Tighter margins and a loss for the year have not deterred Dickson Concepts from opening more stores.
The listed Hong Kong retailer, which operates the Tommy Hilfiger and Beauty Avenue retail brands, amongst others, says it opened 30 new stores in the year to March, 10 of them in mainland China.
The company reported a sales decrease of 0.7 per cent to $4.322 billion and slumped from a profit in 2014 of $154.8 million to a loss of $110.3 million.
As at March 31 it operated 248 shops – 47 in Hong Kong, 90 in China, seven in Macau, 81 in Taiwan and 23 in Singapore and Malaysia.
Geographically, 65 per cent of sales was generated in Hong Kong, 18 per cent in Taiwan, eight per cent in China and nine per cent in the rest of Southeast Asia.
Comparable store sales, adjusted for discontinued and new stores, decreased by 4.2 per cent.
“As a result of a change in sales mix and in order to maximise sales in the face of the significant decline in the retail markets in which the group operates, particularly in Hong Kong, China and Singapore, margins were lowered by 2.6 percentage points,” the company said in a stock exchange filing.
Net profit from operations for the second half was $23.1 million. For the first time, this includes a net profit contribution of $22.4 million from the group’s diversification into direct investment and equities. The group’s full year net loss from operations was $28.5 million. The company made a non-cash impairment of $81.8 million in the first half on the fixed assets of certain retail stores to reflect the declining retail climate, sending full year figures into the red. million.
Dickson Concepts says the opening of new stores in key markets demonstrated its commitment and confidence in
In Hong Kong, seven new shops were opened during the year, including a 5300 sqft Beauty Avenue store at Tsuen Wan Plaza in November 2014 offering the most comprehensive cosmetics and skincare products from leading international names and a 3100 sqft Tommy Hilfiger store at the Moko Mall in Mongkok in December 2014.
Of the immediate retail industry future, Dickson Concepts said the retail climate in China and Southeast Asia “remains weak”.
“The Hong Kong retail market has not recovered since Occupy Central and has further deteriorated as a result of the one-trip-per-week cap the Central Government has implemented. As such, the group regards the retail sector with conflicted pessimism and will rigorously control costs and expenses at all levels of operation and adopt a very cautious approach to its further expansion and development strategies.”
It added that with $1.3 billion in cash assets, it is open to well positioned to take advantage of any suitable investment opportunities that arise as well as undertake further investments outside of the group’s principal activities in order to diversify and broaden its earnings base.
The group’s strategy is to cater to the Asian market’s demand for quality branded products through a combination of licensed brands, the group’s own brands and its own retail platforms.