Designer handbag outlet Milan Station, which is seeking an initial public offering, has no plans to purchase properties to cut costs even though its rent rose almost 40 per cent last year.
The second-hand bag trader is selling a total of 162.5 million shares in an IPO and has priced the shares between HK$1.17 and HK$1.67, raising up to HK$271.38 million.
The cost of operating outlets in Hong Kong's prime shopping locations such as Causeway Bay and Central, where most of its stores are located, have risen substantially.
Rental expenses surged 38.9 per cent from 2008 to HK$41.6 million last year, with the company paying on average HK$525,400 per sq ft for its Hong Kong stores.
Chairman and chief executive Byron Yiu Kwan-tat, who founded the handbag chain 10 years ago, said Milan Station would continue to rent its 14 stores in Hong Kong, Macau and Beijing. Rental expenses would be kept between 6 and 10 per cent of the company revenue, said Yiu, who will own 75 per cent of Milan Station after listing.
The company's revenue last year totalled HK$730.3 million, up 19.5 per cent from 2009.
Net profit grew 38.5 per cent to HK$54.3 million from 2009.