Trinity performs satisfactorily under adverse conditions

27 Aug '12

5 min read

The Group acquired Gieves & Hawkes Group at an estimated aggregate consideration amounted to approximately HK$719.9 million, including a paid initial consideration of GBP32.5 million (approximately HK$402.3 million), and a contingent consideration of HK$317.6 million payable over 18 years which is subject to a cap of HK$ equivalent of GBP60.0 million (approximately HK$753.3 million).

The Group’s gross margin decreased by 1.6 percentage points in the first half of 2012 to 79.2%, compared to 80.8% in the first half of 2011. The decrease in margin reflected a cyclical slowdown in the market.

Selling and marketing expenses, expressed as a percentage of revenue, increased from 41.3% to 44.5% year on year. The increase was attributable to higher investment in brand building, advertising and promotion expenses which increased from 4.8% of revenue in the first half of 2011 to 6.1% in the first half of 2012. Higher store operating expenses, especially shop staff wage adjustment in the Chinese Mainland, were also a contributory factor.

Administrative expenses decreased from 17.8% to 15.3% of revenue year on year. This was mainly due to adjustment on staff related compensation. Operating profit increased slightly from HK$298.3 million to HK$303.6 million as a result of an increase in revenue, but this was partially offset by the impact of lower gross profit margin and an increase in operating expenses.

Retail revenue growth in the Chinese Mainland and Hong Kong & Macau were 9.3% and 9.6% respectively, while the retail market in Taiwan recorded negative growth of 4.8%. Cerruti’s worldwide licensing businesses and retail operations in Paris contributed approximately HK$64.9 million of revenue in the first half of 2012, compared to HK$39.0 million in the second quarter of 2011 since its acquisition in April 2011. Revenue from Gieves & Hawkes Group in the United Kingdom in the first half of 2012 was approximately HK$37.6 million since its acquisition in May 2012.

The Group recorded a slight decline in its retail gross margin in Greater China to 79.3% due to the weakened market environment. The retail gross margin for Hong Kong & Macau, the Chinese Mainland and Taiwan was 80.2%, 79.4% and 74.5% respectively.

The retail and licensing gross margin for Europe were 58.4% and 100.0% respectively.

Building Brand Equity as the Group continues to develop its global portfolio of high-end to luxury menswear, creating brand equity is more important than ever in an increasingly competitive retail environment.

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The Group is principally engaged in the retail and wholesale of menswear under self-owned brands and licensed brands in the Greater China Region, retailing and licensing businesses in Europe, and its jointly controlled entities are retailers of luxury fashion and accessories in South Korea and Southeast Asia.

Trinity Limited