759 Store parent cuts rent burden, but posts full-year loss
Despite a positive first half to the year, CEC International, the parent of the 759 Store discount retail chain, has recorded a full-year loss of HK$9.5 million, down from $32.9 million the prior year.
The company has been continuing to restructure its store network, culling unprofitable locations, and to expand the product offer of its stores. It also shut its 11 loss-making cosmetics stores.
The company cut its retail-leasing expenses by 12.4 per cent, a saving which exceeded the fall in sales. For the third successive year, the rent-to-sales ratio fell, and is now down to 11.3 per cent, from 12.1 per cent last financial year.
Chairman Tang Fung Kwan said CEC International’s leasing department is actively looking for suitable sites in residential areas. Since the financial year ended on April 30, six new 759 Store shops have opened, the same as the number of new shops for the entire last financial year. Another six stores are under fitout and two are undergoing refurbishment, all located in shopping malls or housing estates.
While the company returned a profit of $1.4 million for the six months to October, the second half was impacted by the trade war between the US and China, which “gave rise to a series of extreme uncertainties in consumer market where the value of total retail sales recorded drops in consecutive months from January 2019 to the date of this report,” said Tang.
In the retail business, which accounts for 94 per cent of CEC International’s turnover, sales fell 6.3 per cent for the year to $1.84 billion, primarily due to the cosmetics-store closures.
With a net decrease of 27 stores, the company ended the year with 179 759 Store outlets, down from 206. The last remaining 759 KawaiiLand store, located at Hong Kong International Airport, will be closed in October when the current lease expires.
Last year was a particularly difficult one for the company, with the passing away of its founder Lam Wai Chun in August.