Veeko International flourishes despite downturn
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While its peers suffer from Hong Kong’s lacklustre market, one retailer has achieved a stunning sales boost.
Veeko International operates 82 Colourmix and one Morimor cosmetics stores and 155 fashion stores in Hong Kong, Macau, Taiwan, Singapore and Mainland China under the Veeko and Wanko brands.
For the six months to September 30, Veeko International recorded a turnover of HK$1.066 billion – an increase of 23.6 per cent on the corresponding period of last year. Its cosmetics business increased sales by 33.7 per cent over the same period last year, accounting for 77.6 per cent of Veeko’s turnover. Sales in the fashion business slipped two per cent.
Profit attributable to shareholders reached HK$41.488 million – up 14.9 per cent on last year, driven by a 56.2 per cent increase in profit from the cosmetics business. The fashion business, meanwhile, recorded a $2.68 million loss, a 133.6 per cent downturn on the profit of $7.97 million for the same period last year, largely due to exchange rate losses from overseas markets including Taiwan, Singapore and Mainland China. At constant exchange rates the division would have recorded a profit.
Veeko says it will continue to expand its Colourmix store network, having added six in the first half.
A large part of the success of its cosmetics operations is an increase in the average sale from $358 per transaction for the same period last year to $377 per transaction for the current period, – a year-on-year increase of 5.3 per cent. The gross profit margin of cosmetics business for the
period was relatively unchanged at 35.7 per cent.
“Veeko says Hong Kong and Macau accounted for 78.8 per cent of the group’s total fashion retail turnover.”
Veeko’s fashion store network was down by a net 19 stores due to a revision of its store networks in Singapore, China and Taiwan.
Veeko says Hong Kong and Macau accounted for 78.8 per cent of the group’s total fashion retail turnover. Sales in the two territories rose 6.2 per cent year on year, but gross profit margin decreased by 1.7 percentage points to 71.8 per cent.
Taiwan fashion sales fell 24.9 per cent, due to the closure of eight stores, leaving it with 25 in the market. But same store sales grew by 6.4 per cent.
In Singapore, sales slumped 26.6 per cent, largely due to the closure of four stores, leaving it with just nine there. Same store sales in local currency slipped 2.6 per cent.
And in China, turnover fell 19.4 per cent, due to a net reduction of 10 stores, leaving it with 41.
Veeko says it expects the challenges faced by the retail business will continue during the next half year, with cautious consumption sentiments.
“The group… believes that opportunities exist alongside with challenges. In an environment which is full of challenges, the best policy is to uplift our competitiveness and lay a good foundation for sustainable growth in the future by maintaining healthy growth of the core business in the long run.”
Questions & Answers
Q.Which part of Veeko International's business is driving its overall sales growth?
Which part of Veeko International's business is driving its overall sales growth?
The cosmetics business significantly increased sales by 33.7 per cent over the same period last year. This segment accounted for 77.6 per cent of Veeko's total turnover and drove the overall sales boost.
Q.Why did Veeko's fashion business report a loss, despite an increase in sales in some regions?
Why did Veeko's fashion business report a loss, despite an increase in sales in some regions?
The fashion business recorded a loss of $2.68 million, largely due to exchange rate losses from overseas markets. At constant exchange rates, this division would have reported a profit.
Q.How did the average sale per transaction change in the cosmetics operations?
How did the average sale per transaction change in the cosmetics operations?
The average sale in cosmetics increased from $358 per transaction in the previous period to $377 per transaction for the current period. This represents a year-on-year increase of 5.3 per cent.
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