The Asian retail market is in a dismal state, but Joyce Boutique, purveyor of fashion to the region's elite, remains confident enough to plan aggressive expansion. By the end of the year, Joyce says it will open seven new shops and cafes in Hong Kong and elsewhere in Asia. In Bangkok, a 27,000 sq ft Joyce shop which cost $20 million opened on Tuesday. Despite the depressed state of the Thai economy, Roberto Dominici, Joyce's managing director, said he was confident the operation would break even in its first year and post a profit thereafter. The company sees the Thai market supported by young professionals returning home after living abroad, a trend repeated elsewhere in Asia. Joyce recently became the exclusive Hong Kong retailer for German fashion house Hugo Boss. President and chief executive of Hugo Boss, Peter Littmann, said: 'To remain successful we had to get a higher profile.' 'We believe Joyce Boutique is the ideal partner because they have a high profile and are willing to go aggressively with us.' Mr Dominici said the company was investing $20 million in the project to fuel rapid growth, something that was not achieved during Hugo Boss' nearly 10-year relationship with Lane Crawford. Most of the current crop of investments will be funded from about $180 million Joyce raised through the issue of new and existing shares in November. Not all Joyce ventures overseas have proved successful. Military tensions between Taiwan and China had delayed the recovery at its troubled Taipei operation, Mr Dominici said. 'We don't expect Taipei to improve their bottom line until next year. They will break even two years from now,' he said. The company has yet to penetrate the potentially lucrative Chinese market, but not so Hugo Boss, who already has seven outlets on the mainland. Hugo Boss retains its partnership with Lane Crawford in China, jointly operating four outlets in Beijing, Shanghai and Shenzhen. Joyce Ma, Joyce Boutique's chief executive, said that while there was strong demand for imported luxury menswear on the mainland, few Chinese women could yet afford to buy Joyce's fashions. She said Joyce hoped to open its first mainland outlet in Shanghai, her home town, in 1998. Operations in the core Hong Kong market have also been depressed, resulting in two consecutive years of flat profits. That raises the question of Joyce's near-term profit potential after two years of tame profit growth. Joyce's net profits rose 7.8 per cent to $81 million for the year to March, nearly half of which was contributed by associated companies. A year earlier, profits rose 10 per cent to $75 million. Mr Dominici blamed the flat results on slower turnover sparked by pre-handover jitters rather than a lack of profitability. 'If you compare our profitability to total turnover, Joyce is probably one of the most profitable retailers in the world,' he said. 'I have always cautioned analysts on the 1997 issue. We knew and have now confirmed that the period ending in 1997 will be a difficult one. 'People are not in the mood to buy; they are uncertain about the future of Hong Kong. It's an emotional issue, not a matter of money.' Hong Kong's weakness was the driving force behind Joyce's advance overseas. 'We do not want to put all our eggs in Hong Kong,' Ms Ma said. With business in the retail sector not likely to improve until the end of next year, Joyce's share price may continue to underperform the market. Since releasing its results in late July, its share price has fallen 26 per cent, from $2.80 to $2.05. 'Analysts are very happy with Joyce's share price performance, they remember when the share price was 50 cents [in 1993], but they are also very aware of the difficulties surrounding 1997,' Mr Dominici said. 'This year is going to be very difficult. The investments we are making now will bear fruit in 1998.'