HK Fashion Brand Company Sees Luxury Fashion Demand Dip

Sitoy Group Holdings Limited (the “Company”, together with its subsidiaries, the “Group”; stock code: 1023), a brand management and retailer, and large-scale outsourced manufacturer of luxury handbags, small leather goods and travel goods, is pleased to announce today its annual results for the financial year 2015/2016 (“FY2016”).


During FY2016, the Group’s revenue decreased by 16.1% year on year to HK$2,837.0 million. This decrease was primarily attributable to the decrease in demand from the high-end and luxury brand customers. However, the impact was partially offset by an increase in retail segment sales.


During the year, due to stringent cost control, as well as depreciation of the RMB against HK dollar, the Group’s gross profit margin increased slightly to 27.0%, while profit attributable to owners of the Company decreased by 10.1% year on year to HK$370.1 million.

The Group’s basic earnings per share were HK36.96 cents for the year. The Board recommended the payment of final dividend of HK13 cents and special dividend of HK15 cents per share for the year ended 30 June 2016.


Commenting on the Group’s results, Mr. Teras Yeung Wo Fai, Chief Executive Officer of the Company, said, “During the year, against the backdrop of weak global consumer sentiment, various major brands not only placed their focus on destocking, but also adopted an increasingly conservative attitude in placing their orders for the coming season. As a result, the Group’s results of operations inevitably came under pressure. To maintain consistent quality and services to its customers, the Group will continue most of its manufacturing operations in China despite rising labour costs, mainly due to their higher level of craftsmanship and well-developed supply chain and logistic facilities. Leveraging the Group’s enhanced operational efficiency of its retail network, despite the overall sluggish retail environment, the retail business achieved stable growth during the year. Moreover, with the reinforcement by the Group’s promotional and marketing campaigns across the on-line and off-line sales channels to build up the brand image of TUSCAN’S and Fashion & Joy, together with the implement of cost control policies, the retail business has recorded pleasing results for the year. The Group continuously upgrades itself to meet ever-changing requirements of both existing and new customers. For the year under review, the Group has made its best endeavours to tap new opportunities under a challenging business environment.”


During the year, revenue from manufacturing business decreased by 15.4% year on year to HK$2,767.9 million which was mainly due to decrease in demand for high-end and luxury brand products in the worldwide market. However, new orders generated from the Group’s effort in actively developing businesses with certain high-end and luxury brand names in international and China markets, have partly offset effects of lower demand from existing customers.


During the year, the Group’s retail business continued to grow and diversify. Revenue from the retail business increased by 10.3% year on year to HK$119.6 million, demonstrating enhanced operational efficiency of its retail network. Revenue from the retail business accounted for 3.35% of the Group’s total revenue, a relatively stable level as compared to FY2015. As of 30 June 2016, the Group owned and operated 51 retail stores, of which, 6 stores were situated in Hong Kong, 1 in Macau and the remaining in China.


During the year 2016, the Group has obtained the exclusive license rights from two international brands, Kenneth Cole and Bruno Magli. By obtaining the license rights, the Group has successfully diversified and enriched its retail brand portfolio. With the addition of Bruno Magli and Kenneth Cole to the Group’s retail portfolio, the Group reached the goal of multi-brand development.


Commenting on the prospects, Mr. Michael Yeung Wah Keung, Chairman of the Group said, “Looking ahead, with stalled recovery of the China economy and uncertainties stemming from the worldwide markets, coupled with keener competition in the industry, the Group is well-equipped to face the upcoming challenges. To withstand this difficult environment, the Group will continue to step up its efforts in research and development of its products and technologies. Moreover, the Group shall source quality raw materials with competitive price, and continue to optimise and streamline production procedures to boost competitiveness of the Group and satisfy brand customers’ demands. Meanwhile, the Group will increase the proportion of the development of retail business by actively growing its existing brands, TUSCAN’s, Fashion & Joy, Bruno Magli and Kenneth Cole in both China and Hong Kong, while adopting a prudent approach in seeking ideal locations for new stores, and enhancing operations and efficiency of its existing stores. In order to optimise its product and brand portfolio, the Group will actively capture business opportunities by acquiring suitable high-end luxury brands. Despite mounting challenges and a difficult operational environment in the coming year, the board of directors is confident that it can weather the storm and grow further.”