New World Department Store China, controlled by Cheng Yu-tung, said first-half net profit jumped 62.3 per cent, thanks to a surge in interest income and better sales driven by improved merchandise mix. Earnings for the six months to December rose to HK$227.8 million from HK$140.4 million a year earlier, boosted by interest income rising 11.5 times to HK$59.9 million from HK$5.22 million. Interest income was mainly generated from cash orders by retail investors for its initial public offering in July last year, from which the company raised HK$2.71 billion. Half-year revenue rose 36.9 per cent to HK$663.3 million from HK$484.6 million with commission from concessionaire sales gaining 23per cent to HK$443.53 million. Direct sales of goods rose 75.1 per cent to HK$88.6 million, boosted by strong growth in sales of cosmetics and Olympics-related goods. Same-store sales - a key performance measure for retailers - grew 27 per cent. NWDS China, which operates 18 self-owned stores and 13 managed stores, said it would continue to expand through acquisitions. 'The group has plans to open new stores in cities where we either have strong presence or see good prospects for retail store operations,' the company said. 'Meanwhile, more acquisitions are under consideration for managed stores that are making a profit.' Boosted by its listing, the firm's cash and cash equivalents reached HK$3.93 billion by the end of last year, or four times the previous period's total. Analysts said rising property prices and acquisition costs would be the biggest risks for the retailer. 'NWDS is actively seeking sites, but retail rents on new sites are escalating,' HSBC Global Research said in a report. 'There is a clear risk that NWDS will not be able to secure suitable retail space from new stores at reasonable lease terms.' Shares of NWDS closed down 1.54 per cent at HK$8.96 yesterday. No interim dividend was declared.
