Top Form closes 14 outlets as profit dives
TOP Form International says it will close 14 retail outlets after poor sales of its own brand of lingerie dragged down profit by 44 per cent.
Attributable profit dropped to $45.5 million for the year to June 30 from $81 million in the previous year. Earnings per share dropped 47 per cent to 7.9 cents.
Managing director Eddie Wong admitted that the expansion in the retail section had been too aggressive and the sales in Taiwan had haemorrhaged the worst.
The company will reduce its sales outlets in Taiwan from 40 to 30 and four stores will close in Hong Kong, leaving 10 in operation.
It was hoped that the cut in retail outlets would help consolidate profit in the coming year, Mr Wong said.
'What we wanted to achieve then [with the expansion on retails] was to establish our brands,' Mr Wong said.
'We are restructuring our sales strategies, and ultimately we hope we can establish wholesale channels which will save a lot on overheads like rentals and sales staff.' Top Form's wholesale business now makes up a small portion of its retail section. The two brands it manufactures are Mamselle and It's Me.
The revamped strategy also reflected pessimism of the regional retail sector which did not expect an upturn within the next two years.
Chairman Frank Lo Kit-lun said the company's strength was still in original equipment manufacture business which contributed $78 million in operating profit.
He said the plan for a plant in Vietnam had been shelved due to uncertainties in international trade regulations.
Top Form's new factory in the Philippines is scheduled to open next month and will contribute five to eight per cent to total production.
The 232,500 sq ft site that the company bought near Shanghai is still waiting to be developed. Output from there would be aimed at Southeast Asian markets.
Mr Lo said that although Top Form had 18 sales points in Shanghai through agents, sales of its products in China were not expected to grow.