Joyce Boutique loses more from stagnant market

A stagnant luxury market has made it a tough half-year for fashion retailer Joyce Boutique Holdings, its interim results showing an HK$28.1 million (US$3.5 million) net loss.

This follows a HK$16.6 loss for the same period last year.

The group says its results were also impacted by low visitor traffic from Mainland China as well as the closure of shops in the previous financial year. This was mitigated by the inclusion of a $5.8 million write-back of an “onerous contract provision” made for the Joyce shop at Shanghai IAPM plus the savings in running costs.

Turnover dropped by 19.4 per cent to $386.7 million for the six months. Gross margin also fell by 1.5 points, mainly a result of a higher number of warehouse outlet sales during the period.
Hong Kong turnover dropped by 15.8 per cent and accounted for 88.7 per cent of group turnover.

The division pushed out its operating loss from $8.5 million the previous first half to $27.2 million, primarily caused by the decline in turnover coupled with the drop in gross margin.

With difficult trading conditions and the closure of loss-making shops in previous year, China turnover dropped 40 per cent, but with cost efficiencies and the contract write-back, the division managed to make an operating profit of $1.6 million, a turnaround from a $6.9 million loss for the same period last year.
Loss contribution from the Marni JV business increased from $400,000 to $600,000, mainly because of a drop in turnover.

In July, the group opened Joyce Beauty shop in Yuen Long Yoho Mall to extend its customer base to the West and North Territories and Shenzhen. At the same time, two non-performing shops were closed when their lease expired.

The group says its expects the retail environment will stay challenging in the near term as online specialty fashion retailing continues to impact on its core retail business. Rental levels in prime shopping malls, meanwhile, remain high relative to turnover.