Boshiwa plans more outlets in bid for No 1 spot

PUBLISHED : Monday, 24 January, 2011, 12:00am
UPDATED : Monday, 24 January, 2011, 12:00am

Boshiwa International Holding, a mainland maker and retailer of children's products, plans to increase retail space by 50 per cent this year to further tap the fast-growing 200 billion yuan (HK$236 billion) market.

The Shanghai-based company, which raised HK$2.5 billion in a Hong Kong initial public offering in September last year, also aimed to open its first overseas outlet in the city by next year, chairman and chief executive Zhong Zhengyong said.

Boshiwa operates out of 90,000 square metres of retail space in about 1,000 outlets. The outlets are in department store concessions, street shops and mega flagship stores in more than 130 mainland cities.

In order to achieve a targeted, annualised sales growth of 50 per cent, Zhong said the company needed to not only expand its presence in more second and third-tier cities, but to shore up same-store sales by adding new products to attract children.

Boshiwa produces self-owned brands, such as a namesake brand and one called 'Dr Frog'. It also makes and markets licensed brands including Harry Potter, Prince of Tennis and NBA.

'We are always looking for the No 1 spot in the market,' said Zhong. 'Boshiwa is more than my son. And I'm devoting myself to this promising industry.'

The mainland's baby products market has grown by an annual average of 20 per cent in recent years, and sales last year probably hit 200 billion yuan.

According to a report by consulting firm Frost and Sullivan, sales of children's products including garments and toys reached 165 billion yuan in 2009.

Boshiwa has a 4 per cent share of the market.

'We must balance the growth of sales and a stable level of profit growth,' Zhong said. 'Profit margins must be closely watched when we expand aggressively.'

The increasing number of outlets has resulted in higher discounts offered to customers, reducing the gross profit margin from 56.7 per cent in 2008 to 42.3 per cent.

The company has yet to publish its earnings report for last year, but Zhong said the overall gross margin was likely to be at least 40 per cent.

At the weekend, Boshiwa opened a 4,000 square metre flagship store in Shanghai's Wujiaochang area.

Boshiwa shares soared 41 per cent to HK$7.02 during their trading debut on September 29. The stock closed at HK$5.66 on Friday.