Chinese lingerie retailer Cosmo Lady has reported strong growth in both its own stores, and its franchise network, largely driven by store renovations.

Group revenue rose 12.5 per cent in the six months to June 30, to RMB2.33 billion, (US$340 million) and profit rose 20.9 per cent to RMB175 million ($25.6 million).

Cosmo Lady says it increased sales to franchisees by 21.6 per cent, mainly due to renovation of retail stores adopting new branding and image, urged by the company, and an improvement in product quality.

However, sales in the company’s own stores declined by 3.6 per cent, mainly because the group closed unprofitable stores, reducing its network. Online sales increased by 27 per cent.

Cosmo Lady’s gross profit margin dropped from 45.1 per cent to 43.7 per cent, “primarily due to the keen competition in the e-commerce channel and the group’s step up of promotion efforts to sell aged inventories,” the company said in its earnings report.

Cosmo Lady is listed in Hong Kong.