The unending slowdown in the Chinese economy saw the net profit of men's casual apparel manufacturer China Xiniya Fashion plunging by 89.4 per cent at RMB6.0 million in the third quarter ended September 30, 2013 from RMB56.4 million in the year-ago period.
Revenue of the company decreased by 6.7 per cent to RMB389.8 million from RMB417.9 million in the third quarter of 2012, within the prior guidance range of (7) per cent to (2) per cent.
During the July-September quarter, gross margin shrunk to 29.7 per cent as compared to 34.5 per cent in the third quarter of 2012, dented by the reduced prices the company offered for its 2013 Fall/Winter Collections as well as the increased rebates offered to distributors and authorized retailers to further enhance their ability to compete in an increasingly challenging retail environment.
Interest and other income stood at RMB4.7 million in the third quarter of 2013 as compared to RMB5.5 million in same period last year, mainly due to the lower exchange gain during the quarter. Besides, earnings per ADS were USD 0.02 in Q3, FY14 as compared to USD 0.16 per ADS in Q2 FY13; within the prior guidance range of USD 0.01 to USD 0.06 per ADS.
With the gloomy economy and more stiff competition in Chinese retail market, Xiniya's network of authorized retailers witnessed a net reduction of 23 retail outlets in the third quarter of 2013; consisting of 78 new retail outlets opened and 101 retail outlets closed. As of September 30, 2013 the total number of authorized retail outlets was 1,635.
Commenting on earnings, Xiniya, Chairman and Chief Executive Officer, Qiming Xu said, “Our business continued to face significant challenges during the third quarter due to the continued softness of the Chinese economy and the aggressive discounting done by other menswear brands which has reduced the overall profitability of the industry as a whole.”
Expecting the impact of Chinese slow-down to be more profound in retail industry, Xiniya expects revenue to decline by (12) per cent in the fourth quarter of 2013 to (8) per cent compared to the fourth quarter of 2012. Meanwhile, earnings per ADS in the fourth quarter of 2013 are expected to be in the range of USD 0.05 to USD 0.09.