Lifestyle China lifts half-year sales, profits

As China’s retail sector shows signs of recovering, half-year sales and profits have risen for department-store company Lifestyle China Group.

Its turnover grew 10.7 per cent year on year to RMB608.2 million (US$90.6 million) for the six months to the end of June, mainly attributable to increased sales at its two major department stores, Shanghai Jiuguang and Suzhou Jiuguang. Sales were specifically strong for cosmetics and accessories.

Net sales proceeds increased by 10.2 per cent to RMB1.64 billion, gross profit grew 8 per cent to RMB429.3 million, and the gross profit margin as a percentage of net sales proceeds was stable at about 26.2 per cent.

Gross profit margin as a percentage of turnover eased to 70.6 per cent from 72.3 per cent as the increase in direct sales was higher than the increase in concessionaire sales. Concessionaire rates were stable at around 22.3 per cent on average.

Net profit attributable to the owners of the company increased 29.2 per cent to RMB171.8 million, mainly attributable to turnover growth and a larger profit share from the Beiren Group. Also, last year’s figures included a one-off expense of RMB20.5 million related to the spin-off and listing on the Stock Exchange last year of the company’s shares.

Following a major facelift, the Shanghai Jiuguang store’s sales revenue grew 12.5 per cent for the six months, with cosmetics and accessories sales registering 13.9 per cent growth. The average daily traffic rose by 11.5 per cent to about 50,100.

Suzhou Jiuguang store also benefited from the consumer market recovery, recording sales revenue growth of 12.8 per cent, with cosmetics and accessories sales surging by 17.5 per cent. The average daily footfall rose by 7.2 per cent to around 22,500.

Scaled down

With a sluggish market in northeast China, the group last year decided to scale down business at the Dalian Jiuguang department store. In August last year the store stopped renewing brand lease agreements. With the group still collecting lease money from a handful of retailers, it is considering changes aimed at increasing the economic benefit and efficiency of the property.

In Changning, Shanghai, the group’s standalone Freshmart outlet was still being affected by
increasing competition, but managed to contain its sales decline to just 1.3 per cent.

Shijiazhuang-based retailer Beiren Group, in which the group has a strategic equity interest, saw its profit attributable to the group rising by 17.4 per cent to RMB199.4 million. Lifestyle China says the Beiren Group results are critical as the net share of profit from the investment accounted for 69.7 per cent of the profit attributable to owners of the company.

Beiren Group’s sales revenue grew 4.2 per cent to RMB10.1 billion for the first half. Its department store business had 6.3 per cent sales growth and its supermarket business recorded 3 per cent revenue growth. At the end of last year, Beiren Group launched Beiguo Outlets, recording a start-up loss of RMB18.6 million.

Meanwhile, Lifestyle China’s restaurant business returned stable revenue, the group says. The combined sales revenues of the Wa San Mai restaurants at Shanghai Jiuguang and Suzhou Jiuguang dropped by 10.9 per cent, while revenue of the Hong Kong restaurant grew by 3.3 per cent. Overall, profit from the restaurant business fell by 5.8 per cent to RMB4.2 million.

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