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Area 0264 doubles network

Chanco, which operates eight retail stores in Hong Kong under the Area 0264 brand, says weaker tourism demand impacted on its sales, leading to a loss last year.
But despite the challenges the listed company is on track to double its store network between last March 31 and the end of the year.
The company manufacturers leatherware, which accounts for about 74 per cent of its turnover. The remaining 26 per cent comes from its retailing operation which at the end of March stood at five Hong Kong stores.
It has opened three new stores since then and plans two more – in Causeway Bay and Tai Po – this summer.
Chanco’s Hong Kong retail sales fell six per cent to HK$31.5 million in the year to March 31 due to “weaker tourist spending and softening of domestic consumption”. A profit of $7.37 million last year turned into a loss of $3.21 million.
The company said its market competition intensified as numerous fashion retailers offered earlier and greater sales discounts in the low season.
Sales of international footwear brand products dropped significantly, mainly due to a sharp decline in demand and diminishing brand popularity in the market.
“The group’s in-house brand sales increased mildly on the grounds that the group altered the product mix by focusing on selling more fashion bags with high quality and creative design. The group’s in-house brand sales mainly Urban Stranger increased from approximately 68 per cent of total retail sales for the corresponding period in 2014 to approximately 80.7 per cent.”
But despite a decrease in overall retail sales, the comparable same store sales increased approximately 10.8 per cent year on year.
Gross profit margin increased from 51 per cent to about 67.5 per cent, mainly due to increased sales of own brands.
The overall shop rental to turnover ratio stayed at approximately 36.2 per cent (2014: 35.3 per cent) and the staff cost to turnover ratio stayed at 21.8 per cent (2014: 20.8 per cent).
The group closed three stores when their leases expired last year and opened two new ones in Kowloon Bay and Tsuen Wan.
On the year ahead, Chanco says the retail business operating environment “remains challenging” in view of the slowdown of retail sales growth and increasing market competition in Hong Kong.
“The group will continue to look for strategic location to expand its sales networks. Barring unforeseeable circumstances, the group believes that the worst challenges are behind us and the Group’s retail business will continue to improve in 2015/16.”
Area 0264 is described as “a modern and unique chain store targeting the dynamic youth who are always seeking to be unusual and stylish”. Founded in 2004, Area 0264 boasts an eclectic mix of fashionable apparel and accessories to live up to its concept for “one-stop shopping”.
The multi-brand concept offers a full lineup of Urban Stranger products, along with labels from Japan, Europe and the US, including leisurewear, sportswear, jeans, handbags, wallets, jackets, casual footwear and accessories.

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