“Significant” political and social factors impacted profitability for retailer Bonjour Holdings during its first half this year.
Factors included the drop in mainland Chinese tourists visiting Hong Kong, including the adjusted policy on individual travel by Shenzhen citizens from multiple-entry permits to one visit a week. This continued to hit the market hard, says Bonjour Holdings. One year after the policy change, the number of mainland visitors with multiple-entry visas dropped by 57.3 per cent to 6.3 million.
Meanwhile, says the company in announcing its interim results, the anti-corruption campaign in the mainland further weakened spending patterns.
Other challenges included the devaluation of currencies in neighbouring countries, such as China and South Korea, as well as the Hong Kong dollar rising with the strengthening US dollar.
Under the economic downturns, the group’s turnover dropped by 11.9 per cent while the gross profit margin dropped from 41.8 for last year to 40.3 per cent in the current period.
Overall, the retail market in Hong Kong during the first half remained stagnant. The group’s turnover was HK$1.0104 billion (US$130.2 million), down from $1.1468 billion in the same period last year.
Flip to loss
The group’s loss for the six months was about $28.5 million, compared while profit of about $424 million in the same period last year, which included profit from discontinued business amounting to about$ 399 million.
Meanwhile, with the popularity across Asia of Korean beauty and health products, the group has formed procurement teams to build up a more extensive product portfolio. During the review period, the sales of Korean products comprised about 17 per cent of revenues.
Currently the group distributes 180 skincare and healthcare products. It has appointed a line-up of celebrities to be brand ambassadors in Hong Kong, including Ada Choi (Suisse Reborn), Myolie Wu (Dr Bauer), Elanne Kwong (Wowow), Elaine Yiu and Louis Cheung (Dr Shafter) and Tracy Chu (Yumei).
With the ongoing downturn in property and retail sales, Bonjour enjoyed the benefits of higher bargaining power for store rents. The group’s headquarters were relocated and expanded in November.
At June 30, the group had a presence in Hong Kong, Macau and Guangzhou with 46 stores, no change from last year.
As more store-based retailers develop online sales channels to take advantage of the booming cross-border eCommerce trade, Bonjour was able to maintain growth by partnering with Tmall. Online retail sales reached $18.2 million for the six months, an increase of 7 per cent.
Meanwhile, the group is hoping to launch an app before the end of this year, which will enable Bonjour to cut the cost of opening physical stores.