I.T Announced The 2019 China Daily: Hongkong Branch Or Revenue, Gross Profit Double Reduction "Culprit"

Recently, I.T, a listed company of the Hong Kong Stock apparel industry, released its interim report in 2019. It released the interim results of I.T as of August 31, 2019. The reporter combed the turnover and profits in the reporting period.


During the reporting period, the total assets of each branch of I.T were HK $7 billion 821 million, of which the total assets of Hongkong and Macao were HK $3 billion 339 million, the total assets of the mainland market were HK $3 billion 452 million, the total assets of Japan and the United States were HK $945 million, the total assets of other markets were HK $86 million, and the total assets of each division increased from 28 to 28 in February 2019.


However, since the second half of last fiscal year, the group's retail sales have slowed down. The total turnover of the group decreased by 1.2% to HK $4 billion 15 million 400 thousand, a net loss of HK $71 million 200 thousand in the period, compared with HK $113 million 400 thousand in the same period last year. In addition, the gross profit margin of the group decreased by 4.1% compared with the same period last year, and the gross margin decreased by 1.9% to 62.1%.


What is the reason for double profit reduction in the I.T reporting period? We are sorting out the districts.


"Top students" are steady and steady.


The report shows that the total turnover in mainland China increased by 0.8% to HK $1 billion 870 million, accounting for 46.6% of the total turnover of the group. Gross margins rose 0.4 percentage points to 61.3%. The continued growth of sales is mainly due to the growth of comparable stores and the further expansion of online stores. Due to the depreciation of the renminbi, most sales growth in the mainland area has been offset by the sale of Hong Kong dollars to the Hong Kong dollar. But the development of e-commerce still makes the sales contribution of the mainland business continue to grow. The flagship store of many brands has developed rapidly, and the influence of the online and offline businesses has been expanding continuously. The development of the Tmall flagship store has been developing rapidly.


"Overseas students" foster strengths and circumvent weaknesses


The total retail sales in Japan and the United States increased from 5.7%% to HK $607 million, accounting for 15.1% of the total turnover of the group. Gross margin fell 2 percentage points to 70.8%. The business continued to grow strongly for several years as a result of strong support from the main brands in North America and new European cities. The drop in profits is related to the pre opening expenses of the main brand London new store, which will be officially launched next year to further expand the market's influence.


"Top student" becomes "crane tail".


The Hongkong and Macao markets, which have always been the main force of the group, are not satisfactory during the reporting period. Total turnover decreased by 6.3% to HK $1 billion 481 million, accounting for 36.9% of the total turnover of the group. Due to the complex economic environment, various factors have had a negative impact on the sales of Hongkong and Macao markets.


The reasons for the decline in sales are more macro, and the social instability caused by the continuous escalation of Sino US trade tensions, the social conflicts caused by geopolitical conflicts and the resulting decrease in the number of inbound passengers and the decline in consumption intention have all produced adverse effects, which not only caused regional market sales to drop, but also made the total turnover of the whole group grow negatively. The main reason for the decline in gross profit margin is mainly to launch discounts and preferential activities to stimulate sales earlier, resulting in a decline in operational efficiency. It can be said that business performance has a direct impact on the overall revenue of the group.

In addition, due to slower sales in Hongkong and Macao, the average inventory turnover period of the group increased by 8 days to 191 days compared with the same period last year.


Overall, the I.T group's mainland China market has been developing steadily, and the online and offline development has been developing simultaneously. The Japanese and US markets have also continued to grow steadily for many years. The market in Hongkong and Macao is rather difficult and faces many severe tests.


In the comprehensive report, I.T group said that under the global economic slowdown and under the continuous influence of international trade and geopolitical situation, the group will continue to invest in positive development plans to enhance long-term sustainable development and profitability, while focusing on cost control, cash generation and enhanced asset liability level.