Profits have slipped for the Bauhaus fashion retail group against the backdrop of a sluggish domestic market triggered by “a combination of unfavourable factors”, it says in its latest fiscal year review.

Turnover for the year ended March 31 was HK$1.513 billion (US$195 million) compared to HK$1.592 billion the previous year, while its net profit more than halved from HK$129.4 million to HK$52.9 million.

Bauhaus says its difficulties included Mainland China’s uncertain economic prospects, the instability of financial markets and the appreciation of Hong Kong dollars against other Asian currencies.

Despite the tough environment, the group says it has managed to stay resilient and maintain a low gearing ratio as well as a strong balance sheet through improving productivity, reconstructing workflows, shortening the procurement cycle and tightening inventory control.

It has also been exploring opportunities in prospective business development, as evidenced in its continued investment in brand building and marketing.

One of its successful moves was to renovate its self-managed stores on the mainland, turning them into Salad specialty stores.

Bauhaus plans to further develop its eCommerce side, and will bolster ties with major platforms in China, such as Tmall. It will also encourage take-up of its mobile application, introduced in March.

With Hong Kong’s high rents, underperforming stores will be closed over the coming year, but new sites in prime locations will be considered.

Bauhaus International is mainly engaged in the design and retail sales of apparel, bags and accessories with in-house brands. It also sells third-party fashion brands, and has its own retail stores in Hong Kong, Macau, Taiwan and China, as well as franchise outlets on the mainland.