Bossini loses HK$340 million in last financial year, shuts 12 stores

Bossini International has lost HK$325.76 million in the latest financial year, as the performance in both Hong Kong and Macau was impacted by the pandemic and the absence of tourists in both cities.

In the 18-month period ended on 31 December 2021, the company has lost HK$325.76 million (US$41.64 million). In the last financial year ended on 30 June 2020, the company lost HK$378.59 million (US$48.39 million). However, in February 2021, the board of Bossini International said that the financial year end date of the company was changed from 30 June to 31 December commencing from the financial period ended 31 December 2021, in order to align its financial year end date with the controlling shareholder of the company. Accordingly, the accompanying consolidated financial statements for the current financial period covers an eighteen months period from 1 July 2020 to 31 December 2021. The comparative figures, however, are for twelve months from 1 July 2019 to 30 June 2020, and hence are not directly comparable.

Revenue of the Hong Kong and Macau markets dropped during the period under review. According to the company, revenue in Hong Kong and Macau including the retail and export franchising business was HK$681 million (US$87.04 million). However, for the year ended on 30 June 2020, the revenue was HK$716 million (US$91.55 million). Same-store sales for directly managed stores decreased by 17%, while same-store gross profit dropped by 17%.

The company also closed 12 directly managed stores in the last financial year, as there were only 26 as of 31 December 2021.

Bossini International said the sluggish performance was due to the ongoing pandemic as it posed unprecedented challenges to the retail industry. Chairman of Bossini International Victor Herrero said, "Although the retail sector has shown signs of recovery since the Q1 2021, retail sales volume remained far below the pre-pandemic level as inbound tourism remained frozen, posing a constraint on the pace of recovery in the retail industry."

He added that the pandemic severely affected retail consumption in Hong Kong and Macau. Travel restrictions and border control were in force, while a series of social-distancing measures were imposed, which consequentially impaired consumer sentiment and stifled customer traffic. During the period under review, the third to the fifth waves of local COVID-19 infections at alarming levels induced stricter social distancing measures, which sharply reduced shopping activities and foot traffic as a result.

In addition, for the period from July 2020 to December 2021, tourist arrivals plunged by 99.4% on a period-on-period basis according to the statistics from the Hong Kong Tourism Board.

When it comes to the business in China, revenue in the country was HK$363 million (US$46.39 million). Same-store sales dropped by 19% and same-store gross profit registered a 17% decline. There was a total of 119 (as of 30 June 2020: 154) directly managed stores in mainland China as of December 2021.

In the Singaporean market, the revenue of the operation was HK$120 million (US$15.34 million). Same-store sales registered a 9% decline and the same-store gross profit recorded a 4% decline in the last financial period. The number of directly managed stores was 14. The segment result was HK$11 million profit (US1.41 million). For the year ended on 30 June 2020, the business in Singapore lost HK$36 million (US$4.6 million).

Looking ahead, Bossini International believed that the fifth and most severe wave of COVID-19 outbreak to date in Hong Kong has led to further tightening on various social activities and controls on international travel would likely undermine the retail growth prospects in 2022. In spite of the external factors, the group started establishing new distribution channels in China with shops carrying the new brand “bossini.X” and exhibiting Bossini’s new image and character. The execution of its network expansion strategy in mainland China would mainly be through opening directly managed and franchised stores in appropriate shopping malls and distribution channels in various provinces and cities.

Lastly, the company said since “bossini.X” is set to have a fresh brand positioning, the company is targeting whole new distribution channels, and the products will be substantially different from the brand “bossini”. "We expect that this investment period would span over the next few years with a focus in particular on product development and channel expansion, while we also anticipate the potential downside risks involved," added Herrero.

(Photo courtesy: 123rf)

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