Tumbling turnover and gross profit margin have flipped an operating profit to a loss for beauty and healthcare retailer Bonjour Holdings.
Its turnover for last year fell 12.8 per cent to HK$1.995 billion (US$256.8 million), while its gross profit margin dropped from 41.8 to 38.1 per cent. This gave the group a loss of HK$77.9 million compared to a profit of HK$50.7 million in 2015.
During the year, the group rationalised its retail network from 47 to 42 outlets.
Hong Kong and Macau retail sales fell for the second straight year, the company’s audited results show.
Same-store sales fell 10.1 per cent despite the average sales value per transaction for mainland tourists rising by 7 per cent. However, the total number of mainland customers dropped by double digits last year. The company says the drop in its total number of customers contributed about 9 per cent of the overall retail decline during the year.
Bonjour says an enormous demand continued for Korean beauty and skincare products in Hong Kong’s retail market. Because of this, the group has formed dedicated procurement team to explore this trend.
During the year, Bonjour continued to introduce a variety of mass Korean beauty products to keep the market competitive and to offset the negative impacts of the falling sales of Western and Japanese premium brands.
Meanwhile, the group has been increasing awareness of its brand through online platforms. It partnered with Tmall and WeChat during the year to broaden its touch points with target consumers.
“Additionally, with the rapid rise of live-streaming and photo-sharing apps, video and photo content and key opinion leaders (KOL), partnerships has taken up a significant role in our marketing campaigns,” says Bonjour. “Online image sharing has become a critical element for us to communicate with our target consumers.”
The group partnered with Alipay in two one-day events during the year, “2016 Carnival All the Way” and “Double Eleven”. The group also cooperated with China Post Cross-border eCommerce (CPCBE) to launch the cross-border shopping platform www.bonjourO2O.com (BonjourO2O). With its direct delivery service, customers can buy overseas items not available in Bonjour’s mainland stores.
Online retail sales last year reached HK$40.1 million, up 7.4 per cent from 2015.
At the end of the year, the group had 42 stores in Hong Kong, Macau and Guangzhou. During the year, sales continued to decline in the face of “sky-high” rents. While rents have been adjusting over the past two years, the reduction has not been fully reflected in the company’s income statements as it is usually locked into leases with a three-year term. The company is able to renew only about a third of its agreements each year.
“We believe that stabilising sales along with falling rents should help improve our profitability gradually,” says the group.
Bonjour currently distributes 180 international cosmetic, skincare and healthcare products including Dr Schafter, Suisse Reborn, WowWow and Yumei. During the year the company adjusted the product mix, increasing international parallel-import products and mid-to-lower-priced trendy products while cutting back on higher-priced exclusive products.