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Denise Tsang

General merchandising store Jusco (Hong Kong) blamed the retail slump on an 18 per cent drop in attributable profit to $51.48 million in the year to February.

 The drop was also attributed to an almost $10 million write-off for pre-operations of its Tseung Kwan O store, which opened last October.

 Managing director Akihito Tanaka said that the retail market was so depressed that Jusco expected to see zero sales growth during the first six months this year.

 'In a tough season, it's not easy to generate good sales and profit figures,' he said.

 Last year, operating profit before exceptional items fell 24.2 per cent to $72 million, with the Guangzhou Teem Plaza store still losing money.

 Mr Tanaka said the store was expected to generate profit by next February, the third year of operation.

 Turnover rose about 17 per cent to $2.39 billion.

 Earnings per share were down 18.3 per cent to 19.8 cents.

 The directors have proposed a seven-cent final dividend, taking the full-year payout to 10.5 cents, the same as previously.

 Despite the retail slump, Jusco planned to spend more than $200 million opening two stores this year, in Hung Hom and Tuen Mun, to give it seven in Hong Kong.

 'Given the current economic climate, we are likely to secure low rental contracts,' Mr Tanaka said.

  Jusco hopes to sign a lease contract in Tuen Mun by the end of this month, with the proposed store involving an investment of about $100 million.

 Mr Tanaka said the company might take out a $50 million short-term loan to fund the store while the remainder would be funded by $60 million cash on hand.

 To reduce operating costs, Jusco had hired more part-time staff and had sourced more products through sister companies in the region, Mr Tanaka said.

 Part-time staff accounted for 35 per cent of total working hours last year, a 5 per cent increase from 1996.

 'The ratio will be raised further to 40 per cent this year, as we will save up $7 million for every 5 per cent increase [in the part time staff ratio],' Mr Tanaka said.



Retail slump blamed for 18pc fall in Jusco net profit to $51.48m