Bossini to close its loss-making stores as sales decline
Retailer widens product categories
Bossini International Holdings said same-store sales dropped 9 per cent last year, prompting the casual-wear retailer to increase product categories and cut the number of loss-making mainland and Taiwan outlets.
The drop in comparable store sales for the year ending last month was the same as the 9 per cent fall posted in the first half amid intensified competition, according to chief executive Kathy Chan.
'The third quarter was the worst of the year, while the fourth quarter was the best of the year,' Ms Chan said, without giving figures.
'Overall, sales performance for the year is similar with the trend in the first half,' she added.
Net profit fell to HK$6.41 million in the six months to September from HK$45.21 million a year earlier, while turnover fell 2.7 per cent to HK$969.98 million, prompting the company to carry out a brand revamp.
Ms Chan said the company, which used to focus on youth apparel products, would roll out its new product categories, including maternity and child wear, to strengthen its brand image as a 'family-fit' brand.
Bossini had allocated about HK$80 million for rebranding in the 2007-2008 financial year, the same as in the previous year, she said.
The revamp will include changing store layouts and boosting annual collections to 12 from eight.
The retailer will close up to 40 outlets on the mainland and 30 outlets in Taiwan this year as it seeks to turn around the loss-making operations by next year.
Ms Chan said the company had expanded too rapidly in the mainland last year and political uncertainties in Taiwan could affect consumer appetite.
Bossini had 605 stores on the mainland and 113 outlets in Taiwan at the end of September last year.
Its operating loss in Taiwan widened to HK$21 million for the six months to September from a HK$6 million net loss a year earlier.
First-half operating loss on the mainland was HK$12 million, compared with a HK$1 million operating profit a year ago.
The retailer sells products under Bossini, its lower-end brand Sparkle and its higher-end brand Bossini Style.
'Most of the stores to be closed are our Sparkle stores,' said Ms Chan.
She also revealed plans to sell Sparkle products in Hong Kong and other Asian markets to boost Bossini's overall brand image. At present, the brand is being sold on the mainland only.
The move is similar to rival Giordano International's rolling out of its higher-end brand Giordano Ladies to lift the company's brand image.
Bossini Style's average selling price is 30 per cent higher than that of Bossini, according to Ms Chan. She also said that although she did not see H&M as direct competition, the Swedish brand's entry would nevertheless have an impact because 'the mass apparel market in Hong Kong has little room for growth'.
She said the entry of European apparel retailers might 'educate' Hong Kong consumers to demand more in terms of shopping experience and product designs.
Shares in Bossini, which have dropped 24.3 per cent in the past 12 months, closed unchanged at 53 HK cents on Friday.