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Fashion Corp Narrows Losses in HK and Macau

Fashion company's corporate plan paid off as it adjusted growth sheet in the first half in order to achieve financial gains. Fashion brand operator I.T Limited announced interim results for the six months ended 31 August 2017, turnover of the group increased by 0.2% to HKD3.65 billion from first half last year, gross profit grew by 3.4% to HKD2.28 billion, gross profit margin increased by 1.9 percentage points to 62.5% amid a competitive retail landscape. Operating profit increased by 50.2% to HKD187.8 million whereas net profit increased by 54.5% to HKD60.4 million.

The company said rent-to-sales ratio (including rental charges and building management fees) decreased by 0.1 percentage point to 26.4%, whereas staff cost-to-sales ratio (excluding share option expenses) increased from 17.0% to 17.1%. Consequently, total operating costs as a percentage of sales increased by 0.5 percentage point to 58.1%.

During the reporting period, the firm's retail sales in our Hong Kong and Macau segment declined by 11.2% to HKD1.45 billion, the decline in sales was due to a reduction in total trading area and a negative result of the comparable store sales growth (–6.9%) that was registered for the period, the fashion company said. Gross margin increased by 0.4 percentage point to 59.9%, primarily as a result of a decrease in markdowns in relation to sales along with an improvement in sales mix in favor of higher margin businesses during the period.

"The group was especially encouraged by the reduction in operating expenses it achieved through the store consolidation and cost control exercises conducted in Hong Kong. The operating loss of the Hong Kong and Macau segment reduced to HKD111.9 million amid a diminishment in sales and comparable store sales growth", the company said.

Mainland China, total trading area increased 12.6% over the corresponding period of the previous year. Total retail sales increased by 7.3% to HKD1.6 billion, with comparable store sales growth rising by 0.9%. Operating profit recorded a rise of 16.2% to HKD95.3 million.

The group’s Japan and the USA segment has continued to outperform. Sales of Japan and the USA business increased by 35.7% to JPY6,508.8 million, whereas sales in Hong Kong Dollar term grew by 31.1% to HKD456.8 million. Gross margin increased to 71.9%, while operating profit increased by 33.9% to HKD193.6 million.

- APMR News


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