IMO, I don't think the exclusive distributorship for Laudree macarons will be a significant game changer - neither for the better nor the worse. In Dec 2012, Laudree opened its first outlet in HK and a box of 15 assorted macarons cost around HK$345 or S$57.50 - which implies S$3.80 per macaron. I don't think there will be much price difference between HK and Singapore so it's safe to assume this selling price range.
Now, to see the "impact" of Laudree distributorship - assume the exclusive distribution aims to match the recent 7% sales decline in 3Q2012 which amounts to around S$11mln. To plug in this SS$11mln gap, the two new outlet has to sell around 2.9mln macarons or 190K boxes of 15 assorted macarons. In other words, these 2 outlets have to sell around 2000 boxes a day or 1000 boxes per outlet. Maybe in a blue sky scenario, the novelty effect can meet such target but to run it off consistently for 90 days/1 quarter will be doubtful.
No doubt, moving into Laudree may improve its CCC days - depending on their target mix. A/R days will be low given its CoD terms while I can't forsee selling macaron having a larger inventory days than selling watches. A/P days should be the norm or even better since it is an exclusive distributorship. Margins are likely to match what HG is earning so there is a high possibility it can be accretive though this depends on how much mix will macaron account for HG's total sales. But overall, my point is this, one sale of a cheap Patek Philippe watch at S$10K can cover the effort of selling Laudree macarons. So their impact won't be much.
Instead, I will take one step further and be cynical. I suspect the distributorship announcement was a way to divert attention from its declining watch retailing business. The Federation of the Swiss Watch Industry recently announced figures for its Swiss watch exports for 2012. Overall, 2012 was a good year but trend in December may suggest a peak of watch exports. Swiss watches exports to HK fell by 15%, China by 32% and Singapore by 28%. December tends to be a peak season for watch sales due to the festive mood but the recent data seem to be showing otherwise. Perhaps, the silver lining lies in the fact that luxury watches grew by 1.4%. That said, it is still little comfort given the seasonality peak.
Question now is to whether we should ride through this wave.
Those interested in the HK Laudree outlet -
http://www.thatfoodcray.com/2012/12/05/b...g-laduree/
Homepage
PR Newswire
