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RETAIL | Tony Chua, Hong Kong
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Bauhaus 2010 profit up to HK$115.5mn

The Group targets to further penetrate into China market by opening 20 to 30 shops in prime cities including Beijing, Shanghai, Guangzhou and Nanjing.

Bauhaus International (Holdings) Limited (“Bauhaus”) on Tuesday announced its annual results for the year ended 31 March 2011.

Financial Review
During the year under review, the Group recorded an aggregate turnover of HK$1,011.7 million (FY2009/10: HK$793.8 million), a strong growth of 27.5% over the last year. Enacting certain effective measures, the Group was capable of managing its overall gross margin at a relatively high and stable level at 70.0%. Net margin also increased by 0.9 percentage point to 11.4%. Basic earnings per share was HK32.14 cents (FY2009/10: HK23.10 cents).

In recognition of shareholders’ continuous support, the Board has recommended the payment of a final dividend of HK10.7 cents along with a special dividend of HK5.0 cents. Combined with an interim dividend of HK2.0 cents already paid, total dividend for the year will be HK17.7 cents, representing a dividend payout ratio of about 55.1%, which is in line with the Group’s policy to distribute not less than 40% of net profit as dividend, according to a Bauhaus report.

Mr. George Wong, Chairman of Bauhaus, said, “Throughout the past year, the economy has continued its recovery from the financial downturn. We believe that the overall market has reacted positively, impacted by the spending sentiment as well as a low currency standing in the Mainland China. We are particularly thrilled that Bauhaus’ turnover for the first time exceeded HK$1 billion level, and our net profit continued to hit record-high. Although operation challenges such as rent, labour and other operating expenses continued to present themselves, our network expansion has proved to be a success, containing the various costs and sustaining profitability.”

Future Plans
With ample opportunities continuing to emerge in Mainland China, the Group will seek to further bolster its stature in already established areas of Mainland China by opening approximately 20 to 30 shops in FY2011/12. Specifically, efforts will be made to fortify its self-managed retail network, which covers prime cities including Beijing, Shanghai, Guangzhou and Nanjing. For franchise business, other than actively seeking potential partners, the Group will continue its strategy of directing resources toward nurturing franchisees that have shown high potential. In particular, technical support and training will be provided to these franchisees so that they can better weather volatile market conditions.

The Group has long been committed to nurturing up-and-coming brands that are able to satisfy the needs and tastes of individuals; ultimately delivering quality fashion to different parts of the world. Drawing from its experience in successfully launching “TOUGH Jeansmith” and “SALAD”, the Group shrewdly opened specialty stores for selected popular labels, including the licensed brand “SUPERDRY” and is set to open a flagship store in Hong Kong in the third quarter of 2011. Having realized encouraging results, the Group will maintain growth momentum by targeting to unveil about 10 to 20 self-managed retail stores in Hong Kong, Macau and Taiwan in the coming year.

The Group will also closely monitor the latest market trend and enhance its product mix by raising the proportion of high-value popular items, such as colorful leather jackets that have been a proven success, thus further stimulate sales growth.

“Looking forward, the management remains cautiously optimistic about the Group’s growth potential, buoyed by robust economic development in Asia, and in particular, Mainland China.

However, the inflation and rising operating costs in Mainland China and other regions the Group operates have remained a great concern. With a more flexible cost structure and strategic expansion measures in place, Bauhaus is ready to embrace every opportunity and overcome every challenge ahead.” Mr. Wong concluded.

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