I.T Limited sales, margins eroded due to Covid-19 lockdowns
Hong Kong-headquartered fashion retailer I.T Limited says its sales have fallen in all of its markets, with the US and Japan the worst affected.
Same-store sales of its Hong Kong and Macau stores fell by 49.1 per cent in the three months to May 31, while US and Japan store sales plunged 66.1 per cent. In Mainland China, the sales decline was a less dramatic 11.8 per cent.
I.T Group operates its own brands, including Chocolate and 5cm, concept stores Izzue and Double-Park; international brands it has local licences for including Kurt Geiger and Camper; and A Bathing Ape, which the company rescued from Japanese owners in 2011.
Chairman Sham Kar Wai has warned that the company will post a loss for the first quarter compared to a profit for the same period last year.
“It remains difficult for the group to precisely predict and quantify the negative impact that will result from the Covid-19 pandemic and social unrest around the world, but we expect our business will continue to face strong headwinds for the remainder of the year,” he said in a stock-exchange filing.
Stores were closed, or forced to trade for reduced hours, in most markets due to the Covid-19 crisis.
“Although our initial strategy was to focus on full-price sales and reduce discount related activities in order to secure gross margin, we eventually had to increase mark-downs to boost sales volume amidst an incredibly difficult trading environment,” he said.
Gross-profit margin fell by 8.8 per cent globally, with a 9.5-per-cent decline in Hong Kong and Macau resulting in a final margin of 49.9 per cent. Despite the size of the sales decline in Japan and the US, gross margin remained higher than in any other market at 64.5 per cent, down 7.8 per cent in the quarter. In Mainland China it fell 8.7 per cent to 55.3 per cent.