Bauhaus profit plummets on sluggish Mainland China

By

Benjamin Fitzgerald

Published
Jun 30, 2016

Hong Kong apparel retail group Bauhaus reported a dive in full-year profits against the backdrop of a fatigued domestic market triggered by was triggered by a combination of unfavourable factors, including mainland China’s uncertain economic prospects.

Revenue for the year ended March 31 was HK$1.513 billion ($195 million) compared to HK$1.592 billion the previous year, while net profit plummeted to HK$52.9 million, from HK$129.4 million last year.

In a press release, Bauhaus blamed mainland China’s uncertain economic prospects, the instability of financial markets and the appreciation of Hong Kong dollars against other Asian currencies.

The group went on to say that despite the tough environment, damage control was implemented via a "low gearing ratio as well as a strong balance sheet" as the group continued to "improve productivity, reconstruct workflows, shorten the procurement cycle and tighten inventory control".

Bauhaus has also been exploring opportunities in prospective business development. It managed to renovate self-managed stores on the mainland, turning them into 'Salad' specialty stores.

Bauhaus plans to further develop its eCommerce side, it added, and will bolster ties with major platforms in China, such as Tmall. It will also encourage take-up of its mobile application, introduced in March.

Underperforming stores in Hong Kong - where rents are expensive - will be closed over the coming year, but new sites in prime locations will be considered, it said.