Dickson's mainland expansion blamed for 10.7pc income drop
Dickson Concepts (International) planned to slow expansion on the mainland after investing heavily there last year to grow its retail network, chairman Dickson Poon said.
The investment costs were the main factor behind a 10.7 per cent decline in full-year earnings at the luxury retailer, Mr Poon said yesterday.
Net profit was HK$186.2 million, or 60 HK cents a share, for the year to March, down from HK$208.38 million, or 67.2 HK cents a share, a year ago.
Sales rose 17.3 per cent to HK$3.1 billion, following the company's purchase of Mr Poon's 89 Tommy Hilfiger stores in August last year for HK$396 million. Dickson also operates other single-brand luxury retailers in Asia including ones selling Brooks Brothers, Polo, Ralph Lauren, Bulgari and Tod's.
Mr Poon yesterday said the company's stores recorded strong growth in sales last year and that profit was hit by expenses on its network expansion, including the opening of its third Hong Kong Seibu store in Kowloon Hotel and a Seibu store each in Chengdu and Shenyang.
The company, which opened 65 outlets last year, plans to add 40 stores this year. In March, it had 500 stores, comprising 68 in Hong Kong, 228 on the mainland, 170 in Taiwan and 34 in Singapore, Malaysia and the Philippines.
In terms of revenue, Dickson Concepts is seeing increasing contributions from its mainland operations. Sales from the mainland jumped 45.1 per cent last year and accounted for 13.9 per cent of the firm's income, up from 11.2 per cent a year earlier.
Sales in Hong Kong rose 19.3 per cent last year and generated 54.5 per cent of Dickson's sales, up from 53.6 per cent a year ago.
Revenue from Taiwan grew 6.5 per cent last year for 22.7 per cent of total sales, down from 25 per cent a year earlier.
'We are looking into opening more Seibu stores on the mainland,' Mr Poon said.
The company said its Harvey Nichols store in Hong Kong had recorded 'a significant increase in sales', without giving figures.
Mr Poon said the Seibu stores in Chengdu and Shenyang needed a further 18 months to achieve break-even.
'The group is confident that the Tommy Hilfiger group will become an increasingly significant contributor' to Dickson Concepts' turnover and profits, the company said. Mr Poon said the firm remained optimistic of prospects in Taiwan.
Shares of Dickson Concepts rose 1.54 per cent yesterday to HK$9.24 before the release of the earnings announcement.