Menswear clothing maker Goldlion Holdings expects to announce a return to the black in its results for last year and is likely to increase its dividend payout after two years of painful restructuring. In a bid to rejuvenate the company, Goldlion has launched sweeping management changes, significantly reduced its inventory levels and offered deep discounts to bolster its mainland distribution business. Chairman Tsang Hin-chi said the result for the last financial year to December 30, due to be announced next month, should see a return to profit. He also said that with HK$200 million cash on hand, shareholders would likely receive a higher dividend. The company's core business is distributing and manufacturing clothing, leather goods and accessories under the Goldlion trademark. Mr Tsang said apparel sales, largely from the mainland, might have reached HK$450 million last year. The company suffered a HK$19.84 million net loss for the six months to June 30 last year. To drum up orders, he said Goldlion had offered its menswear apparel to mainland department stores at a 35 per cent discount on retail prices, the highest discount being offered in the mainland wholesale market at the moment. The discount has increased from 15 per cent 20 years ago, reflecting a sharp squeeze on margins due to stronger competition. As an added incentive, clients could change 10 per cent of products ordered at the beginning of the year to minimise their risk, while customers who settled deals in cash received preferential treatment. The incentive scheme had been very effective in attracting more business as retailers enjoyed higher margins. Goldlion supplies menswear clothing to 212 outlets in China, mostly large department stores, according to Mr Tsang. The company's aggressive approach had led to a 30 per cent year-on-year rise in revenue from the mainland market. Mr Tsang said that the closure of a loss-making information-technology venture and stringent cost controls should have resulted in an overall improvement in sales. To boost its income, Mr Tsang said the group was exploring the franchising of its products and expanding into womenswear, although no decision on these ventures had been made. Graphic: gold06gbz
