Turn Off 11 Shops And Make Profits In The Interim.

Li Bang (00891) announced its interim results in 2019, achieving a revenue of about HK $1 billion 29 million, an increase of 15.6% over the same period last year. Shareholders should earn 76 million 600 thousand Hong Kong dollars, a loss of 197 million Hong Kong dollars in the same period last year.

Among them, the retail sales in the mainland of China amounted to HK $318 million, a decrease of HK $68 million 900 thousand compared with the same period last year. This is mainly due to the continuous closure of poor shops by the group, which resulted in the close of 11 shops during the period. As of June 30, 2019, the number of shops was 152. In order to improve its long-term profitability, the group adjusted its retail price and reduced sales discounts. The change in pricing strategy led to a 9% drop in same store sales. This resulted in the improvement of gross margin from 67.2% to 72.3%. Although the new strategy exerted a temporary pressure on retail sales growth, the overall segment contribution improved from HK $10 million 200 thousand in June 2018 to HK $32 million 400 thousand in June 2019.

Retail sales in Hongkong and Macao are HK $232 million, which is HK $39 million 700 thousand lower than the same period last year. The number of stores decreased from 36 in December 2018 to 32 in June 2019. The same store sales decreased by 11.2%, which is similar to that in the mainland of China. The decline is also due to changes in pricing strategy. Gross profit margin increased from 70.4% to 75.3% in the first half of 2019. The contribution of segment improved from HK $10 million 600 thousand in June 2018 to HK $20 million in June 2019.

Retail sales in Taiwan, China, were HK $57 million 600 thousand, down from HK $12 million 800 thousand in the same period last year. In June 2019, the number of stores decreased slightly from 2 to 40. Although the same store sales fell by 19.4%, the gross profit margin increased from 65.1% to 68.5%, and the contribution of the division improved from HK $1 million 900 thousand in June 2018 to HK $2 million 600 thousand in June 2019.

Retail sales in Europe were HK $61 million 300 thousand, down 9.8% from the same period last year. The main reason is the closing of poorly performing shops and the depreciation of the pound and the euro.

The announcement said the group has put more resources into the development of wholesale business in the future. Wholesale income rose significantly from HK $11 million 700 thousand in June 2018 to HK $288 million in June 2019. Wholesale income and gross profit rise are due to the introduction of new distribution partners and business customers in mainland China and other countries.