Chinese fashion retailer Ever-Glory International has returned to profit, boosting top-line sales by 6.5 per cent in the second quarter.
Ever-Glory offers apparel to women in China under its own brands La Go Go, Velwin, Sea To Sky and Idole.
Chairman, president and CEO Yihua Kang said the trading improvement reflected strategic initiatives implemented during the last few months.
“Despite soft year-over-year retail sales, the performance of this segment was within our expectation. In the second quarter, we continued to execute our key strategies to maintain stability in the retail business in the short term, while focusing on store network optimisation, inventory and operation management and branding to drive profitable growth over the long run.”
Second quarter wholesale sales grew by 26.9 per cent year-on-year, with strong results recorded in the US, European markets excluding Germany and the UK, and in China.
“We believe this reflects our recovery efforts as we strive to strengthen product development and supply chain management, as well as optimise our customer base by focusing on high-quality mid-to-high end customers with good credit histories.
“Looking at the remainder of 2016, we expect the challenging market conditions to remain,” concluded Kang.
Jason Jiansong Wang, Ever-Glory CFO said the company increased in-store discounts on out-of-season products during the second quarter to reduce inventory, which led to higher production costs as percentage of retail sales and slightly impacted the gross margin for the retail segment.
“As we remain committed to maximising operating efficiency and further reducing our inventory levels, we are confident in our long-term growth prospects.”
Ever-Glory’s total sales for the second quarter were US$80.7 million, an increase of 6.5 per cent from the $75.7 million in the second quarter of 2015. This increase was primarily driven by a 26.9 per cent increase in wholesale sales, partially offset by a 6.7 per cent decrease in its retail business.
Sales for the Company’s branded fashion apparel retail division decreased by 6.7 per cent to $42.9 million for the second quarter of 2016. The Company had 1275 retail stores as of June 30, 71 more than a year earlier.
Total gross profit for the second quarter of 2016 decreased by 11.1 per cent to $26.7 million, Total gross margin decreased to 33.1 per cent from 39.7 per cent for the second quarter of 2015.
Gross profit for the retail business decreased by 13.4 per cent to $20.6 million for the second quarter of 2016. Gross margin decreased to 48.1 per cent from 51.8 per cent for the second quarter of 2015.
Net income attributable to the company for the second quarter of 2016 was $3.1 million compared with $3.6 million for the second quarter of 2015.