New World retail unit in 1b yuan expansion
New World Department Store China, which reported a 14.8 per cent rise in full-year profit, plans to double its capital outlay to one billion yuan (HK$1.13 billion) this financial year to fund new stores and acquisitions.
The company, which owns and manages 33 stores on the mainland, said net profit for the year to June increased to HK$547.3 million because of strong sales, which grew 15.6 per cent to HK$1.72 billion.
The company declared a final dividend of 7 HK cents, down 28 per cent from a year ago.
Chief financial officer Kenneth Wong said capital expenditure would go mainly to opening three new stores - two in Shanghai and one in Beijing - next year.
Some of the funds would be used to finance acquisitions and rebranding, Wong said.
In Shanghai, the company would open two self-owned stores in Baoshan district and Chengshan Road next year. The two stores will add 273,330 square metres of retail area and take the number of New World stores in the city to nine.
The four-storey Chengshan Road store in Shanghai is close to the World Expo 2010 site.
'We expect to take advantage of the location and attract numerous tourists from home and abroad,' said executive director Adrian Cheng.
He expects Shanghai to contribute about 20 per cent of total sales.
The third store would be the 40,000 square metre Beijing Shishang Store in Chongwen district.
Cheng said because of a rebranding exercise that would be completed in 2011, sales for the three months to September were flat as some stores' performance was affected by a renovation programme.
'It is lower than our expectation,' he said, adding that it was hard to exceed last year's 10 per cent growth by a big margin.
Commenting on the stores' performance, Cheng expected same-store growth to stay in the low single digits in the first half of this financial year to June next year.
He expected the mainland's retail market to turn around in the first quarter of next year.
The firm had no updated sales data for its stores during the National Day Golden Week, as the holiday had not yet ended, Cheng said. The holiday ends tomorrow.
On Tuesday, the Ministry of Commerce said retail sales on the mainland rose 15 per cent year on year to 14 billion yuan on the first three days of the holiday.
Cheng said the firm would maintain its net profit margin at about 32 per cent, the same as last year.
New World Department Store has 22 self-owned and 11 managed stores in 17 major cities, including Beijing, Shanghai, Shenyang and Wuhan.
Shares in New World Department Store rose 0.32 per cent to HK$6.12 yesterday.
Changing mode
Quarterly sales flat amid rebranding and renovation
For the past financial year, the firm's profit was HK$547.3 million, a rise of: 14.8%
