Footwear retailer Le Saunda to slow pace of expansion after profit drop

PUBLISHED : Wednesday, 29 May, 2013, 12:00am
UPDATED : Wednesday, 29 May, 2013, 2:51am

Footwear retailer Le Saunda Holdings plans to slow its pace of expansion after reporting a nearly 8 per cent drop in net profit in the last fiscal year.

Alice Lau, chief executive of Le Saunda, said yesterday the company would remain cautious on the mainland market as sales across the border had been volatile in the past three months.

The firm's share price rose nearly 4 per cent ahead of a company press briefing yesterday before it closed 0.4 per cent lower at HK$2.57.

Le Saunda said in a filing on Monday that net profit for the year to February dropped 7.8 per cent to HK$179 million even as revenue grew 14 per cent to HK$1.76 billion. Net income declined because it offered discounts in an effort to combat weak consumer sentiment.

The firm's mainland retail business generated revenue of HK$1.52 billion during the period, accounting for 86 per cent of total sales. Hong Kong and Macau contributed HK$206 million to revenue.

Lau said about half of its customers in Hong Kong stores came from the mainland. Sales in the city between March and May grew slower than expected.

Rising mainland labour costs added to Le Saunda's problems, but the rate of increase fell below 10 per cent, from a double-digit figure the year before.

Le Saunda operated 814 self-owned stores and 170 franchise stores on the mainland and in Hong Kong and Macau at the end of February.

The company said it would increase the proportion of revenue that handbags sales generate this year. It also said it would lift single-store sales of new outlets, which would slow the pace of new store openings in the short term.

The company proposed a final dividend of 8.7 HK cents per share.