Hong Kong apparel retailer I.T. Limited has boosted turnover by 6.4 per cent on an expanded retail footprint, despite the retail downturn that has been squeezing its rivals.
Total sales reached HK$7.18 billion, with retail sales in Hong Kong, its largest market, up by 0.3 per cent to HK$3.577 billion with same store sales up 0.7 per cent.
It added nearly one per cent of retail floor space in Hong Kong to 631,292 sqft.
Mainland China provided the most growth, however, with sales up 18. 2 per cent to HK$2.56 billion and same store sales up 4.5 per cent.
It added 12.3 per cent of floor space in China, reaching 978,854 sqft.
And in Japan, where the economy had a sluggish year, I.T.’s sales rose 5.4 per cent in Hong Kong dollar terms, or 14.5 per cent on Japanese currency, to HK$434 million.
In Macau, total retail sales rose 1.6 per cent to HK$221.3 million.
I.T. posted a group profit increase of 10.4 per cent to HK$4.464 billion with a gross profit margin of 62.2 per cent – up on the previous year’s 59.9 per cent. Net profit increased 11.7 per cent to HK$312.9 million.
In its earnings statement, the company said the business environment across Hong Kong, mainland China and Japan had stabilised gradually.
“However, the economic recovery on a global scale remained subdued and uncertain. Multiple domestic and peripheral factors, alongside the intensified regional tensions, continued to have considerable impacts on the retail business. In particular, the political demonstration which began in late September 2014 in Hong Kong caused a level of disruption to our operations.”
The company cited a “prudent yet flexible approach” to its business in Hong Kong for weathering the storm in the market which accounts for 50.6 per cent of its turnover.
“The political demonstration, which lasted for more than two months, highly affected our retail business during the period. Whilst the shift of the Chinese New Year period from January last year to February this year extended the traditional shopping season, the pace of recovery progressed very slowly. As a result, spending momentum and store traffic among local consumers and inbound visitors showed no sign of noticeable improvement.”
Moving forward, the company said it would maintain “a dominant and balanced retail presence” in Hong Kong, with more bigger size stores “to facilitate new ideas and new shopping excitement including various in-store marketing campaigns which enable us to extend direct interaction with our customers”.
As a result of less proactive discounts offered during the year, gross margin increased 1.4 percentage points to 60.7 per cent. “However, such achievement in gross margin has yet to fully offset the increase in operating costs, such as rental and staff costs which remained the most significant portion of our operating expenses.”
Meanwhile, Macau showed “modest growth” following the downturn in gaming spend.
