Casual apparel retailer Bossini says it will close more stores in Hong Kong as many landlords remain unwilling to convert leases to turnover-based rents.
The company has reported a loss of US$11.2 million for the December half after sales fell 25 per cent.
With Hong Kong and Macau accounting for 66 per cent of sales in 2019, cross-border travel restrictions to both territories meant that share fell to 55 per cent last year. Revenue in Hong Kong and Macau fell by 38 per cent year on year.
“The overall shop rental expenses remained at a very unreasonable level with several landlords still unwilling to provide rent concessions, despite some landlords had already switched to pure turnover-rent arrangement,” said chairman Victor Herrero in a stock exchange filing.
“This will inevitably involve the closure of certain loss-making retail shops… We will continue to renegotiate with landlords to seek rent relief and reduction. Where landlords are reluctant to respond reasonably to our requests, we will close those shops.”
Group revenue reached $60.3 million. Outside Hong Kong and Macau, sales rose by 2 per cent in Mainland China, but fell 9 per cent in Singapore. This was the first complete trading period not to include Taiwan, which the company exited by the end of last June.
Looking forward, the company expects the pandemic to continue to impact its business.
“The group’s performance is expected to remain under significant pressure for the remaining financial year with travel restrictions and social-distancing measures still largely in place,” said Herrero.
But the company is upbeat about its ability to withstand the ongoing pressure caused by the pandemic.
“Overall, the group is formulating and implementing strategies ranging from brand re-positioning, product segmentation and pricing, distribution channels, production and supply chain management, marketing and promotion to IT infrastructure,” he said.
“We believe all of these would collaboratively equip us with a solid foundation and pave the way for our expansion and tap into market opportunities in the mid- to long-term.”