Hengdeli Holdings is to expand into the mid market as it mainland China business grows.
Hong Kong-listed Hengdeli specialises in high end watch retailing in mainland China, Hong Kong and Taiwan and has relationships with major global suppliers including Swatch, both LVMH and Richemont, Rolex and Kering.
As at December 2014, the company represented more than 50 international brands, including Breguet, Bulgari, Cartier, Girard-Perregaux, IWC, Jaeger-LeCoultre, Longines, Mido, Omega, Rolex, Scatola del Tempo, TAG Heuer, Tissot, Vacheron-Constantin, Van Cleef & Arpels and Zenith.
Last year Hengdeli added Manufacture Royale, MB&F and Vulcain to its portfolio as it stepped up its efforts to “bring in and align mid-end, mid-to-high end and high-end brands across both Mainland China and Hong Kong”. The company said it believes optimising the brand portfolio will pave the way for long-term business development and increased sales.
According to recently filed 2014 financials, Hengdeli recorded turnover of RMB 14,764,370,000 (US$2.379 billion); an increase of 10.4 per cent year-on-year. Retail sales amounted to RMB 10,608,804,000 ($1.71 billion), an increase of 6.3 per cent year-on-year. Of this figure, retail sales in mainland China posted a year-on-year increase of 11.6 per cent to reach RMB 6,248,240,000 ($1.007 billion), while Elegant Hong Kong’s retail sales experienced a year-on-year decrease of 17.7 per cent to RMB 2,593,388,000 ($418 million). Excluding the impact of foreign exchange gains and losses, the decrease was 16.6 per cent.
Group sales remained at the same level as in 2013, indicating a slowing of expansion. “Growth of our total retail sales was mainly generated by domestic retail outlets and mid-end brands. While continuing weak sales of high-end watches had some impact on the total retail sales, the new normality of China’s economy and our strategy of aligning operations with market dynamics has paid off. As a result, the decline in sales of high-end watches in Mainland China began to slowdown.”
The company says sales of mid-end brands remained favourable, posting a year- on-year growth of 16.1 per cent. Same-store sales of mid-end brands also grew by 2.2 per cent, which was above the group’s average growth for the year.
The group recorded net profit of RMB 583,427,000 ($94 million); an increase of 24.4 per cent year-on-year.
As well as focussing expansion on less high end brands, Hengdeli actively expanded into mainland China’s second, third, and fourth-tier cities while building market shares in first-tier cities, and establishing a multi-level sales system across Mainland China and Hong Kong.
At year end, the Group operated 513 retail outlets in mainland China, Hong Kong, Macau and Taiwan.
The Group’s retail network covers the Greater China Region, where retail stores mainly includes Prime Time/Hengdeli, Elegant as well as certain other single-brand boutiques. Prime Time/Hengdeli mainly sells mid-end and mid-to-high-end international brands, while Elegant focuses on top-end internationally renowned brands.
Prime Time is the major retail outlet arm of the Group in Mainland China and mainly sells internationally renowned mid-end and mid-to-high-end branded watches.
Hengdeli says in 2015, China’s economy looks likely to continue to evolve despite ongoing global economic uncertainties.
“We believe that the resultant new normality will continue to create exciting fresh opportunities for the group.”