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Sincere Company’s losses grow as Chinese-visitor numbers drop

Impairments and a 5-per-cent drop in sales have seen Hong Kong department-store operator The Sincere Company’s half-year loss increase by HK$10 million in the latest half year.

The company’s sales sales for the six months to August 31 were HK$138 million, down by $8 million year on year. 

The unaudited loss attributable to shareholders increased from $70 million to $80 million, a $7.8 million writedown of assets and $1 million in impairments of property, plant and equipment to blame. 

The company said the decline in sales was influenced by the social unrest in Hong Kong, the strengthening of the renminbi, the trade war and the resulting decline in inbound visitors from the mainland. “Our group’s performance was unavoidably affected by the above events,” said  chairman Philip K H Ma. 

However, by improving the company’s merchandising, such as sourcing stylish Spanish apparels and shoes to complement its Italian and German collections, the gross-profit ratio for department store operations increased by about 2 per cent. “Consequently, the gross profit for all six department stores was only dropped by 2 per cent, despite the closure of the Sincere Causeway Bay Store in early July.”

Ma predicts a difficult period ahead through this year and next “given the persistent poor social atmosphere and the instability of the global stock market”. 

“The management of the department stores will return to basics to sustain the store operations, improve the gross profit margin, strengthen the merchandising mix and enhance the customer services. The management will also streamline the operation and curtail the operating and management costs to protect the bottom line,” he said.

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