Optical 88 reports strong Hong Kong sales
Eyewear chain Optical 88 is narrowing its Mainland China losses as its sales improve.
A subsidiary of Hong Kong-listed Stelux Holdings, Optical 88 has 227 stores in Hong Kong, Macau, Mainland China, Singapore, Malaysia and Thailand.
Group sales rose just one per cent in the year to March 31, and its store network shrank by seven.
Trading was mixed across the markets, with China and Malaysia standouts.
China sales rose 4.7 per cent and the loss narrowed by 10 per cent to HK$27.5 million.
“In line with our Greater China strategy, resources have been strengthened to accelerate shop opening in Southern and Southwestern China as we have relocated out from expensive cities, like Shanghai,” parent Stelux said in a stock exchange filing.
“In addition, as we increasingly cater for the ageing demography and children, sales in progressive and functional lenses have improved whilst myopia control lenses have also been introduced.”
In its home market of Hong Kong and Macau, the soft economy in Macau together with the accelerated slowdown in Hong Kong in the second half after a strong first six months, saw sales rise 3.9 per cent for the full year to $835.6 million.
Profit rose 19.5 per cent to HK$95.4 million and gross margin improved to 64.2 per cent.
“Though less affected by the decline in Mainland tourist spending, a cautious approach has nonetheless been adopted to review our store portfolio in key tourist locations.”
Optical 88 recorded a loss for its Southeast Asian stores, but there were mixed results by market.
Overall, Optical 88 lost $6.7 million in the three markets but on an exchange neutral basis, the loss was reduced to $1.4 million. Operating costs declined 2.2 per cent, with shop rentals falling 3.8 per cent.
“In the second half of the year, a Hong Kong team was parachuted in to strengthen operational management and to improve operational efficiencies in all three regions. Initiatives were introduced to increase store productivity, improve gross margin and tighten procurement control. We will continue to see progressive improvements as a result of the above measures in the next year,” Stelux said.
Singapore stores reported improved sales per shop as the brand focused on strengthening its customer base. Malaysian reported earnings of around $1.8 million, but excluding an
exchange loss the profit would equate to $4.8 million.
“In the medium term, we will be opening new stores to increase market coverage and to grow business scale.”
The profit from Thai stores fell from $13.8 million to $8.6 million.
“Given the poor economy and the unstable political situation, a cautious approach will be adopted towards shop leasing,” said Stalex.
Optical 88’s total profit for the year rose 12.8 per cent to HK$61.2 million due to Hong Kong and Mainland China operations.