Competition stifles Le Saunda sales
It has been a year of losses for fashion group Le Saunda Holdings, which designs, develops, makes and retails women’s and men’s footwear handbags and accessories.
Total Le Saunda sales fell by 17.2 per cent for the year ended February 28, reaching RMB1.13 billion (US$176 million), while consolidated gross profit dropped by 18.1 per cent to RMB743.5 billion.
During the year, the retail channel through department stores in Mainland China remained feeble, says the group. Both topline Le Saunda sales and like-for-like sales fell. The group recorded a gross profit of RMB743.5 billion, a decline of 18.1 per cent, while the gross profit margin shrank to 65.8 per cent, down 0.7 points.
The company sells in Mainland China, Hong Kong and Macau, its major proprietary brands being Le Saunda, Le Saunda Men, Linea Rosa, Pitti Donna and CNE.
During the year, the group initiated a series of promotional and brand marketing campaigns to mark its 40th anniversary. It also launched online leisure brand Pitti Donna.
Le Saunda says the growth of total retail sales on consumer goods slowed down in China during the year, still presenting many challenges for traditional retail businesses.
“In particular, the rapid development of e-commerce posed the greatest threat, and the fierce competition among traditional retail businesses resulted in extensive close-downs and tenancy surrenders.
Because of the economic challenges, the group adjusted its strategy to close down low-profitability stores and re-adapted the e-commerce model. At the end of the year, the group had a retail network of 687 stores in Mainland China, Hong Kong and Macau, a net reduction of 109 outlets. The number of self-owned stores dropped by 101, while the number of franchised stores decreased by eight.
At year-end, there were 493 core brand Le Saunda stores and 35 Le Saunda Men stores,
representing net reductions of 70 and 17 stores respectively. There were two fewer stores for its high-end fashion brand Lina Rosa, taking the total to 72 stores, while there was a 21 drop in CNE stores, ending up with just one.