Sales fall for Le Saunda Holdings

Footwear group Le Saunda Holdings has reported another tough half-year.

Revenue fell 13.8 per cent and consolidated gross profit by 12.7 per cent for the retailer, according to its results for the six months to August 31.

Total revenue for the year’s first half dropped to RMB651.2  million (US$96 million) from RMB755.8 million in the same period last year. Consolidated gross profit was RMB438 million, a fall from RMB501.8 million. The group’s overall gross profit margin of 67.3 per cent was up 0.9 percentage points from the same period last year.

Consolidated profit attributable to the owners of the company decreased by 24.7 per cent year-on-year to RMB41.6 million. The underlying profit attributable to the owners, reflecting the performance of its core footwear business, was down by 24 per cent to RMB45.6 million.

The group designs, develops, manufactures and retails women’s and men’s footwear, handbags and accessories in China, Hong Kong and Macau. Its proprietary brands include CNE, Le Saunda, Le Saunda Men and Linea Rosa.

The group says the retail markets in China and Hong Kong remained sluggish during the half-year. However, with a lower sales discount, the decline rate of gross profit was less than that of revenue.

Overseas spending

Its total retail sales in China decreased by 12.1 per cent to RMB614.8 million for the period. Same-store sales fell 13 per cent, compared to 4.2 per cent for the same period a year ago. As well as slackened economic growth, this was attributable to a surge in property prices plus a rapid growth of consumer spending in overseas markets. Also, consecutive years of high growth in same-store sales have already built a quite high comparative base.

To cope with the constant change in its key retail market, the group says it will focus on improving its product quality and boosting its price competitiveness.

In Hong Kong, first-half retail sales dropped by 10.5 per cent year-on-year, showing an apparent acceleration in decline. The slide was the combined effects of the drop in tourist numbers and more prudent spending by locals.

The group’s sales revenue in Hong Kong and Macau fell by 35.4 per cent year-on-year to RMB36.3  million. During the six months, the company closed down six of its 16 stores because they were underperforming. Overall, the group’s retail network comprised 836 stores in China, Hong Kong and Macau, 47 fewer than at the same date last year.

As at August 31, there were 604 Le Saunda stores and 57 Le Saunda Men stores – 62 and 12 stores fewer respectively that at the same date last year. Its high-end fashion brand Linea Rosa approached its mature stage to provide stable results. Fifteen stores were opened, taking the total to 72. More CNE O2O stores were also opened, growing from 16 to 22.

Under pressure

Despite double-digit year-on-year growth for national online retailing, the group says the growth rate of the eCommerce industry has diminished significantly. Severe competition from cross-border eCommerce import players and a rapid increase in channel expenses had put the profit margin of online business under pressure.

To boost its sale conversion rate, the group had extended its access to consumers via subscription accounts. More casual and youthful designs were introduced during the half-year. While its eCommerce revenue fell by 19 per cent year-on-year, it maintained its gross profit margin with the eCommerce revenue accounting for about 12 per cent of the group’s total revenue.

“Looking forward, fierce competition in online and offline retail markets and market integrations will pose a persistent challenge,” says the group.

To provide stable return to shareholders in the long run, the group says it is committed to transforming from a traditional vertically integrated offline retailer to a highly data-oriented omni-channel format.


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