Upmarket retailer expects poor market conditions to continue as earnings shrink to $6.7m

Deteriorating market conditions have caused profits at upmarket retailer Dickson Concepts to shrink 78 per cent in the six months to September 30.

The company posted a net profit of just HK$6.75 million, compared with HK$30.8 million in the same period last year.

Turnover fell 1.7 per cent to HK$1.04 billion from HK$1.05 billion previously, showing 'sales were achieved at the expense of margins', the company said yesterday.

Of the turnover, almost 80 per cent was generated in Hong Kong, while the remainder came from other Asian countries.

'Asian economies were already performing poorly during the first half of the year,' the company said.

'The group expects these difficult conditions to continue for the remainder of the current financial year.'

Dickson Concepts operates 60 shops in Hong Kong, as well as another 273 in countries such as the mainland, Malaysia, the Philippines, Singapore and Taiwan.

The retailer sells products under high-end brand names such as Chopard, Ralph Lauren and Tod's.

To boost sales, the company recently acquired middle-end clothing brand Benetton's distribution operation in Taiwan.

Apart from the adverse market conditions, some analysts suggested struggling cyber store Dickson CyberExpress could be partly to blame for the first-half profit shrinkage.

The store, launched in September last year, incurred a loss of about HK$60 million last financial year.

No figures for the store were released yesterday.

Dickson Concepts said the cyber store had added more shops, such as a convenience store and laundry kiosk, to meet the increasing needs of residents around the Airport Express' Kowloon Station, where it is located.

To reduce costs, Dickson Concepts sub-leased half of the store's 70,000 square feet to other retailers.

Among them is Mega Warehouse, which sells consumer electronic goods at competitive prices, which some analysts consider does not match Dickson Concepts' upmarket image.

Dickson Concepts also is pinning its growth hopes on the mainland - one of the few Asian countries expected to record growth this year despite the adverse market.

'China is expected to become an increasingly important contributor to the group's future turnover and profits,' the company said.

To capture opportunities arising from the country's accession to the World Trade Organisation, Dickson Concepts said more than 20 outlets were being opened in the mainland this year.

It plans to open a second Seibu department store in Shenzhen next year, with an investment of up to HK$100 million. The company now operates three Seibu stores in Hong Kong and Shenzhen.

Dickson Concepts was not the only Hong Kong-listed retailer to post poor results yesterday.

Gay Giano International, which sells middle to high-end fashion, saw its loss jump nearly 10 times in its interim result.

In the six months to September 30, its loss surged to HK$13.3 million from HK$1.34 million in the year-earlier period, despite a 2.61 per cent increase in turnover to HK$94.09 million.

As with Dickson Concepts, Gay Giano did not declare an interim dividend for the half-year.