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Public company info - Forward Fashion (International) Holdings Company Limited , 02528.HK
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Forward Fashion (International) Holdings Company Limited, 02528.HK - Company Profile
Chairman Fan Wing Ting
Share Issued (share) 400,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Apparel
Corporate Profile Business Summary: The group is principally engaged in the fashion retailing in Hong Kong, Macau and the People’s Republic of China. Performance for the year: For the year ended 31 December 2019, the revenue of the Group amounted to HK$1,514 million, representing an increase of 12.6% as compared with HK$1,345 million for the year ended 31 December 2018. The net profit for the year amounted to HK$37.8 million (2018: HK$108.6million). Business Review The Group’s revenue increased to HK$1,513.8 million for 2019, representing a 12.6% increase from 2018, which was mainly due to the growth in the sales of the Group’s self-operated retail stores in Macau and Mainland China, resulting from a combined effect in the increase of average sales floor area, to 33,690 sq.m., or a 11.8% increase from 2018, and the increase in the number of brands operated by the Group in its mono-brand stores to 29 brands, a net increase of one brand from 2018. The growth rate of revenue for 2019 was 13.5% lower than that of 2018, which was mainly due to the declining number of visitors and the drop of the average spending per visitor recorded in Macau. The revenue of HK$1,425.5 million generated from the Group’s retail channels accounted for 94.1% of the total revenue in 2019, or 0.9% lower than that in 2018. Among the revenue generated from retail channels in 2019, 99.8% was generated from the sales of the Group’s self-operated retail stores and the rest was generated from online sales. The revenue generated from the Group’s mono-brand retail stores increased to HK$1,186.3 million, representing a yoy increase of 10.5%. The revenue generated from the Group’s multi-brand retail stores increased to HK$236.7 million in 2019, representing a yoy increase of 15.8%. The revenue generated from the Group’s provision of store management services increased to HK$64.0 million in 2019, representing an increase of 118.6% from 2018. The increase was primarily due to the consignment fee of HK$31.5 million generated from the consignment sales of CK CALVIN KLEIN products in Mainland China in 2019 on a temporary basis and the increase in store management service fees as a result of the increase in rental expenses reimbursed by the customers. The decrease in revenue from wholesale to HK$24.3 million in 2019, or a 34.1% decrease from 2018, was primarily attributable to the decrease in purchase orders from one of the Group’s sub-distributors in Mainland China in 2019. Macau The revenue generated from retail stores in Macau for 2019 increased to HK$869.1 million, representing an increase of 12.2% from 2018. The growth rate decelerated from that of 33.2% in 2018, which was mainly attributable to the decline in visitor per-capita spending in Macau, which was in turn primarily attributable to the increase in same-day visitors who normally spend less having outweighed the corresponding increase in overnight visitors who normally spend more during their stay in Macau. The business of the Group’s retail stores in Macau benefited from the increase in number of visitors to Macau especially from Mainland China in 2019 albeit declining average spending per visitor. Against this backdrop, the Group’s revenue increased due to the corresponding increase in the average sales floor area to 9,862 sq.m., representing a yoy growth of 12.4%, streamlining of the number of brands of products that the Group sold through its mono-brand stores in Macau from 20 brands in 2018 to 19 brands in 2019 and the increase in the number of brands of products the Group sold through its multi-brand stores in Macau from 48 brands in 2018 to 98 brands with a net increase of four multi-brand stores in 2019. The Group also offered more promotion and discounts at its retail stores in Macau to stimulate its sales in 2019 comparing with that of 2018 to attract more lower-spending visitors, especially during November and December of 2019 when the growth of visitors to Macau recorded a negative growth comparing with the same period a year ago. As such, the average monthly sales per sq.m. for 2019 decreased by 0.1% to HK$7,070 and the same store growth in Macau recorded a negative rate of 12.0%. Mainland China The revenue generated from Mainland China recorded HK$571.5 million in 2019, representing a yoy growth of 12.8%. The business of the Group’s retail stores in Mainland China benefited from the growth of economy and the increase in disposable income per capita in Mainland China in 2019 albeit in a slower pace compared with that of 2018. Against this macroeconomic background, the Group increased the sales by increasing the average sales floor area to 22,220 sq.m. in 2019, representing a yoy growth of 9.1% and the number of brands of products it sold through mono-brand stores from 14 brands in 2018 to 15 brands in 2019. The Group also offered more promotion and discount to attract and entail higher consumer spending. As such, the average monthly sales per sq.m. for 2019 only increased by 0.3% to HK$1,925 and the same store growth rate in Mainland China recorded a negative rate of 4.9%. Hong Kong and Taiwan The revenue generated from the sales in Hong Kong and Taiwan recorded a mild growth to HK$73.2 million in 2019, representing a yoy growth of 14.3%. The growth was mainly attributable to the net increase of two retail stores in Taiwan in 2019. Retail sales in Hong Kong experienced a declining trend in 2019, due to the social unrest arising from opposition to the Extradition Bill since June 2019 deterring tourists from visiting Hong Kong and/or local customers from shopping in the districts that were affected by the mass protests, which led to a weakened consumer sentiment. If any mass protests took place in the districts where the retails stores are located, the Group would be required to temporarily close the relevant retail stores or shorten their operation hours in order to ensure the safety of its staff and customers. The average monthly sales per sq.m. of retail stores in Hong Kong and Taiwan recorded a yoy decrease of 29.2% and same store sales of retail stores in Hong Kong recorded a drop of 20.5%. Against this macroeconomic background, the Group increased its revenue by increasing the average sales floor area in Hong Kong and Taiwan to 1,608 sq.m.in 2019, or a yoy increase of 61.4%. Prospects: The deceleration of GDP growth of the PRC at 6.0% and the escalation of China-US trade tension albeit a pact has been signed in January this year dampens the prospect of retail in Greater China this year. The outbreak of the novel coronavirus (COVID-19) (“Epidemic”) occurred in Mainland China, Hong Kong, Macau and Taiwan since January and later spread globally, which, from the Directors’ point of view, has and would further hurt the apparel retail market in Greater China. The Group had temporarily suspended most retail stores in PRC, all retail stores in Macau and one retail store in Hong Kong for various periods in January and February 2020 according to the local situations and requirements. As such, the Group’s revenue in January and February 2020 recorded a sharp decrease of 46.8% compared with the same period a year ago. The Group’s business could be adversely affected by the Epidemic and/or other adverse public health developments in Greater China. Such events could severely disrupt the Group’s business operations by having a negative impact on consumer sentiment, the macro-economic condition as well as the financial conditions of the stock markets. Following the outbreak of the Epidemic in January 2020, various countries have since issued travel warnings to their citizens for going to Greater China; and as a result, Greater China had sharply reduced visitor traffic within itself as well as imposed travel ban or restrictions against visitors from the other countries to Greater China in an effort to control further spread of Epidemic. Following recent Epidemic outbreak in Europe and United States, governments in these countries further impose tough measures such as putting their countries or cities in strict lockdown, quarantines, restriction on movement of their people and limitation on travel among countries. The general public in Greater China have also been advised to stay at and/or work from home to reduce the risk of Epidemic spreading in the community. While the Group is facing the most challenging time in 2020 since its start of business in 2005, the Directors believe that the impact of the Epidemic would eventually come to an end; and Greater China, in particular, Mainland China, will embark upon major pump-priming and offer more stimuli after the Epidemic has ended whereby the Directors expect that the economy in the second half of this year can be recovered gradually. To preserve its strengths to meet the post-Epidemic growth, the Group has adopted a series of cost control measures to minimize its expenses such as negotiating with landlords for rent cutting and suppliers for more discount/more favourable terms and voluntary temporary salaries reduction starting from executive Directors and senior management of the Group. The Group is committed to implementing the following strategies to cope with the temporary glomming retail environment in Greater China and ride on the opportunity of subsequent recovery: To adopt progressive marketing approach for loyal customers by offering attractive package and arrangement of visit time to avoid crowdy shopping; To defer the introduction of new brands and opening of retail stores to second half this year or end of the Epidemic, whichever is the earlier by seizing the market opportunity provided by those knocked out; To accelerate the implementation of the Centralised Retail Management System to enhance its operational efficiency; and To strengthen its digital marketing and online sales through existing e-shopping platform and group chat via social media.

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