The parent of 759 Store closed 50 outlets during the last trading year as it looks to reposition the business and return to profitability.
The closures cut CEC International Holdings’ sales by 7.9 per cent to HK$1.98 billion for the year, but its consolidated loss of $32.9 million was 34.3 per cent less than that of the previous year.
Despite those figures for the year to March, the company appears to have turned the corner with double-digit same-store sales growth in recent months.
While underperforming stores were shuttered at the expiry of their leases, the company is opening new sites, so it ended the year with 206 shops, a net reduction of 37. That cut the 759 Store group’s rent burden by 14.6 percent.
CEC International’s chairman Lam Wai Chun told shareholders in a results filing that the recovery in Hong Kong’s retail market had created “a relatively stable environment for the company to adjust its pace”.
The 759 Store model has been adjusted to focus on food, snacks and everyday items, with cosmetics, and slow-moving items like durable household products and electrical appliances phased out. Ranges of products like rice, noodles, cooking oils, alcohols, sanitary paper products and detergents were boosted.
While 759 Store has no plans to expand into fresh produce or meats, it will develop a frozen range, including imported beef, pork and poultry.
Said Chun, “759 Store will adopt the policy of ‘quick turnover with lower margin’ to meet the development of staple food category. It is expected that gross profit margin would be hard to rise in future and that business growth would be achieved by an increase in sales revenue.”
The group anticipated up to 20 more shops will be closed this current year, when their leases expire, and as of July 12 have gone.
Chun said closing stores has reduced overlap in the network and that the long declining same-store sales of the network reversed during the second half of the year. In May and June this year, same-store sales growth had reached the double figures, endorsing the company’s new approach.
Since March 31, 13 new 759 Store shops have opened, with the company now focusing on locations in public housing estates under the management of Link REIT and the Hong Kong Housing Authority.
Products sold at 759 Stores are sourced from 63 countries and regions around the world, but there is an increasing focus on goods sourced from Thailand and on establishing sustainable local supply chains.
