Trinity warns of looming loss

Menswear brand Trinity has warned it expects to post a loss in the half year to June based on preliminary trading figures.

The Hong Kong listed retailer and manufacturer, majority owned by Li & Fung, says it has faced challenges adapting to the weak retail market in the Chinese mainland and a decrease in the number of mainlanders visiting Hong Kong and Macau.

In a stock exchange filing, the company said it had incurred higher one time restructuring costs to mitigate those on-going unfavourable conditions.

“In addition, while unit sales remained relatively stable, average selling prices were adjusted, placing pressure on margins and combined with the restructuring costs, the group’s performance was adversely affected.”

In March, Trinity reported revenues of HK$2.6 billion (US$335.2 million) and a gross profit of HK$1.9 billion ($244.95 million). The gross profit margin was 74.1 per cent representing a 1.4 percentage point decline due to liquidation of excess inventory, a management priority in the second half.
In Monday’s warning, Trinity said management is taking “significant actions” to improve second half year performance but expects the subdued retail market environment in Greater China will continue.

Trinity retails high-end menswear in Greater China and Europe. Its brands include D’Urban, Gieves & Hawkes, Cerruti 1881, Intermezzo and Kent&Curwen.

In March, CEO Richard Cohen said Trinity was on track with its medium-term strategy.
“We target globally and think locally,” he said. “We are optimistic for the near and medium-term, and remain confident about the longer term potential for our business.

He said the company was putting in place “the right retail strategy and structure” to deliver consistent, sustainable returns into the future.
“We have significantly strengthened our teams up and down the organisation and continue to improve inventory management. In the past six months we have developed centralised shared services across all departments and improved our supply chain to make it more cost-effective and flexible.”

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