Hong Kong-based luxury goods company Dickson Concepts has recorded a 25 per cent drop in sales for the six months ended September 30 and is flagging a significant profit decline for the period.

Management attributed the contraction in sales to “extremely weak” consumer sentiment in Hong Kong as consumers increasingly seek better value in other Chinese cities. This was coupled by Mainland Chinese tourists opting for Japan instead of Hong Kong due to the weak Japanese yen.

The group expects to report a 40 per cent decrease in net profit for the six-month period. The decrease in sales and profits in Hong Kong more than offset the increase in profits from the investment division, it noted.

“The board would like to stress that the group’s balance sheet and net cash position continue to be extremely strong and is in an excellent position to take advantage of any further improvement in market condition as well as to undertake new investment opportunities to diversify and broaden its earnings base,” the group added.

The profit warning was based on the preliminary assessment of unaudited consolidated accounts. The group expects to publish its official interim results on November 28.

For the last fiscal year, the group posted a 12.6 per cent increase in sales and a 38.9 per cent growth in attributable net profit.