Hong Kong retail group Dickson Conceptssays it has sufficient cash in the bank to take advantage of “suitable investment opportunities” in Asia’s challenging retail market.
The retailer, which operates the Tommy Hilfiger and Beauty Avenue retail brands, amongst others, 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 HK$4.322 billion in the year to March 31 and slumped from a profit in 2014 of $154.8 million to a loss of $110.3 million (US$14.2 million).
But it has HK $1.3 billion in cash assets, and says it is 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.
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.
Same store sales 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 the industry despite the current “weak” climate.
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.