Hong Kong-headquartered footwear retailer Le Saunda has significantly pared back its losses after same-store sales in Mainland China recovered post-Covid.
The company has reported a half-year loss attributable to shareholders of US$188,000, a fraction of its $4.1 million deficit in the same period last year. However last year’s result was heavily impacted by provisions for redundancies after the company closed its factory in Shunde, Guangdong, outsourcing manufacturing to third-party suppliers.
Revenue for the six months to August rose by 7.2 per cent to $43.8 million. Between March and June, sales growth reached double figures, largely due to Mainland China’s recovery, only to be battered by Covid outbreaks and flooding in various regions in July and August.
A focus on improving operational efficiency, together with the shift of production, resulted in a significant improvement in inventory management. The group’s inventory balance reduced by 20 per cent year on year, to $28 million with the turnover of finished goods decreasing by 108 days, from 396 to 288.
“The group has adopted a prudent strategy towards inventory management since the outbreak of the pandemic in early 2020 by vigorously clearing off-season inventory during the period on one hand and appropriately increasing new purchases for the coming season on the other, so as to meet the anticipated market demand when the pandemic subsides,” the company said in a results filing.
Le Saunda markets shoes under its own namesake brand, as well as Linea Rosa, Pitti Donna and CNE. The company reduced its Hong Kong store network from five to three during the period and by a net five on the mainland for a total of 389 as at August 31.
Le Saunda chairman James Ngai sees Mainland China as the company’s core focus moving forward and is optimistic about its growth prospects there.
“[The] Mainland China consumption market will undergo major changes in the coming several years. As a brand with over four decades of history, the group has witnessed the advancement of the times and the continuous evolution of spending patterns.”