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Hour Glass Ltd’s Share Price Is Down By 16% In The Last 12 Months: Here’s Why

Hour Glass Ltd (SGX: AGS) is a luxury watch retailer that runs over 40 boutiques in the Asia Pacific region in countries such as Singapore, Thailand, and Australia.

Some of the brands that can be found in Hour Glass’s boutiques include the marquees such as Patek Philippe, Audemars Piguet, and IWC. All told, the company carries over 50 of the finest watch brands in its boutiques.

Over the last 12 months, Hour Glass’s stock price is down by 16%. What may have caused this?

Reasons for a decline

There can be many reasons behind a stock’s price decline.

But, the reasons can generally be classified as business-performance-related, or investor-sentiment-related. The former deals with how a stock’s business has performed or is expected to perform. And in terms of business performance, one of the really important numbers would be the stock’s profits.

Meanwhile, the latter is about the overall mood of market participants – are investors more greedy than fearful, more pessimistic than optimistic et cetera? In general, negative emotions (fear and pessimism) tend to drag down the prices of stocks while positive emotions (greed and optimism) tend to push up stock prices.

The case with Hour Glass

In Hour Glass’s case, it appears to be the former at work. Here’s a table showing the company’s revenue and profit performance in the six months ended 30 September 2016:

Hour Glass income statement table
Source: Hour Glass earnings announcement

We can see that the luxury watch retailer has suffered a 7% year-on-year decline in revenue for the period under study. This in turn has led to a 18% drop in its earnings per share.

Moreover, the company commented in its earnings release that it does not expect the current headwind to its business – a slowdown in the global economy leading to contracting market demand for luxury goods – to ease anytime soon.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.