Apparel maker's shares dive 30pc
Shares in silk-apparel maker High Fashion International fell 31.47 per cent yesterday after the firm on Thursday evening announced an 83 per cent slump in its interim profit.
The earnings slump was largely the result of falling silk product exports to the United States which the firm blamed on bad economic conditions.
The stock lost 62 HK cents to close at HK$1.35 after its net profit fell to HK$11.09 million for the six months to March, from HK$65.62 million a year earlier.
The firm also said its children's wear retail venture in China was on the verge of collapse as its majority partner, Hangzhou Wahaha Group, planned to terminate the arrangement.
An ambitious plan to open 2,000 franchise outlets in the mainland over the next 12 months hit the rocks just two months after the project was announced.
The franchise was to have run under the brand of Wahaha which is a well-known Chinese icon for beverages.
Hangzhou Wahaha has a 51 per cent stake in the new venture, Hangzhou Wahaha Garments, with High Fashion holding the balance.
Shi Youzhen, director of Hangzhou Wahaha Garments, said the company had informed High Fashion of its intention to pull out from the venture by letter but no reply had been received.
The move came as a result of widening differences between the managements of the two companies, she said.
Divergent views on designs of children's wear and lack of communication and co-ordination between the two management teams led to the break, she said.
'[High Fashion] . . . is leveraging on our brand name in business activities in Guangdong without our consent.'
A statement from High Fashion said: 'An amicable solution is expected for both parties.'