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H1 EBITDA up at Bosideng but operating profits down
Dec '14
EBITDA at the largest down apparel company in China, Bosideng International rose 11.9 percent from a year ago period, but operating profit slipped 10.7 per cent in the six months to September 30, 2014 period.

Bosideng said, as a result of proactively controlling operating expenses during the period, group EBITDA increased by 11.9 per cent to RBM473.4 million, year on year in the first half of fiscal 2014-15.

However, the group's operating profit declined 10.7 per cent to RMB306.6 million, while operating profit margin too shrank 10.8 per cent, down 1.4 percentage points from same period of previous fiscal year.

According to Bosideng, the decrease in operating profit and also operating profit margins was mainly due to the one-off impairment of goodwill for apparels of menswear and ladieswear.

During the period under review, group's revenue increased by 1.4 percent year on year to approximately RMB2,849.5 million.

“The increase of revenue is mainly attributable to a 54.8 per cent rise in OEM management business sales, as a majority of orders in the fiscal year was completed and delivered by the end of September,” the apparel retailer said.

It added, “However, we focused on clearing inventory in the down apparel business, as well as re-positioning the brand, which led to sales in the down apparel business recording a decline.

During the reporting period, sales of down apparel business, OEM management business and non-down apparel business were RMB1,418.4 million, RMB1,011.2 million and RMB419.9 million respectively, accounting for 49.8, 35.5 and 14.7 per cent of group revenues.

Gross profit margin decreased by 2.0 percentage points from the year earlier period to 47.4 per cent in the first six months of 2014-15.

“This is attributable to the 5.2 percentage points decline in non-down apparel gross profit margin and the 2.9 percentage point fall in gross profit margin of OEM management business,” Bosideng added.

However, gross profit margin of down apparel surged 9.1 percentage points year on year, driven by hike in proportion of Bosideng branded apparel sales with higher gross profit margin.

The Bosideng board recommended payment of an interim dividend of HKD1.2 cents per ordinary share for the six months ended September 30, 2014.

As of September 30, 2014, the total number of retail outlets fell by 3,436 to 8,216 as against those at the end of March 2014, primarily from rationalisation of its retail network.

In addition, the group also closed stores which failed to meet its sales expectations or unable to meet its requirements in terms of brand image and services.

Gao Dekang, Chairman at Bosideng, said, "Bosideng will strive to stay up to date on the market trends and thus enhance the competitiveness to maintain a sustainable and healthy growth for the long term." (AR)

Fibre2fashion News Desk - India

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