Hongkong Retailers I.T Group Net Profit Fell 33%

According to reports, Hongkong multi brand retailer I.T group released the annual performance report as of February 29, 2016, the total turnover of the group increased by 5% to HK $7 billion 541 million, and net profit fell 33% to HK $203 million, after adjustment, down 7.6% to HK $274 million over the same period last year.

Last year,

Continue to face the challenging economic environment in the fashion retail market. Due to the turbulence of global financial market and the diminished desire for consumption and shopping in different regions, the impact of Hongkong market is particularly notable, because the Hong Kong dollar exchange rate is stronger than the major Asian currencies (including RMB), and the price of products is expensive, which reduces the number of visitors to Hong Kong.

In addition, the profitability has been further weakened, mainly because the cost of retail channels continues to rise and the reduction in sales area leads to a decline in income.

By region, sales in Hongkong dropped by 3.3% to HK $3 billion 459 million, while sales in mainland China increased by HK $2 billion 983 million to HK $16.4%. Japan's regional performance was strong, sales grew 19.3% to HK $517 million, while sales in Macao area edged up 0.3% to HK $222 million due to the drop in passenger numbers.

In addition, the unstable geopolitical situation and the warm weather in the winter of 2015 also led to a slowdown in group revenue and led to a slowdown in the group's income.

The power of seasonal demand recovery has weakened.

Although the I.T group's performance is in line with analysts' expectations, the turnover in Hongkong is still down by 3.8%. At the same time, the continuous increase in rents has led to a rise in the operating costs of the group, which is a great pressure on profit growth.

Although China's mild economic growth has put pressure on consumption growth, I.T Group continues to expand its retail network in mainland China.

At present, the I.T group's direct outlets in mainland China have expanded to 20 cities, and the group is preparing to further enhance its diversified fashion platform in mainland China.

The Japanese market benefited from a number of cross border cooperation activities with well-known fashion brands from different parts of the world, as well as the good performance of A Bathing Ape's brands, and the market performance remained strong.

In addition, the group and

The joint venture business continues to record sales growth, which helps to reduce the loss generated by the business.

Although the group's turnover grew by 5%, the gross profit margin fell by 1.6% to 60.6%.

The economic uncertainties faced by the operating area have led to a significant setback in consumers' desire for consumption in the current financial year. The main driving force of the fashion retail market in advertising has also led to a decline in the profit margin of the retailer.

As the global economic situation and the fashion retail environment can not pick up in the short term, the Group expects consumption power to be improved in real time.

Therefore, the market situation in 2016 should continue to be challenging and will be affected by the instability of the number of free travellers and the challenges of macroeconomic.

In addition, the issue of currency exchange rate will continue to affect consumer spending. Hongkong is particularly affected by exchange rate, but Hongkong will remain the largest market for I.T group.

Group investor relations and corporate finance director said that the group's discount pressure has doubled this year and has affected gross margins. Although the same store sales have been flat in the current fiscal year (since March), the proportion of profits and revenues in the first quarter has been relatively small, so the annual performance is still under great pressure, and it is not optimistic about the overall economic environment. There will be no special shop or shop opening plan this year.

After the announcement of the earnings report, I.T group's share price dropped 0.5% to HK $1.85 per share, with a market value of HK $2 billion 241 million.