[February 17, 2017 ] Bosideng International Holdings (3998) announces that it has disposed of an equity interest in its non-down apparel brand Mogao and it closed its flagship store in London in the middle of January. The company sold its 51.004% equity stake in the non-down apparel brand Mogao for RMB40.52million after having reviewed the brand’s financial position and business performance. This will allow the Group to focus its resources on apparel brands with greater potential.
In addition, the Group has closed down its flagship store in London in January this year after having considered the economic uncertainty. The property where the flagship store used to be has been rented out temporarily. The Group may consider entering the British market again when the business environment is favourable. In 2011, the Group acquired the property and established its first overseas flagship store there. The Group has gained valuable experience in an overseas retail market and enhanced its reputation there and in the capital market after having operated the flagship store for several years.
I.T Limited reported gross profit grew by 9.0% to HK$2,209.2 million, while gross profit margin increased by 0.9 percentage point to 60.6% amid difficult times and promotional headwinds. Total turnover increased by 7.4% to HKD3.64billion.
The company says the operating environment of the fashion retail business in the first half of the fiscal year continued to be suppressed by the same adverse economic factors as in the previous year. External market factors, such as the persistent cost inflation in operating retail channels, continued to place downward pressure on the Group’s profitability, particularly in the Hong Kong segment. As a result, total operating cost ratio of the Group increased by 0.5 percentage point to 57.6%. Rent-to-sales ratio (including rental charges and building management fees) remained flat at 26.5%. Staff cost-to-sales ratio (excluding share option expenses) increased from 16.3% to 17.0%.
Operating profit (adjusted) increased by 12.1% to HK$125.0 million whereas net profit (adjusted) increased by 9.2% to HK$39.1 million. Basic earnings per share were 3.2 HK cents against the basic loss per share of 2.6 HK cents for the corresponding period in 2015. The Board does not declare the payment of an interim dividend for the six months ended 31 August 2016.
The company management said looking specifically in theHong Kong market, the overall market conditions have remained very challenging in the midst of an uncertain macroeconomic landscape and volatile financial markets. Currency headwinds continued to impact domestic spending momentum. The cost of operating retail channels, particularly rental and staff costs, continued to rise. This was an area that placed significant pressure on the profitability of the Group’s Hong Kong segment and remained the most challenging area of the Group’s business. As a result, retail sales in Hong Kong declined by 2.0% to HK$1,540.2 million, with comparable store sales growth registered at -0.9%. Gross margin increased by 2.0 percentage points to 58.9%, primarily a result of a more favorable mix of sales toward in-house brands and a slight decrease in markdowns in relation to sales during the period. However, such enhancement in gross margin was not sufficient to completely offset a decline in efficiency measured by operating costs on sales. An operating loss of HK$140.0 million was recorded for the six months ended 31 August 2016.
The Group is gratified with the progress in expansion that it has achieved so far in Mainland China as it has successfully capitalised on multiple growth opportunities and has extended its self-managed store presence to new cities such as Changchun and Nanning. Total retail sales of the Group’s Mainland China business increased by 14.0% to HK$1,523.7 million, attributable to not only the increase in total trading area but also a positive comparable store sales growth of 4.6%. Gross margin decreased by 0.6 percentage point to 58.4%, primarily a result of exchange differences from the devaluation of Chinese Renminbi over the previous period. Operating profit increased by 4.8% to HK$82.0 million.
The company said its Japan segment has continued to outperform benefiting from the overwhelming responses to its collections of all brands within the A Bathing Ape group, as well as the increase in inbound tourist traffic growth during the period. Sales of Japan business increased by 28.4% to JPY4,796.3 million, whereas sales in Hong Kong Dollar terms grew by 46.6% to HK$348.5 million. Gross margin landed at 71.6%, compared to 70.5% in 1H FY15/16. Operating profit increased by 52.6% to HK$144.5 million.
The Group maintained a solid balance sheet, with cash and bank balances amounting to HK$1,766.4 million and a net cash position of HK$343.2 million as at 31 August 2016.
Sitoy Group Holdings Limited (the “Company”, together with its subsidiaries, the “Group”; stock code: 1023), a brand management and retailer, and large-scale outsourced manufacturer of luxury handbags, small leather goods and travel goods, is pleased to announce today its annual results for the financial year 2015/2016 (“FY2016”).
During FY2016, the Group’s revenue decreased by 16.1% year on year to HK$2,837.0 million. This decrease was primarily attributable to the decrease in demand from the high-end and luxury brand customers. However, the impact was partially offset by an increase in retail segment sales.
During the year, due to stringent cost control, as well as depreciation of the RMB against HK dollar, the Group’s gross profit margin increased slightly to 27.0%, while profit attributable to owners of the Company decreased by 10.1% year on year to HK$370.1 million.
The Group’s basic earnings per share were HK36.96 cents for the year. The Board recommended the payment of final dividend of HK13 cents and special dividend of HK15 cents per share for the year ended 30 June 2016.
Commenting on the Group’s results, Mr. Teras Yeung Wo Fai, Chief Executive Officer of the Company, said, “During the year, against the backdrop of weak global consumer sentiment, various major brands not only placed their focus on destocking, but also adopted an increasingly conservative attitude in placing their orders for the coming season. As a result, the Group’s results of operations inevitably came under pressure. To maintain consistent quality and services to its customers, the Group will continue most of its manufacturing operations in China despite rising labour costs, mainly due to their higher level of craftsmanship and well-developed supply chain and logistic facilities. Leveraging the Group’s enhanced operational efficiency of its retail network, despite the overall sluggish retail environment, the retail business achieved stable growth during the year. Moreover, with the reinforcement by the Group’s promotional and marketing campaigns across the on-line and off-line sales channels to build up the brand image of TUSCAN’S and Fashion & Joy, together with the implement of cost control policies, the retail business has recorded pleasing results for the year. The Group continuously upgrades itself to meet ever-changing requirements of both existing and new customers. For the year under review, the Group has made its best endeavours to tap new opportunities under a challenging business environment.”
During the year, revenue from manufacturing business decreased by 15.4% year on year to HK$2,767.9 million which was mainly due to decrease in demand for high-end and luxury brand products in the worldwide market. However, new orders generated from the Group’s effort in actively developing businesses with certain high-end and luxury brand names in international and China markets, have partly offset effects of lower demand from existing customers.
During the year, the Group’s retail business continued to grow and diversify. Revenue from the retail business increased by 10.3% year on year to HK$119.6 million, demonstrating enhanced operational efficiency of its retail network. Revenue from the retail business accounted for 3.35% of the Group’s total revenue, a relatively stable level as compared to FY2015. As of 30 June 2016, the Group owned and operated 51 retail stores, of which, 6 stores were situated in Hong Kong, 1 in Macau and the remaining in China.
During the year 2016, the Group has obtained the exclusive license rights from two international brands, Kenneth Cole and Bruno Magli. By obtaining the license rights, the Group has successfully diversified and enriched its retail brand portfolio. With the addition of Bruno Magli and Kenneth Cole to the Group’s retail portfolio, the Group reached the goal of multi-brand development.
Commenting on the prospects, Mr. Michael Yeung Wah Keung, Chairman of the Group said, “Looking ahead, with stalled recovery of the China economy and uncertainties stemming from the worldwide markets, coupled with keener competition in the industry, the Group is well-equipped to face the upcoming challenges. To withstand this difficult environment, the Group will continue to step up its efforts in research and development of its products and technologies. Moreover, the Group shall source quality raw materials with competitive price, and continue to optimise and streamline production procedures to boost competitiveness of the Group and satisfy brand customers’ demands. Meanwhile, the Group will increase the proportion of the development of retail business by actively growing its existing brands, TUSCAN’s, Fashion & Joy, Bruno Magli and Kenneth Cole in both China and Hong Kong, while adopting a prudent approach in seeking ideal locations for new stores, and enhancing operations and efficiency of its existing stores. In order to optimise its product and brand portfolio, the Group will actively capture business opportunities by acquiring suitable high-end luxury brands. Despite mounting challenges and a difficult operational environment in the coming year, the board of directors is confident that it can weather the storm and grow further.”