Le Saunda closes stores as profit goes red

Struggling shoe and accessories retailer Le Saunda has shuttered more than 100 stores on Mainland China in the last year as it tries to reduce overheads and return to profit. Group sales fell 14.4 per cent in the first half of this year, to RMB 460.4 million, (US$66.1 million), gross profit margin slipped 3 per cent and the company recorded a loss of RMB 9.6 million (US$1.4 million), compared with a profit of RMB22.9 million in the same period last year.

The company blamed a slowing of retail sales in Mainland China for its poor result, with same-store sales down 10.2 per cent, as well as a decline from the closure of unprofitable stores.

On the mainland, Le Saunda shuttered 96 of its self-run stores, cutting its network back to 549 and a further eight franchised outlets were closed, leaving a total network of 611.

In Hong Kong and Macau, where sales rose 4.5 per cent, it closed one store leaving 10.

Le Saunda chairman James Ngai said the company’s reduced gross profit margin was a result of lowering prices to meet market demand. The growth rate of fashionable ladies’ footwear sector had “slowed down significantly” on the mainland, Le Saunda’s core market, he said.

“With a change in customers’ buying behaviour, the e-commerce segment experienced rapid expansion, striking a tremendous hit on the sales of traditional retail stores.

“To cope with the ever-changing market environment, the group is fully committed to enhancing product quality, promoting a new pricing model, enhancing consumers’ shopping

experience and thereby improving same-store sales,” said Ngai.

“Facing the challenges posed by the economic environment, the group is determined to [return] to the basic principles of retailing, which include adjusting the pricing strategy, closing down low-profit stores, and actively exploring its franchise and wholesale businesses.”

With Hong Kong and Macau sales up, totalling RMB 30.7 million, Ngai said the group would pursue growth there “in a proactive yet prudent manner and establish new stores in desirable locations”.

Le Saunda designs manufactures and retails shoes and accessories under the Le Saunda,

Linea Rosa, Pitti Donna and CNE brands.