First-half woes fail to dent Bossini International optimism

Apparel brand Bossini International Holdings remains optimistic despite a slip in revenue and profit turning to loss for its six months to the end of December.

It says growth is projected to continue rising in emerging markets and developing economies, supported by a favourable global financial environment and a concomitant recovery in advanced economies.

“The regional picture is particularly encouraging as expansion in Mainland China and other parts of Asia remains solid, reflecting the strength of a broad-based upturn that saw global growth reaching its strongest rate since 2011. Mainland China is spearheading this long-overdue regional expansion, its economy having grown following two years of decline.

“Hong Kong’s apparel retailing industry seems to have bottomed out after shrinking for consecutive years. Nonetheless, various downside risks remain evident, including geopolitical tensions, sudden capital outflows, policy indecisiveness and a sharp adjustment in Mainland China.”

Bossini’s revenue for the six months fell by 5 per cent to HK$974 million (US$124 million), with gross profit slipping 1 per cent to $512 million.  

The group’s operating loss was $10 million with a -1 per cent operating margin, down from a positive 2 per cent a year earlier. Loss for the period attributable to the owners was $12 million, a switch-around from a $17 million profit 12 months earlier.

Economic backlash

Bossini says it weathered economic backlash from the China government’s “one trip per week” policy, more in-depth travel instead of retail shopping, and changes in tourist buying patterns. These factors hit retail sales in Hong Kong and Macau, which accounted for more than half of the group’s consolidated revenue.

The drop in profit attributable to the owners was mainly because of the decrease in the profit derived from the retail and export franchising business in the Hong Kong and Macau segment. There was a 5 per cent drop in overall revenue and a 2 per cent decline in same-store sales for the period. However, same-store sales rebounded in the second quarter, particularly in China and Taiwan.

Gross margin improved by two points to 53 per cent.

Same-store sales in Hong Kong and Macau and Singapore declined by 4 per cent, an improvement over a 6 per cent decline the previous year, and 8 per cent (no change) respectively. Same-store sales in Mainland China and Taiwan grew 9 and 5 per cent (both had 2 per cent declines previously).

Overall, same-store sales slipped by 2 per cent, an improvement on the previous period’s 6 per cent decline.

At the end of the six months, the group had a presence in 29 countries and regions with  total 940 stores, the same as at June 30. The number of directly managed stores dropped by two to 282, while the number of franchised stores was 658, up two.

Hong Kong/Macau remained the group’s core market and major contributor to the total revenue. A new outlet lifted the overall total number of stores to 41 while the export franchising business added five stores to the global network, taking the total to 656 across 25 countries.

Mainland China had 166 stores (down two) comprising 164 directly managed stores and two franchises. Two non-performing stores in both Taiwan and Singapore were closed, giving both markets 16 outlets.

During the six months, the group continued to launch its “on-the-go” collection to ride on the athleisure trend.

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