Milan Station has terminated the agreement with its Singapore franchisee M C Holdings.
In a voluntary update disclosure to the Hong Kong Stock Exchange this week, Milan Station says the company also negotiated the end of consignment sales at concession counters at Hong Kong’s four cruises.
The luxury bag and accessories retailer said the reason for the terminations of the franchise and concessions is that retail sales of luxury goods remained stagnant.
“The termination of the Concession Agreement and the Franchise Agreement shall enable to group to concentrate its resource on the more profitable operating arms of the group,” Milan Station said in its update.
“The group will assess the market condition regularly and will consider re-launching the concession and franchise business when the market outlook turns to be promising in future.”
The Singapore franchise agreement dates back to June 2013. The two parties have agreed that half of the security deposit of S$180,000 shall be deducted by the franchisor as compensation for inconvenience incurred, with the balance to be repaid. Unsold stock will be returned to Milan Station.
The Hong Kong company says the concession business under the Concession Agreements accounted for approximately 1.8 per cent of the group’s revenue in the year to December 31.
The Singapore franchise business accounted for approximately two per cent of group revenue.
“The Board considers that the termination of the Concession Agreement and the Franchise Agreement has no material impact on the existing business operation and financial position of the group.”