Optical 88 struggles

Eyewear chain Optical 88 has suffered a 10.5 per cent slump in sales in the first half, with profit down 53.2 per cent.

According to the trading announcement of its parent company Stelux International, sales reached HK$579.1 million and EBIT $18.0 million.

The company says exchange rate fluctuations and the subdued Hong Kong and Macau markets contributed to the downturn, although the business remains profitable.

In Hong Kong and Macau turnover decreased by 8.9 per cent and profit by 32.6 per cent, despite efforts in cutting operating costs (other than shop rentals) by around 7.4 per cent. “The turnover performance was impacted by the softened demand from local customers and tourists but gross profit margin remained healthy and stable,” Stelux said in its filing.

In Mainland China, sales declined by a modest 5.3 per cent. The company says it is building on Optical 88’s professional and healthcare positioning, and will continue to expand the store network in Mainland China in the second half of this year. It aims to accelerate network expansion in the Southern and Southwest regions to further strengthen its market share, paving the way for further expansion into other parts of China.

Optical 88’s turnover in Southeast Asia dropped by 17.8 per cent (or by 7.1 per cent on a constant currency basis), and a loss of $11.5 million was recorded.

The introduction of GST in Malaysia in April caused turnover to slip in the first quarter, but the company made up the lost ground in the second quarter.

Store consolidation and productivity enhancement measures in Singapore paid off this year, with the loss narrowing by 10.7 per cent to HK$7.5 million through reduced operating costs.

The Thai operations are still profitable, but recorded a drop in turnover by 19.1 per cent caused by the significant decline in consumer confidence and purchasing power in Thailand.

“Severe competition driven by widespread sales promotions in the market has also led to narrowed margin. The tough market is expected to continue in Thailand, and we will… close non performing shops and continue with our cost control measures, which have reduced our operating costs by 15.7 per cent in the first half,” said Stelux in its filing.