China Xiniya Fashion sales halve

China Xiniya Fashion has reported a near halving of its retail sales in the first quarter of 2015 during which time it closed 294 authorised retailers.

The Chinese menswear company is mid way through a major restructure, aiming to boost margins and maximise profits. Surprisingly, despite the sales and store attrition, the company achieved a profit, albeit down 38.7 per cent.

China Xiniya Fashion releases financial data in RMB. It says first quarter revenue fell 47.3 per cent to RMB 107.9 million (US$17.4 million), from 204.6 million in the same quarter last year.

Gross margin was 27.9 per cent, down from 29.6 per cent.  Net profit declined from RMB26.6 million to RMB16.3 million (US$2.6 million).

After the closure of nearly one third of its authorised retail network, the company was left with 604 stores across China as at March 31.

Chairman and CEO Qiming Xu says sentiment among the company’s distributors and authorised retailers has improved significantly.

“As part of our effort to stabilise our retail network, we are now focusing on the short term challenges of preserving cash, implementing cost cutting initiatives and installing an ERP system to effectively monitor our distribution channels. With these short-term initiatives in place and our substantial capital position, we are well prepared for the consolidation of the menswear industry.

“We believe numerous opportunities will present themselves in the mid to long-term as the market increasingly becomes concentrated among a few big brands. At the same time, we are working to reduce the layers of our business model to increase efficiency by converting distributors into city retailers,” he said.

“As we begin the next phase, we will continue to monitor our retail network closely and may initiate appropriate actions as the situation evolves over the year or next. I am confident that the changes we have made to our business model will further strengthen the position of our brand during the next round of industry consolidation.”

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