Bossini reports Bossini $12m interim loss
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Apparel brand Bossini International Holdings remains optimistic despite a slip in revenue and profit turning to loss for its six months to the end of December.
It says growth is projected to continue rising in emerging markets and developing economies, supported by a favourable global financial environment and a concomitant recovery in advanced economies.
“The regional picture is particularly encouraging as expansion in Mainland China and other parts of Asia remains solid, reflecting the strength of a broad-based upturn that saw global growth reaching its strongest rate since 2011. Mainland China is spearheading this long-overdue regional expansion, its economy having grown following two years of decline.
“Hong Kong’s apparel retailing industry seems to have bottomed out after shrinking for consecutive years. Nonetheless, various downside risks remain evident, including geopolitical tensions, sudden capital outflows, policy indecisiveness and a sharp adjustment in Mainland China.”
Bossini’s revenue for the six months fell by 5 per cent to HK$974 million (US$124 million), with gross profit slipping 1 per cent to $512 million.
The group’s operating loss was $10 million with a -1 per cent operating margin, down from a positive 2 per cent a year earlier. Loss for the period attributable to the owners was $12 million, a switch-around from a $17 million profit 12 months earlier.
Economic backlash
Bossini says it weathered economic backlash from the China government’s “one trip per week” policy, more in-depth travel instead of retail shopping, and changes in tourist buying patterns. These factors hit retail sales in Hong Kong and Macau, which accounted for more than half of the group’s consolidated revenue.
The drop in profit attributable to the owners was mainly because of the decrease in the profit derived from the retail and export franchising business in the Hong Kong and Macau segment. There was a 5 per cent drop in overall revenue and a 2 per cent decline in same-store sales for the period. However, same-store sales rebounded in the second quarter, particularly in China and Taiwan.
“Bossini’s revenue for the six months fell by 5 per cent to HK$974 million (US$124 million), with gross profit slipping 1 per cent to $512 million.”
Gross margin improved by two points to 53 per cent.
Same-store sales in Hong Kong and Macau and Singapore declined by 4 per cent, an improvement over a 6 per cent decline the previous year, and 8 per cent (no change) respectively. Same-store sales in Mainland China and Taiwan grew 9 and 5 per cent (both had 2 per cent declines previously).
Overall, same-store sales slipped by 2 per cent, an improvement on the previous period’s 6 per cent decline.
At the end of the six months, the group had a presence in 29 countries and regions with total 940 stores, the same as at June 30. The number of directly managed stores dropped by two to 282, while the number of franchised stores was 658, up two.
Hong Kong/Macau remained the group’s core market and major contributor to the total revenue. A new outlet lifted the overall total number of stores to 41 while the export franchising business added five stores to the global network, taking the total to 656 across 25 countries.
Mainland China had 166 stores (down two) comprising 164 directly managed stores and two franchises. Two non-performing stores in both Taiwan and Singapore were closed, giving both markets 16 outlets.
During the six months, the group continued to launch its “on-the-go” collection to ride on the athleisure trend.
Questions & Answers
Q.What were the main financial results for Bossini in the six months to December?
What were the main financial results for Bossini in the six months to December?
Bossini reported a revenue drop of 5 per cent to HK$974 million and an operating loss of $10 million. The loss attributable to owners was $12 million, compared to a $17 million profit the previous year.
Q.What factors did Bossini identify as contributing to the drop in profit?
What factors did Bossini identify as contributing to the drop in profit?
The company attributed the profit drop to economic backlash from the China government's 'one trip per week' policy, changes in tourist buying patterns, and a decrease in profit from the Hong Kong and Macau retail and export franchising business.
Q.Which regions showed improvements in same-store sales during the period?
Which regions showed improvements in same-store sales during the period?
Same-store sales rebounded in the second quarter, particularly in Mainland China and Taiwan, which saw growth of 9 per cent and 5 per cent respectively. Hong Kong and Macau also improved their decline rate.
Q.How did Bossini's store count change during the six-month period?
How did Bossini's store count change during the six-month period?
The total number of stores remained at 940, with directly managed stores dropping by two to 282 and franchised stores increasing by two to 658. Some stores were closed in Taiwan, Singapore, and Mainland China.
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