Dickson profits hit by disappointing sales in Taiwan
Luxury goods retailer Dickson Concepts (International) said annual profit climbed just 2.6 per cent as disappointing sales growth in Taiwan hurt earnings.
Profit for the year to March rose to $208.38 million from $203.1 million a year ago, slower than the 4 per cent growth forecast by Credit Suisse. Turnover rose 6.8 per cent to $2.64 billion while gross profit margin rose 3.7 percentage points to 55.8 per cent.
Chairman and chief executive Dickson Poon said unsatisfactory sales growth in Taiwan, which accounted for 25 per cent of the company's sales, dragged down the company's earnings.
'In Taiwan, a tightening of credit card limits by local banks and growing political uncertainties temporarily affected sales,' he said.
Sales in Taiwan gained 8.3 per cent to $660.8 million for the year from $610 million a year ago, compared with a 26.6 per cent jump in China to $296.8 million. Sales in Hong Kong rose 6.8 per cent to $1.42 billion from $1.33 billion.
Still, Mr Poon is confident that Taiwan's retail market would soon pick up. The company plans to scale back its operations there, where it runs 143 stores.
'Normally, a policy such as tightening of credit card limits will not last long,' he said.
Dickson, which sells luxury brands including Brooks Brothers, Polo, Ralph Lauren, Bulgari and Tod's, had a better profit margin last year because it reduced promotion campaigns and discounts, Mr Poon said.
The company, which runs 51 shops in Hong Kong, 162 in the mainland and 38 in Singapore, Malaysia and the Philippines, has cash on hand of about $500 million.
Capital expenditure for this financial year will be about $180 million, mainly for the opening of 30 shops under various brand names and three Seibu department stores.
The company will invest $80 million in a Seibu store in Kowloon Hotel in Tsim Sha Tsui.
Under the agreement, Dickson Concepts will lease a 52,000 square foot area in the shopping arcade of the hotel.
On the mainland, the company plans to spend up to $60 million to open a 145,000 square feet Seibu store in Shenyang, the capital of Liaoning province, by the end of this year. It will also open a 100,000 square feet Seibu store in Chengdu, in Sichuan province, in October.
Mr Poon said the company would continue to aggressively expand its retail network in China, despite expectations of more austerity measures by the government to curb economic growth and further increases in interest rates.
In Hong Kong, Mr Poon said Asia's first Harvey Nichols store, opened at the Landmark in Central in September, was receiving 'a good response' from customers. He expected the store, in which the company has invested $100 million, to break even next year.