Apparel business I.T. Limited has boosted sales by 5.1 per cent to HK$3.393 billion in the first half year despite a slowdown in Hong Kong.
But the company recorded a net loss of $31 million due to a non-recurring foreign exchange losspreviously reported totaling $79.6 million. Without that, profit would have increased by 32.8 per cent to $48.6 million.
Gross profit increased by 1.4 per cent to HK$2.026 billion at a gross profit margin of 59.7 per cent, slightly down on the 61.9 per cent of a year ago.
In Hong Kong, retail sales slipped 3.6 per cent to $1.571 billion, but I.T. Limited noted that was a lesser fall than the broader apparel market in the city. Same store sales fell by 0.9 per cent.
But in China, where it has more than 580 stores, the company increased sales by 19.1 per cent to $1.336 billion.
Total Macau sales rose 6.2 per cent to $101 million despite lower than expected tourist traffic.
And Japan continued to outperform with total retail sales of HK$222.4 million, representing 6.9 per cent increase in Hong Kong dollars, or 27.5 per cent in local currency.
The company said in the Hong Kong market, a slow economic recovery alongside diminished inbound tourist traffic growth (from Mainland China in particular), which was attributed predominantly to the strength of the HK dollar and the easing of immigration in multiple tourist destinations such as Europe, Japan and Korea, has placed “unprecedented challenges on the consumer retail market”.
“Similarly, Mainland China, where domestic headwinds continued to cause considerable impact on consumer appetite and maintained lingering concerns about the economic prospect of the country, demonstrated by the depression of external import demand, has created a challenging economic environment for retailers in the region,” I.T. Limited said in its filing.
“At this juncture, consumer sentiment across these regions remained weak, and retail sales growth was largely boosted by sales promotions.”
The company said having a multifaceted business model with “inherent flexibility” will allow it to remain resilient in the face of the market challenges.
“We also believe that innovation and differentiation are among the most relevant tools to support our position as a fashion leader across our operating regions and allow us to adapt to the rapidly changing fashion markets. To that end, the group continues to focus and invest in further strengthening its fashion platform through a combination of international brands assortment upgrades and new fashion concepts establishment within the in-house brands segment.
“Today, we have a balanced portfolio showcasing a collection of the latest distinctive international brands alongside multiple innovative in-house brands, all of which have their own unique identities that complement each other well.”
In the first half year, I.T. Limited’s house brands accounted for 56.8 per cent of its revenue.