Embattled Hong Kong-listed footwear retailer Le Saunda is back in the red – the general retail recovery across Greater China coming too late to rescue the year’s results.
The company has revealed plans to expand a new cosmetics retail business in Hong Kong and Macau as it seeks to diversify from its shrinking shoe business.
Revenue plunged 27.4 per cent in the year ended February 28, leading to a loss attributable to the company’s owners of US$38 million – a significant turnaround from the previous year’s profit of $423,700.
The loss was widely anticipated. Last December, chairman James Ngai warned of a loss for the full year of between $5.46 million to $6.47 million after third-quarter retail sales in physical stores slumped 35.3 per cent.
The sales decline throughout the year was largely down to restricted trading in Mainland China due to Covid-related lockdowns and retail trading restrictions, along with the closure of Hong Kong’s border keeping shoppers out.
While the company was able to reduce selling and distribution expenses, the decrease in sales led to an increase in the ratio of those expenses to total revenue, from 45.6 per cent in the 2022 financial year to 58.1 per cent in the latest year.
Despite posting a loss in most of the previous five years of trading Le Saunda has retained a healthy financial position with $52.5 million in the bank, down 16 per cent year on year.
In the latest fiscal year, Le Saunda decreased its self-owned store network by 56 stores, and a net five franchised stores closed, leaving 328 trading in Mainland China and Hong Kong.
Charm & Easy launched in Hong Kong
Meanwhile, the company is diversifying from footwear, developing a cosmetics retailing business in Hong Kong, with two stores now trading under the Charm & Easy brand, one in Mong Kok (pictured above) and the other in Causeway Bay. A third store has opened in Macau on the popular tourist street S Domingos.
“The philosophy of the new brand is “Clean Beauty”, which introduces almost 1000 beauty products from Europe, America, Japan, South Korea, Taiwan and local areas to take care of customers’ skin in a non-toxic, non-damaging, safe and hypoallergenic approach and to prevent burden to the environment at the same time,” explained Ngai in a results filing.
“Furthermore, to allow customers to buy the most suitable products for their skin, our stores offer one-on-one professional beauty consultant service to help customers thoroughly understand their skin conditions and daily needs.”
Ngai said Le Saunda would organise “large-scale promotional activities” to promote the new brand during traditional sales periods in the territories.
