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The Good And Bad That Investors Should Know About Hour Glass Ltd’s Latest Earnings

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

The company carries over 50 high end watch brands in its boutiques, some of which are Audemars Piguet, Patek Philippe, Richard Mille, and IWC Schaffhausen.

Last week, Hour Glass reported its second quarter results for its fiscal year ending 31 March 2018 (FY2018). There are both positive and negative takeaways that investors may want to learn about.

You can see Hour Glass’s income statement for the reporting quarter below:


Source: Hour Glass FY2018 second quarter results announcement

Let’s start with the positives. Firstly, Hour Glass’s revenue grew by 6% on a year-on-year basis due to an improvement in consumer sentiment in certain markets, and increased economic activity in its key markets.

Secondly, the luxury watch retailer’s gross profit margin improved from 21.4% a year ago to 22.2%.

Thirdly, Hour Glass continues to have a strong balance sheet. The company ended the reporting quarter with S$120.4 million in cash and equivalents, and just S$53.1 million in debt.

Now we can move on to the negatives. Firstly, employee costs grew faster than revenue. In the reporting quarter, Hour Glass’s employee costs increased by 8% year-on-year, compared to revenue growth of 6%.

Secondly, the company commented in its earnings release that “the global watch sector continues to remain challenging.”

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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.