Bossini International revenues down 8% in H1 FY'13

Revenue for the Group for the six months ended 31 December 2012 decreased by approximately 8% to HK$1,334 million (2011: HK$1,447 million). Gross profit for the period under review was HK$636 million (2011: HK$715 million), resulting in a reduced gross margin of 48% (2011: 49%).

Profit for the period attributable to owners was HK$34 million (2011: HK$59 million). EBITDA for the period under review was HK$85 million (2011: HK$122 million), while basic earnings per share were HK2.10 cents (2011: HK3.62 cents).

The Board of Directors declared the payment of an interim dividend of HK0.63 cent per share and a special interim dividend of HK1.05 cents per share for the six months ended 31 December 2012.

The Group continued to maintain a healthy financial position with cash and bank balances of HK$344 million (2011: HK$370 million) and a net cash balance of HK$344 million (2011: HK$202 million) as of 31 December 2012. As at 31 January 2013, cash and bank balances increased to HK$378 million with net cash balance also expanded to HK$378 million.

During the first half of the financial year 2012/13, the global economy, clouded by the deep-rooted European debt, United States budget crisis as well as waning momentum in Asia and emerging markets, endured a feeble convalescence as economic weakness and uncertainty continued to mar the prospects of a recovery in consumer sentiment.

In this difficult climate, the Group experienced a modest decrease in sales, leading to a diminishment of profit due mainly to the dampened export franchising markets, widened loss incurred from the Taiwan operation and exorbitant rentals fuelled by fierce competition for prime shopping locations in Hong Kong.

Notwithstanding the formidable backdrop, the Group managed to drive record-high sales in its Hong Kong and Singapore markets, with Singapore market achieving a turnaround in operating profitability for the period under review. Meanwhile, the Group had inventory turnover days of 100 days (2011: 126 days), a 26-day improvement over the 31 December 2011 level and a healthy level especially at a time when the overall industry is plagued by high inventory levels.

The Group followed its pragmatic approach to expansion in light of continued global economic weakness and uncertainty during the period under review and at the same time continued to wind down its “b.style de flyblue” stores in mainland China, Hong Kong and Singapore and closed the under-performing stores.

In the export franchising markets, 7 stores were added during the period under review to a total of 550 (30 June 2012: 543) as it continued to take advantage of selected opportunities in certain markets. Overall, the Group had presence in 36 countries and regions as of 31 December 2012. Of the existing stores, 397 (30 June 2012: 523) were directly managed and 748 (30 June 2012: 791) were franchised stores.