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Hour Glass Ltd – The Positives And The Negatives That Investors Should Know About Its Quarterly Results

Hour Glass Ltd (SGX: AGS) is in the business of retailing luxury watches. It has a network of over 40 stores in Singapore, Malaysia, Thailand, Japan, Hong Kong, and Australia.

The company is an official retailer of some of the world’s finest brands, such as Audemars Piguet, Cartier, Hublot, IWC, Patek Philippe, Richard Mille, Rolex, Sinn, TAG Heuer and the likes.

Hour Glass recently reported its FY18 Q1 result. In this article, we will look at the good and the bad from its latest result.

But first, let’s have a quick overview of the result.

Source: Hour Glass FY18 Q1 Result Announcement

Let’s look at the good points from the latest result.

First of all, revenue grew by 11% of a year-on-year basis due to improvement in consumer sentiments in certain markets within the region.

Secondly, the company continued to have a strong balance sheet. Hour Glass ended the quarter with $112.2 million in cash and cash equivalent and $52.2 million in debt.

After looking at the positive points, now let’s focus on a few negatives from the latest result.

First of all, gross margin declined from 22.9% last year to 21.2% this quarter. This might indicate that Hour Glass is facing challenges maintaining the pricing power of its watches.

Secondly, operating expenses grew faster than revenue due to a one-time relocation expense of $1.5 million incurred by The Hour Glass Australia.

Last but not least, Hour Glass expects the “global watch sector continues to remain challenging.” This might indicate that the company could continue to see challenges going forward.

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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.