Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
NATURAL BEAUTY
HKEx Stock Code : 00157 
 
Corporate Profile
Principally engaged in (a) manufacturing and selling of skin care, beauty and aromatherapeutic products and (b) provision of skin treatments, beauty and spa services and skin care consulting and beauty training.

Business Review - For the year ended December 31, 2012

The PRC Market

Turnover in the market decreased by 19.8% in 2012 to HK$379.6 million compared with HK$473.2 million in 2011. The decline was mainly due to the deteriorating retail and economic environments. Gross margin on product sales decreased from 83.0% in 2011 to 80.7% in 2012, as a result of (1) an inventory write-off, which amounted to HK$6.7 million, due to repackaging of products and the formula upgrades; (2) the lower sales mix of NB-1 and Yam products which have higher margins and (3) costs inflated significantly during 2012.

The Taiwan Market

Turnover for the Taiwan market also declined by 11.8% from HK$110.5 million in 2011 to HK$97.5 million in 2012 amid a slowdown in retail sales and economic growth. Gross margin on product sales decreased from 83.1% in 2011 to 80.9% in 2012 due to the lower sales mix of NB-1 and Yam products which have higher margins and inflated costs during the year.

The Group derives its income principally from its network of distribution channels, including spas and concessionary counters at department stores. As at 31 December 2012, there were 1,454 spas and 44 concessionary counters. Of these, 1,450 were franchised spas, 4 spas and 25 concessionary counters were directly operated by the Group. 19 concessionary counters were entrusted to reputable operators. Franchised spas are owned by the franchisees who are responsible for the capital investment in these spas. They are obliged to use only Natural Beauty or ¡§NB¡¨ products in their spas. A wide array of services, including hydrotherapy, facial treatment, body care and skin care analysis, are provided in all the spas, while skin care analysis is widely available at the concessionary counters at department stores.

Group-wide, a total of 136 new stores were opened and 176 stores were closed during 2012.

Average sales per store in 2012 decreased from HK$396,000 in 2011 to HK$321,000 in 2012.

Average sales per store in the PRC in 2012 decreased by 22.8% to HK$321,000. In Taiwan, average sales per store decreased by 3% to HK$321,000 in 2012.

Business Outlook - For the year ended December 31, 2012

After the 18th National People's Congress of the Chinese Communist Party, the government's plan for urbanization and household income growth should continue to fuel the long-term growth of China's domestic consumption which will be positive for the consumer market.

However, results in short term are expected to remain volatile.

As such, we will continue to pursue a prudent growth strategy and implement the following strategies so as to proactively strengthen our position as a leading skin care brand and spa operator in the Greater China Region.

¡V We will focus on increasing the productivity of our existing franchisees as our major growth driver in the near term through the addition of new outlets based on our NCS store strategy to increase our scale.

¡V We will enhance our operational efficiency by streamlining our organisational structure, implementing a more integrated go-to-market process and improving our cost-controls measures.

¡V We will focus our marketing and promotional efforts on enabling more sell-through by our franchisees.

Source: Natural Beauty (00157) Annual Results Announcement
Chairman Tsai Yen-Yu Issued Capital (shares) 2,002M
Par Value HKD 0.1 Market Capitalisation (HKD) 1,121M
 
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