Emperor Watch built 100 stores for mainland tourists — then the visitors stopped

Emperor Watch & Jewellery, the Hong Kong retailer listed on the exchange under stock code 887, built its network for one customer: the mainland Chinese tourist buying luxury watches. By the mid-2010s it ran about 100 high-rent stores across Hong Kong, Macau, mainland China and Singapore, with Hong Kong and Macau the core.

When visitor arrivals and spending fell in 2014–2016, the bet collapsed. In 2015 the group swung from a HK$138 million net profit to a HK$120 million net loss, with revenue down 25.2% to HK$4.43 billion. It closed its Canton Road flagship in February 2016 and went to landlords asking for 30–50% rent cuts at four to six other outlets, as Hong Kong's jewelry and watch retail sales tumbled 24.2%.

The company attributed the fall to weakened consumption sentiment from a strong local currency and falling mainland visitor arrivals. By 2016 the store count had fallen to 97 and the net loss narrowed to HK$64.8 million as rents came down. Emperor survived — smaller, humbler, and a textbook in what concentration on one demand source costs when it reverses.