Fashion retailer IT sees profits plunge over Hong Kong slump
Fashion retailer IT's profit fell 27.3 per cent year on year as it faced rising rental and labour costs in its main markets, and a slowdown in Hong Kong retail spending.
Fashion retailer IT's profit fell 27.3 per cent year on year as it faced rising rental and labour costs in its main markets, and a slowdown in Hong Kong retail spending.
Net profit for the year ended February was down to HK$280 million, compared to HK$385 million the year before. Turnover increased by 3.1 per cent.
Meanwhile, rental expenses surged by 8 per cent and staff costs rose nearly as much, by 7.8 per cent.
Gross profit margin climbed 1.1 per cent to 59.9 per cent, the effects of offering fewer price discounting campaigns.
Founder and chief executive Sham Kar-wai said the recent flare-up of tensions between locals and mainland visitors was dampening prospects and taking its toll industry-wide.
"The recent [retail] figures were only so-so," Sham said. "We hope that less people will object to mainland visitors from coming, as they are a very important segment."
Local March retail figures dropped 1.3 per cent, the first decline since 2009, excluding February to account for the effects of Lunar New Year.
Known for its trendy apparel and accessories, IT sells upmarket European and Japanese brands in addition to its own in-house labels such as 5cm, B+ab and Izzue. Now in its 26th year, Hong Kong is its primary market, making up 54 per cent of sales, while the mainland generates 35 per cent and Japan 7 per cent.
The group's Hong Kong business declined 3.3 per cent to HK$3.56 billion.
The mainland market performed better, growing 16.3 per cent to HK$2.17 billion.
Japanese sales increased 5.5 per cent in local currency but were offset by the weakening of the yen.
