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Upmarket retailer Dickson Concepts has spent HK$100 million acquiring and expanding Italian clothing brand Benetton's distribution operation in Taiwan.

The company has obtained exclusive rights for the Benetton brand and taken over management of 75 shops, chairman Dickson Poon said yesterday.

It also has rights to distribute Benetton's other brands, Sisley and 012, in Taiwan.

The firm spent a total of HK$100 million on the Benetton rights and other related expenses arising from the new business, Mr Poon said. It had recently opened new Benetton shops in Taipei.

'We expect the new business will generate sales in Taiwan exceeding NT$500 million [about HK$113 million] in the first full year,' Mr Poon said.

The Benetton Group saw sales of its apparel business grow about 10 per cent to US$2 billion last year, he said. Taiwan was the brand's third-largest market in the region.

He expected the addition of the Benetton brands to enhance sales in the coming years. For the year to March 31, Dickson Concepts' turnover dropped more than 26 per cent to HK$2.23 billion.

Even if the present adverse market environment failed to improve, the business was still expected to post double-digit sales growth from the second year onwards, Mr Poon said.

He declined to provide a breakdown of the HK$100 million investment, citing commercial confidentiality. However, he said the company had not paid any goodwill premium for the acquisition.

He also refused to say whether the Taiwan operation was presently profitable.

'Given no solid financial information has been given, it is difficult to tell whether this is a good deal,' said one retail sector analyst.

Under the listing rules, only transactions with a value exceeding a certain ratio based on a company's assets or net profit need to be disclosed.

The analyst said the Benetton deal appeared to indicate that the upmarket retailer intended to add more lower-end brands to its stable in an attempt to boost sales.

Following the Benetton expansion, the total number of retail outlets Dickson Concepts controls in the region has increased to 308, of which 60 are in Hong Kong, 162 in Taiwan, 22 in Singapore and 64 in China.

The company is known for distributing high-end brands such as Chopard, Ralph Lauren, Tod's and Brooks Brothers.

In another expansion for the firm, Mr Poon said the company planned to open a second Seibu department store in Shenzhen by the end of next year, with an investment of up to HK$100 million.

He said it aimed to replicate the success of the first store, which the company acquired in 1996.

Meanwhile, the company said it had cut directors' salaries by more than 10 per cent in October.

'It is important for every retailer to maintain the strongest possible financial health,' Mr Poon said.

Total directors' remuneration at Dickson Concepts rose 52.07 per cent to HK$25.09 million in the year to March 31, despite a 62.87 per cent fall in net profit to HK$56.22 million.

Mr Poon said the company had no immediate plan to impose pay cuts for other staff.

But under the present sentiment, 'we absolutely do not rule out that possibility in the future', Mr Poon said.



Deal seals exclusive rights to Benetton and other brands plus management of 75 shops