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Mainland China lockdowns put Le Saunda well back in the red

Hong Kong-headquartered shoe retailer Le Saunda is warning shareholders to be prepared for a 10-fold escalation in losses for the first half of the current financial year after sales plunged in its company-owned stores. 

In a profit warning filed with the Hong Kong Stock exchange, chairman James Ngai said a preliminary review of the numbers shows a loss of between US$3 million to $3.4 million (RMB21 million to 24 million) for the half year to August 31 compared to a loss of $318,000 (RMB2,230,000) during the same period a year earlier. 

Sales in its self-owned retail business declined by 12.7 per cent during the second quarter, with same-store sales down by 10.8 per cent, reflecting the net closure of eight stores year on year. 

Online sales rose by 6.5 per cent. 

In the statement, Ngai said the increased loss was mainly attributable to lower sales in Mainland China stores due to lockdowns and other Covid-fighting measures, currency exchange losses and an initial loss on the company’s newly developed cosmetics business. 

As of the end of August, Le Saunda had 381 outlets, including 345 of its own stores in Mainland China and Hong Kong, and 36 franchised outlets on the mainland. 

In October last year, Le Saunda reported it had significantly pared back its losses after same-store sales in Mainland China recovered post-Covid. A half-year loss attributable to shareholders of $188,000 was but a fraction of its $4.1 million deficit in the same period a year earlier however that year’s result was heavily impacted by provisions for redundancies after the company closed its factory in Guangdong, outsourcing manufacturing to third-party suppliers. 

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