Sogo parent takes profit hit
Sogo parent Lifestyle International Holdings has warned investors its profit for the six months ended June 30 is likely to fall by 50 per cent.
In a notice to the stock exchange, Lifestyle cites five reasons for the steep decline which range from the depressed luxury retail market to increased financial costs.
A “decrease in sales revenue and hence profit of the group’s retail operations due to slowing economy and weak consumer sentiment,” is in line with reports from other retailers in town targeting high-spending shoppers.
“The expected decrease in profit… is primarily attributable to a significant drop in investment income of approximately HK$445 million on the group’s financial assets and bank deposits when compared to the same period last year. Due to the volatile financial market conditions during the period which has resulted in an unrealised loss on fair value changes of the group’s financial assets, the group’s investment income for the period turned to negative of approximately HK$186 million (instead of approximately HK$200.9 million as disclosed in the previous announcement) from a positive of approximately HK$259.1 million for the same period last year. “
Lifestyle International’s bottom line also took a hit from the one-off listing expenses relating to the spin-off and separate listing of Lifestyle China Group whose shares commenced trading on the Hong Kong stock exchange in July.
In March, Lifestyle International reported its Hong Kong flagship store Sogo Causeway Bay saw sales revenue slip 4.5 per cent in the past year. That was minimal compared with falls of as much as 25 per cent by some watch and jewellery retailers and at a time luxury fashion brands were also reporting double-digit sales declines.