Veeko culls Singapore store network

Hong Kong-based Veeko International has closed four of its Singapore stores, leaving just nine in the city.

Veeko now operates four Veeko bannered retail stores in Singapore and five Wanko stores, both chains selling women’s fashion.

In its interim report to September 30, Veeko says its Singapore, sales slumped 26.6 per cent, largely due to the closure of four stores, leaving it with just nine there. Same store sales, expressed in local currency, slipped 2.6 per cent.

The company’s Singapore fortunes – with similar results in Taiwan and Mainland China – are something of a blemish on an otherwise stunning half year result for the company, which is flourishing in the Asian region’s stagnant retail market.

The flagship of its operations is an 82-strong chain of Colourmix cosmetics stores and a newly launched upmarket cosmetics retail brand Morimor, with one store. It has 155 fashion stores in Hong Kong, Macau, Taiwan, Singapore and Mainland China under the Veeko and Wanko brands.  

For the six months to September 30, Veeko International recorded a turnover of HK$1.066 billion – an increase of 23.6 per cent on the corresponding period of last year. Its cosmetics business increased sales by 33.7 per cent over the same period last year, accounting for 77.6 per cent of Veeko’s turnover. Sales in the fashion business slipped two per cent.

Profit attributable to shareholders reached HK$41.488 million- up 14.9 per cent on last year, driven by a 56.2 per cent increase in profit from the cosmetics business. The fashion business, meanwhile, recorded a $2.68 million loss, a 133.6 per cent downturn on the profit of $7.97 million for the same period last year, largely due to exchange rate losses from overseas markets including Taiwan, Singapore and Mainland China. At constant exchange rates the division would have recorded a profit.

Veeko says it will continue to expand its Colourmix store network, having added six in the first half.

A large part of the success of its cosmetics operations is an increase in the average sale from $358 per transaction for the same period last year to $377 per transaction for the current period, – a year-on-year increase of 5.3 per cent. The gross profit margin of cosmetics business for the period was relatively unchanged at 35.7.

Veeko’s fashion store network was down by a net 19 stores due to a revision of its store networks in Singapore, China and Taiwan.

Veeko says Hong Kong and Macau accounted for 78.8 per cent of the group’s total fashion retail turnover. Sales in the two territories rose 6.2 per cent year on year, but gross profit margin decreased by 1.7 percentage points to 71.8 per cent.

Taiwan fashion sales fell 24.9 per cent, due to the closure of eight stores, leaving it with 25 in the market. But same store sales grew by 6.4 per cent.

And in China, turnover fell 19.4 per cent, due to a net reduction of 10 stores, leaving it with 41.

Veeko says it expects the challenges faced by the retail business will continue during the next half year, with cautious consumption sentiments.

“The group is prudently optimistic about its future development and believes that opportunities exist alongside with challenges. In an environment which is full of challenges, the best policy is to uplift our competitiveness and lay a good foundation for sustainable growth in the future by maintaining healthy growth of the core business in the long run.”

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