Hongkong Fashion Apparel Retailers Fell 8.6% In I.T2015

I.T Limited said sales of joint venture with Galeries Lafayette, Lafayette department store continued to grow, helping to reduce the loss recorded by the business by 30.8% to HK $13 million 900 thousand per year.

Due to previously announced exchange losses,

I.T Limited recorded a net loss of HK $31 million 252 thousand or a loss of HK $2.5 per share in the first half of August 31st.

The group said that in view of the difficulties in Sino Hong Kong business environment, the group decided not to issue interim dividend, while the group issued a medium-term dividend of HK $1 per share in the same period last year.

Excluding the loss of HK $79 million 600 thousand in non recurrent foreign exchange losses due to the sudden depreciation of the central bank in August 11th, the group pointed out that net profit should increase 32.8% to HK $48 million 600 thousand over the same period last year.

In August 12th, the group converted the 1 billion 187 million yuan deposit into Hong Kong dollar, aiming to minimize the risk that the renminbi would face in the future. As a result, it recorded a HK $66 million 800 thousand exchange loss and a HK $12 million 800 thousand currency conversion loss.

In the first half of this year, I.T Limited sales increased by 5.1% to HK $3 billion 392 million per year.

Sales in Hongkong, the largest market, fell 4.2% from HK $1 billion 586 million to HK $1 billion 586 million, due to a lack of local consumer spending and a slowdown in visitor arrivals. The share fell below 50%, from 51.3% in the same period last year to 46.7%.

Hongkong retail store sales recorded a 0.9% decline, showing that the two quarter continued to deteriorate compared with the first quarter (0.5%), and the sales area also decreased by 2.1% over the same period last year.

The sales ratio of mainland China rose to 42% from 37.8% in the same period last year, and the sales growth of 5.9% in the same store (3.5% in the first quarter) and the double digit growth of sales area increased by 16.9% to 1 billion 426 million per year.

Sales in Japan and Macao rose by 8.3% and 6.2% to HK $238 million and HK $101 million respectively.

During the period, the group took the initiative to increase discount promotions in response to the unfavorable business environment in Hongkong and Mainland China.

A sharp regression of 220 basis points to 59.7%.

Hongkong's gross profit margin plunged by 370 basis points to 56.9% while operating costs increased significantly due to the increase in rents. In the first half of this year, the operating profit of HK $3 million 200 thousand was converted to a loss of HK $91 million 400 thousand in the first half of last year.

In mainland China, the decrease in operating costs offset the decline in gross margins and operating profits increased by 160.9% to HK $78 million 200 thousand.

Japan's operating profit rose 54.7% to HK $94 million 700 thousand compared to the same period last year, and Macao recorded a HK $31 million 800 thousand operating profit, up 2% over the same period last year.

I.T Limited and Galeries Lafayette

The joint venture's sales continued to grow, helping to reduce the loss recorded by the business by 30.8% to HK $13 million 900 thousand per annualized year.

In the first half of August 31st, stock turnover in Japan was shortened to 168 days, down 9 days from the same period last year.

(0999.HK) on Wednesday, it closed at HK $2.01, a slight increase of 0.50% over the whole day. Since its earnings warning in August 13th, it has fallen by 20.9%, which has fallen 8.6% in 2015.