Hong Kong fashion retailer I.T sees 33pc dive in net profit
Fashion retailer I.T Limited said it is likely to continue offering deep discounts to boost sales, after posting a 33 per cent plunge in net profit for last year.
“We don’t see any indication of a recovery in consumer appetite or improvement in the business environment in the near term. So there still is pressure to give discounts in the coming year,” said Benny Fong, head of investor relations and corporate finance at I.T.
I.T, which is listed on the Hong Kong stock exchange, operates 668 stores worldwide with the majority of them in Hong Kong and China. A little more than half of the company’s products are its own in-house brands while the rest are curated, international brands.
Fong said the company had come under pressure especially since major brands all around the world started discount sales earlier compared with previous years, and have also been offering steeper discounts.
The company’s net profits dived 33 per cent to HK$274.8 million in the last financial year ending February, mainly because retail sales in Hong Kong fell while rents continued to rise.
I.T also suffered a foreign exchange loss of HK$65.1 million after it converted its yuan fixed deposits into Hong Kong dollars in August when China devalued its currency by almost 2 per cent – the biggest change in a decade.
Excluding its foreign exchange losses, the company’s net profits declined by 7.6 per cent to HK$274.8 million.
The city’s retail business recorded its poorest first-quarter performance since 1999 as sales plunged 12.5 per cent. The company’s retail sales in Hong Kong, which account for 46.3 per cent of its business, slid 3.8 per cent to HK$3.49 billion.
This was largely because of the steeper discounts it offered and more promotions in the past year. The brand shuttered 17 of its stores and reduced its trading area by 5.2 per cent to 598,168 square feet across Hong Kong in the past year.
Looking ahead, Fong said, the company remained “prudent” about upcoming strategies in Hong Kong and said it would depend on the market condition on whether it would continue to close more stores.
Fong added that the company would continue to expand its network gradually in China, where it operates in 20 cities, after posting a 16.4 per cent jump in retail sales there.