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Q3 revenues dive 20.9% at Zuoan Fashion
Dec '14
Revenues for the third quarter ended September 30, 2014 at Zuoan Fashion Limited, a leading Chinese fashion casual menswear company, dived 20.9 per cent year on year.

Zuoan said its sales in the third quarter of 2014 amounted to RMB 301.1 million or $49.1 million, down 20.9 per cent from RMB 380.5 million in the same quarter of 2013.

The decrease was primarily driven by decreased sales volume; lower wholesale prices offered to its distributors as well as reduced pricing at the retail level, due to a slower Chinese economic environment.

Gross profit in the reporting quarter too nosedived 45.6 per cent year over year to RMB 84.8 million or $13.8 million from RMB 155.8 million in the same quarter of 2013.

Gross margin too fell to 28.2 per cent compared with 40.9 per cent in the prior year quarter and 30.0 per cent in the second quarter of 2014.

Zuoan attributed the decline to lower wholesale pricing from 35 per cent to 33 per cent offered to its distributors as well as decreased pricing at the retail level.

Zuoan reported a net loss of RMB 14.1 million or $2.3 million in the period under review as against net income of RMB 23.0 million in the corresponding quarter of previous year.

Diluted loss per ordinary share was RMB 0.13 or $0.02 in the third quarter of 2014 compared to diluted earnings per ordinary share of RMB 0.21 or $0.03 in the year earlier period.

Founder James Hong said, "A major new initiative for Zuoan going forward focuses on the integration of our supply chain structure to establish a brand new online-to-offline (OTO) business.

He added, “This October, we conducted a pilot program in which we launched a new and lower priced collection in twelve Zuoan stores, which is tailored according to fashion trends and sold at very competitive prices.”

“We believe the OTO business can serve as a model for Zuoan's future development and this experience will enable Zuoan to attract a new group of target customers,” he noted.

Third quarter of 2014, selling and distribution expenses totaled RMB 72.1 million or $11.8 million, or 24.0 per cent of revenue as against RMB 108.3 million or 28.5 per cent of revenue in the same quarter of 2013.

“Selling and distribution expenses and percentage decreases were mainly due to lower advertising expenses, offset by an increase in renovation costs of the existing stores,” it said. (AR)

Fibre2fashion News Desk - India

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