Hip retailer cutting back HK operations
Updated: 2015-05-27 07:52
By Sophie He in Hong Kong(HK Edition)
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I.T Ltd - a Hong Kong high-end fashion retailer catering mainly to young jet-setters - is to continue expanding on the mainland while closing a few stores in Hong Kong to save costs amid unsustainable levels driven by rising rentals.
Eymon Tsang Hing-hung, I.T's chief financial officer, said on Tuesday the company's mainland stores have become increasingly popular among young shoppers, especially in major cities.
Currently, I.T has 283 stores on the mainland, 30 more than it has a year ago, and aims to keep up with the pace of expansion in the next 12 months, while downsizing its operations in the SAR.
"We're feeling some pressure on our business in Hong Kong," said Tsang, explaining that local consumer sentiment is weak, while store rentals continue to climb.
He said about 30 percent of I.T's local stores will need to renew their leases in coming months, and a significant increase in rents will force the company to pull down the shutters on some of them to cut costs.
I.T has 266 stores in Hong Kong - nine less than a year ago. Tsang said the company feels that doing business in Hong Kong is difficult and he expects local consumer sentiment to remain weak throughout this year. He warned that the company's sales in Hong Kong in 2015 would be lower than a year ago.
I.T, which was listed on the main board of the Hong Kong Stock Exchange in 2005, posted a net profit of HK$312.5 million, or 25.4 Hong Kong cents per share, for the year ended Feb 28, 2015 - up 11.7 percent from a year earlier. Total turnover rose year-on-year by 6.4 percent to HK$7.18 billion, the company said.
The company's growth in revenue was mainly driven by increased sales on the mainland, which amounted to 2.77 billion yuan - up 38.6 percent from a year earlier. Sales in Hong Kong stayed flat at HK$3.6 billion. Operating profit contributed by its mainland operations surged 147.6 percent to HK$116.6 million, while that from Hong Kong dropped by 25.1 percent to HK$157.3 million.
Tsang said the company's business in Hong Kong was affected by the "Occupy Central" movement at the end of last year during which sales of some its stores plunged by as much as 50 percent year-on-year. The decline in the number of mainland visitors to Hong Kong also had a negative impact on sales, said Tsang.
The share price of I.T picked up 2.75 percent to close at HK$3.36 in Hong Kong on Tuesday.
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Fashion retailer I.T's business in Hong Kong was affected by the "Occupy Central" movement at the end of last year, during which sales of some its stores plunged by as much as 50 percent year-on-year, according to its chief financial officer. Provided to China Daily |
(HK Edition 05/27/2015 page9)