Hong Kong-listed retailer CP Lotus China says opening new outlets has plunged it into the red.
The Thai headquartered company is one of several to lodge profit warnings with the Hong Kong Stock Exchange this week, but unaffected by the luxury retail decline in Hong Kong, CP Lotus is blaming its expansion for the decline.
The company says it is expected to record a loss for the six months ending June 30 compared to a profit of RMB32.9 million for the corresponding period in 2015.
“The expected change from a profit to a loss is mainly attributable to… a reduction in gross profit resulting from a decrease in revenue, with the sales contribution from new stores not being sufficient to offset the decline in same store sales and  an increase in store operating costs as a result of the opening of five new stores in the second half of 2015.”
Despite the expected loss for the half year, the board considers the group’s overall financial position remains sound, said the statement, signed by director Umroong Sanphasitvong.
CP Lotus expects to release its half year trading figures in mid to late August.