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Colourmix, Veeko parent trims stores to turn around losses

Colourmix parent and fashion retailer Veeko has seen its sales fall 4.4 per cent in the last year, to HK$1.928 billion.

But it posted a $5.26 million profit, a turnaround for the previous year’s $25.9 million loss – all due to an increase in the value of investment property.

Veeko said its cosmetics division’s sales, which accounted for 82 per cent of group revenue, slipped 1.9 per cent, with gross profit margin easing 1.1 per cent to 31.7 per cent.

Sales in its fashion division slumped 14.2 per cent to $354.45 million, but gross profit margin improved to 70.1 per cent.

The cosmetics business lost $6 million for the year and the fashion business lost $8.2 million, but an increase in fair value of investment properties of $31.6 million pulled the overall business to a paper profit.

At the end of March, Veeko operated 84 Colourmix stores, six fewer than a year earlier, and eight Morimor stores, (up one). The Colourmix stores are primarily in Hong Kong, with five in Macau and one in Mainland China. It opened the first Morimor store outside Hong Kong in November, at The Venetian Macao Resort.

“It is expected that the market presence and popularity of Morimor stores will be further enhanced through its brand new image in quality and trendy cosmetics,” the company said in its results announcement.

Fashion business

As at the end of March, Veeko had 101 fashion stores trading under the Veeko and Wanko banners in Hong Kong, Macau and Mainland China, a reduction of 18. This was partly due to the company exiting Singapore, closing its five stores there.

The group has 25 stores in Mainland China where it closed four underperforming outlets during the year. It also has a presence on Tmall.

Looking ahead, Veeko says it expects the Hong Kong retail market to continue to improve gradually.

“Under the challenging environment, the group is cautiously optimistic about its future development, and will continue to seek opportunities for growth and monitor closely the changes in market trends.”

The company says it will continue to adjust its store portfolio and review rental levels.

“Given the downward adjustments of rental rates for certain stores in the market, the rental pressure for stores with expiring lease terms will be reduced, and the group will achieve better results in controlling rental costs. Meanwhile, the group will close down underperforming cosmetics stores and identify prime locations with lower rents for new stores in order to improve overall operation efficiency.”

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