S Culture International uses survival tactics

With a slight increase in revenue in the face of market difficulties, footwear retailer S Culture International Holdings has used such tactics as salary restraint, relocating shops and using pop-up stores to cope.

And noting online shopping as an inevitable global trend, the group is looking at embracing omnichannelling and strengthening its capabilities in online-to-offline integration retailing.

In its interim results for the six months to June 30, the group reports slow sales in Hong Kong, where it worked at fine tuning its retail network. It also cut store numbers in Taiwan.  

The group’s retail revenue for the period was HK$260.4 million (US$33.5 million), up 5.9 per cent from the same period last year. However, comparable retail outlet sales eased 2.4 per cent, compared to an 8.2 per increase last year.

S Culture says Hong Kong still contributed most to sales with 74 retail outlets at the period end.

Regular monitoring

“To enhance our efficiency and remain competitive in the market, we suspended our salary increment plan and continued to fine tune our retail network in Hong Kong.

“We closely monitored the performance and productivity of each individual retail outlet on a regular basis, strategically relocated certain outlets to other prime shopping locations with lower rentals, and opened short-term-lease promotional outlets.”

There were 14 such promotional outlets during the six months, their purpose being mainly to inject flexibility into the sales platform to better reach target customers and to alleviate inventory pressure.

In Taiwan, the group closed three retail outlets for a total of 48. Excluding the effect of translating Taiwan dollars into Hong Kong dollars, revenue in Taiwan edged up about 1.6 per cent.

S Culture continued its strategy in Taiwan of increasing retail outlets in department stores and outlet parks, closing underperforming shops.

With two outlets in Macau, the group says it reaped “the highest return” amid the economic conditions there.

“Cautious steps”

With its economy slowing down and online shopping becoming a habit, China posed a challenging business environment. “However, we remain positive about its overall economic growth in the foreseeable future and applied cautious steps toward our expansion in the mainland,” the group says.

It continued opening its concession counters for its Josef Seibel, Petite Jolie and The Flexx brands while collaborating with local business partners to explore opportunities.

At June 30, the group had six retail outlets (four at December 31) and 14 (10) points of sales for its Clarks, Josef Seibel, Petite Jolie and The Flexx brands in 14 cities, including Beijing and Shanghai.

“At this time, we expect the full-year net loss will be higher than last year unless market conditions improve considerably in the second half of this year. Nevertheless, we believe the retail environment is undergoing a structural shift and hope it can be stabilised this year.”

Total revenue for the group for the six months was $282.6 million, up 4.9 per cent increase from the same period last year.

At June 3o, the group had 74 retail outlets in Hong Kong (73 in the same period last year), two  (unchanged) in Macau, six (two) on the mainland and 48 (51) in Taiwan.

Gross profit for the period was $160.3 million, a 7.8 per cent drop. Gross profit margin was 56.7 per cent, down from 64.5 per cent.

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