Weaker sales last year saw revenue and gross profit drop for Cosmo Lady China Holdings, although its gross profit margin edged up.
Cautious consumer sentiment was a factor, says the branded intimate wear enterprise, as well as structural adjustments in the industry with further diversification of sales and distribution channels, and changes in the mix of products in the market.
While sales were weaker in department-store and street outlets, the sales performance for outlets in shopping malls and through its e-commerce channel were generally better, says the company.
“On the other hand, customers have higher requirements and opt for more comfortable products and those with health concepts and serving specific purposes.”
With these challenges, the group’s revenue for the year dropped about 8.9 per cent to about RMB4.512 billion (US$654.54 million). Gross profit dipped 5.3 per cent to about RMB2 billion.
However, with continuous changes to sales channels and the product portfolio, plus further integration of supply-chain management, gross profit margin increased to about 44.4 per cent from 42.7 per cent in 2015.
Measures adopted
With the unsatisfactory sales performance, the group says management adopted measures in the second half of the year to control running expenses. Nevertheless, it took time for the measures to become effective and their impact is expected to be reflected in this year’s figures.
As such, profit attributable to equity holders of the company fell by about 55.2 per cent last year to about RMB241.96 million.
Cosmo Lady chairman/executive director/CEO Zheng Yaonan says the group enhanced its management by recruiting new key senior officers during the year and in the first quarter of this year.
Loss-making outlets, mainly in department stores and on streets, were closed with outlets added in shopping malls, social communities and third- and fourth-tier cities. Outlet upgrades were also accelerated.
To broaden its customer base and clear aged stocks, the group plans strategic alliances with potential partners to develop Southeast Asian markets, and open discount outlets in third- and fourth-tier areas in Mainland China.
On the product front, the group will step up its market research and development, and introduce new products.
“The group will continue to face various challenges,” says Zheng. “We are cautiously optimistic that after implementing these measures, our operating results will gradually improve.”
