Despite the torrid times facing Hong Kong retailers in the second half of last year, the 759 Store network achieved sales growth of 1.3 per cent to HK$853 million (US$109.5 million) in the six months to October 31.
In a year that chairman Tang Fung Kwan described as “full of challenges” a one-off property valuation gain helped CEC increase its profit attributable to shareholders nearly fourfold in the October half. It rose from HK$1.431 million in the comparable six months to $5.07 million.
Tang said changes happened “every single split second” during the period as the US-China trade war remained unpredictable and the local economy was affected by a series of “disturbances in society”.
“In the period under review, the group held saving resources as its basic principle, adopting extremely prudent policies, taking restrictive cost control on [the] retail business and electronic component-manufacturing business, in order to … survive in the economic storm,” he said.
The 759 Store network accounts for 96 per cent of the group’s revenue which on a consolidated basis was down by 1.1 per cent in the half year despite stronger retail sales.
The consumer-goods retailer strengthened its portfolio of daily-living products during the half, including rice, noodles, food-grocery items and frozen food. That meant the share of snack foods and leisure foods in the portfolio decreased.
To control costs, the group closed stores with relatively high rents but searched for potential sites that while in less prominent locations were available at reasonable rents. There was a net gain of three stores between April 30 and October 31 as six closed and nine opened.
Tang said the company remained cautious of “the influences of uncertainties that come both internally and externally” in the year ahead.
“The group will review the cost structure of current retail-store network, considering not to renew the tenancy agreements of some stores [whose] rents were too high, in the meantime searching for potential shop sites of suitable locations and relatively reasonable rents for replacement.
“For the products, 759 Store will further strengthen its portfolio of food-grocery items, introducing many more items for rice, noodles, spaghettis, canned food, etc.”
He said the company’s procurement team is approaching meat suppliers in Europe and North America with plans to boost its range of frozen meat. About four in five stores currently have freezer cabinets.