Luxury menswear group Trinity cautious amid China economic slowdown
High-end menswear group Trinity expects a soft year and mild consolidation of its store network on the mainland as the firm builds up the profile of recently acquired brands Kent & Curwen, Gieves & Hawkes and Cerruti.
"We acquired Gieves & Hawkes and Cerruti was just getting off the ground last year. The timing was that the mainland economy slowed down but that was when we started our investment, so that's affected our profitability," said group managing director Sunny Wong Yat-ming, adding first-quarter same-store sales growth was relatively soft.
Profit for its five menswear brands fell 42.9 per cent year on year to HK$308.2 million last year. Revenue dropped 3.7 per cent to HK$2.7 billion, hurt by weak consumer demand on the mainland, where it has most of its stores.
Administrative expenses rose 9.6 per cent, primarily due to the addition of senior management positions at Cerruti and Gieves & Hawkes. Selling and marketing expenses came to HK$1.3 billion, up 2 per cent, mainly spent on Gieves & Hawkes.
Wong said the firm would continue increasing its advertising and promotion budget, in line with the past few years. "We will continue what we've been doing. We are a company with a very long-term vision," he said. "We have to invest in our brands for it to succeed. Even if the situation on the mainland is not so good, we still have to do it."
Trinity is venturing into wholesale with department stores in the United States such as Bloomingdales and Nordstrom, as well as in Britain. This differs from fellow luxury group Prada, which said last year that it would pull back from US department stores because the products were not being presented in the right way.
"We are at different stages of development," Wong said. "I'm sure 10 years ago they wouldn't say this. Now they're very big. We are hopefully like Prada 10 years ago."
The group closed a net 26 stores on the mainland and had 360 at the end of December. In total, the group had 451 stores.
The firm proposed a final dividend of 8.5 HK cents per share.
Shares of Trinity fell 1.6 per cent to HK$1.90 yesterday, in line with the Hang Seng Index.