While China and Hong Kong may continue to benefit from an upswing in the global economy, they also face potential problems, says Crocodile Garments in releasing its first-half unaudited consolidated results.
“Debt in the mainland has ballooned in recent years, and any new measures to crack down on excessive borrowing will surely have negative spillover effects on the economy and could cause a painful slowdown,” says Crocodile.
“On the other hand, trade tensions between China and the US, the world’s two-biggest economies, have flared anew. Threats to global trade may begin to materialise, which would be a serious concern for the mainland, the world’s biggest exporter of goods, and Hong Kong, an externally oriented economy.
These adversities will cause Mainland visitors and Hong Kong people to be more cautious of To tackle the tough conditions of exorbitant rents and rising wages in the Mainland, the group restructured its sales channel by discontinuing underperforming sale points and redeveloping the franchise and e-commerce strategies.
At the end of January it had a total of 14 shops in the Mainland (down from three a year earlier), five being self-run shops and the rest franchises.
Transforming the sales framework inevitably hit revenue, which fell to HK$5.7 million (US$ ) for the six months. As a buffer, the group says it simplified its merchandise mix and product design, consolidated supplier chains and centralised inventory processing.
It also closed down under-performing shops and fought to decrease rentals upon renewal of leases. As the end of January, the group had 18 shops for the Crocodile line (down two) and seven (one fewer) shops for Lacoste. Turnover was $131,258,000, down from $135,804,000.
Despite the slide, gross profit was up 3 per cent to $85,544,000, mainly attributable
to the increment in margin earned by the “garment and related accessories business” segment.
The total comprehensive income attributable to the owners of the company was $75,457,000 for the six months, compared to an expense of $10,154,000 twelve months earlier.
