Shanghai La Chapelle Fashion warns it will report an operating loss for last year, for the first time in its trading history.
In an update to a profit warning issued last December, the company says total revenue dropped by about 2.5 per cent last year and costs accelerated.
“Revenue from La Chapelle and Puella, which are our main women’s wear brands, is estimated to have decreased by approximately 11.94 per cent and 13.35 per cent year-on-year, respectively, and the growth in sales of the women’s wear brand Candie’s and that of children’s wear and men’s wear brands could not make up for the decrease in sales of La Chapelle and Puella,” the company said in a regulatory filing.
With a slowdown in consumption growth and a decline in customer flow at physical stores, La Chapelle’s sales at brick-and-mortar stores in the second half of last year were lower than expected. As a result, revenue in the third and fourth quarters decreased by 7 per cent and 6 per cent, respectively, year on year.
The company also reported a continuing decline in revenue from concessions at department stores. Last year, that revenue was estimated at about RMB4.893 billion (US$729 million), down 7 per cent, and department stores’ share of total sales fell from 50.4 per cent to 48 per cent year on year.
In the second half of last year, the company closed down 179 loss-making and inefficient stores, and launched a joint-venture “franchise and trusteeship cooperation business model”. It ended the year with 9269 stores.
The company estimates it will post a net loss attributable to shareholders of about RMB156 million, representing a decrease in net profit attributable to shareholders of the company of RMB654 million (US$23.256 million).