Lifestyle posts 38.8pc interim profit growth

PUBLISHED : Tuesday, 10 August, 2010, 12:00am
UPDATED : Tuesday, 10 August, 2010, 12:00am

Lifestyle International Holdings, operator of Hong Kong's Sogo and the mainland's Jiuguang department stores, reported a 38.8 per cent year-on-year growth in net profit for the first six months on strong recovery in retail sales. The company is to open the second mega store in Shanghai, riding the retail boom on the mainland.

The company, which runs two stores in Hong Kong and three on the mainland, saw its net profit rise to HK$616 million in the first half from HK$443.7 million a year earlier.

Turnover rose 14.6 per cent to HK$1.99 billion.

Sales from the mainland, which accounts for 27 per cent of total revenue in the first half, is projected to be on par with that from Hong Kong by 2015, when more mainland stores are opened, managing director Thomas Lau Luen-hung said yesterday.

The management is in talks with mainland officials and developers over another department store in Shanghai, where it already runs a 90,000 square metre store in Puxi. The details of the second store, estimated to have a floor area of 120,000 square metres, would be finalised by the end of the year, said chief financial officer Terry Poon.

'Unlike on the mainland, it's not easy to expand operations in Hong Kong,' Lau said. 'Land is precious here and Hong Kong developers seldom grant a lease as long as 20 years.'

The company is on track to open a department store in Shenyang in 2012 and put its commercial property in Tianjin on lease next year.

Although retail sales growth for the second half will be slower than the first half because of the higher base effect, Lau is confident sales in the second half will be stronger than in the first. Traditionally, second-half sales constitute 60 per cent of total yearly sales, Lau said.

'Sales in July and August are still growing and I'm positively cautious about the operation in the second half,' he said.

In the first half, Sogo in Causeway Bay posted a 13.9 per cent growth in sales while Sogo in Tsim Sha Tsui grew 13.4 per cent year on year. Shanghai's Jiuguang saw its sales increase 19 per cent.

Lifestyle said it was still pursuing EganaGoldpfeil (Holdings), the embattled luxury good retailer which has been under receivership since 2008. According to Poon, the listing vehicle and the mainland distribution network of the troubled retailer are still very useful for Lifestyle.