The Hour Glass H2 profit falls 6% to S$74.4 million on increased operating expenses

The Hour Glass has reported a 6 per cent drop in net profit to S$74.4 million in the six months ended March 2025, from S$79.5 million in the year-ago period.

Revenue was at S$622.6 million, up 9 per cent year on year from S$571.3 million.

Earnings per share stood at S$0.1148 for the half-year period, down from S$0.1217 previously.

In a bourse filing on Friday (May 23), the luxury watch retailer said that for the full year, profits had been affected by increased operating expenses driven by inflationary pressures on rents and wages combined with a fair value adjustment on investment properties.

Michael Tay, group managing director of The Hour Glass Group, said: “The past year has tested the resilience of both the luxury and specialty watch retail sector. The consolidation of the global luxury market has intensified competition for the consumer’s share of wallet while inflationary pressures have elevated the cost of operations across our network of boutiques.”

For the full year ended March 2025, net profit was down 13 per cent at S$135.8 million, from S$156.5 million in the year ago period, while revenue increased 3 per cent to S$1.2 billion across the same time frame.

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Tay said that the group had delivered modest revenue growth on “the strength of its curated brand portfolio and depth of its client relationships.”

Higher operating expenses for FY2025 compared to FY2024 were mainly due to increased selling and promotion costs and depreciation of property, plant and equipment and right-of-use assets.

For FY2025, selling and promotion expenses were up 5 per cent at S$40.7 million, depreciation of property, plant and equipment increased 18 per cent to S$15.7 million, and depreciation of right-of-use assets increased six per cent to S$32.3 million.

Fair value loss on investment properties was at S$6.5 million, reversing from a gain of S$1.2 million, while foreign exchange losses also increased 139 per cent to S$2.2 million.

A final dividend of S$0.04 per share has been recommended, compared with S$0.06 per share in the year ago period, and subject to shareholder approval. The date payable will be announced later.

The group said that the luxury watch industry will continue to face cautious consumer sentiment driven by macroeconomic uncertainty, while “market and industry consolidation are expected to persist, challenging watch brands and retailers alike” but the group is positioned to maintain profitability in the next financial year.

Shares of The Hour Glass closed flat at S$1.61 on Friday, before the results were released.