City Chain parent Stelux International files profit warning
City Chain parent Stelux International has warned shareholders of another looming loss.
In a stock-exchange filing, the Hong Kong retail operator blamed “softened retail sentiments” in the markets it operates in, amid an economic slowdown and the intensified trade dispute between the US and China in the second half of the trading year.
Last year Stelux reported a loss of HK$150.6 million, however chairman and CEO Joseph C C Wong said this year’s deficit would be smaller due to a one-off gain from the divestment of the company’s optical retail portfolio to a related party, part of a restructure. That gain is expected to be in excess of $100 million.
In January, the company reported turnover of $368.3 million for the three months to December, representing a year-on-year decline of 5.6 per cent, with its retail network contracting by 9.4 per cent.
Stelux International sold its Optical 88, Egg and Thong Sia Optical businesses across Hong Kong, Macau, Mainland China, Singapore, Malaysia and Thailand in June last year for $400 million. The purchaser was an entity controlled by Wong, also known as Chumphol Kanjanapas.
At the time the deal was said to benefit the optical chains which required fresh investment for expansion, difficult to achieve given the high debt level of Stelux, which was about $1.1 billion.
As a separate entity, the optical business has been repositioning itself as a professional healthcare-based business.