Dickson steps up mainland luxury push

PUBLISHED : Thursday, 09 December, 2004, 12:00am
UPDATED : Thursday, 09 December, 2004, 12:00am

Significant lifestyle stores are being planned for key cities, big and small

Dickson Concepts (International) is pressing ahead with plans to become the leading luxury retailer in the mainland by opening more large 'lifestyle' stores similar to Seibu, two of which already exist in Shenzhen.

Chairman Dickson Poon unveiled the plan yesterday after announcing that the company had seen interim profits soar nearly tenfold (905.84 per cent) to $77.56 million for the six months to September compared with a year ago, when the city was severely affected by the Sars epidemic.

The company will give a generous interim dividend of 27.5 cents, up from 2.7 cents a year ago.

Mr Poon said new stores would range from 20,000 square feet to 100,000 sq ft and would be established as anchor tenants of major retail developments.

Dickson Concepts also operates 140 outlets measuring between 1,000 sq ft and 10,000 sq ft in 25 mainland cities.

In Hong Kong, the company has 52 outlets, including three Seibu department stores, the latest of which opened in Langham Place in October.

Mr Poon said it was experiencing 'heavy traffic' and could break even in November next year.

'Such a large format store is equivalent to the size of 20 outlets that we have in the mainland,' he said.

'With a better economic scale in the operation of large stores, it definitely will enhance our future earnings capability.'

He refused to identify the locations or the size of investment but said the plan was not only limited to major centres as it would include second and third-tier cities.

'We are now [talking] with various developers about how the design of their retail developments will match our image,' he said, adding that the group had $600 million net cash to spend.

Having had a presence in the mainland for 12 years, Mr Poon said he had noted consumers' rising demand for luxury products in second and third-tier cities.

'China has ample room for further development,' he said, adding that he would not rule out the possibility of opening 100 per cent-owned lifestyle stores following Saturday's relaxation of restrictions on foreign ownership of retail outlets.

In the six months to next March, the company plans to have added 14 new outlets in Hong Kong, the mainland and Taiwan, bringing its total network to 400.

Mr Poon attributed the strong first-half result to a significant improvement in margins and the continued tight controls on expenses.

Gross margins grew to 46.5 per cent during the period under review from 41.8 per cent a year ago.

Turnover for the six months to September rose 9.9 per cent to $1.22 billion.