Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
WALKER GROUP
HKEx Stock Code : 01386 
 
Corporate Profile
Principally engaged in the retailing of footwear in Hong Kong, Mainland China and Taiwan.

Business Review - For the year ended March 31, 2013

For the Year, the Group recorded a decrease of 5.3% in its consolidated revenue to approximately HK$1,375 million (2012: HK$1,451 million). Revenue from the PRC, Hong Kong and Taiwan markets decreased by 3.1%, 12.8% and 9.9% respectively. The overall same store sales of the Group dropped by approximately 3.9%, while the overall gross profit margin of the Group increased slightly by 1 percentage points to 59.6% despite significant cost increase and strong price driven by competition. The Group's overall operating expenses as a percentage of turnover increased by 6.6%. Loss attributable to the equity holders was approximately HK$92.8 million (2012: HK$9.7 million). Loss per share amounted to approximately 14.9 HK cents per share. The Board has recommended not to declare dividend for the Year (2012: Nil).

The three geographical market segments, namely the PRC, Hong Kong and Taiwan respectively accounted for 79%, 19% and 2% of the Group's total revenue (2012: 77%, 21% and 2%).

The PRC

During the Year, the Group opened 183 and closed 200 Retail Points in the PRC, resulting in a net decrease of 4 Self-managed Shops and 29 Concession Points and a net addition of 16 Franchised Stores in the region. Total revenue generated in the PRC was approximately HK$1,089.9 million (2012: HK$1,125.1 million), representing a slight decrease of 3.1% as compared to the previous year. Operating profit in the PRC decreased by HK$42 million, representing a 44.6% decrease as compared to last year. Same store sales dropped by approximately 5.9% and operating margin decreased by 3.6 percentage points as compared to last year.

Hong Kong

During the Year, the Group opened 5 and closed 12 Retail Points in Hong Kong, resulting in a net decrease of 5 Self-managed Shops and 2 Concession Points in the region. Total revenue generated in Hong Kong was approximately HK$260.3 million (2012: HK$298.5 million), representing a decrease of 12.8% as compared to the previous year. Operating profit in Hong Kong decreased by HK$14 million, representing a 335.7% decrease as compared to last year. Same store sales growth was approximately 0.7% while operating margin decreased by 5.2 percentage points as compared to last year.

Taiwan

During the Year, the Group opened 5 and closed 11 Retail Points in Taiwan resulting in a net decrease of 6 Concession Points in the region. Total revenue generated in Taiwan was approximately HK$25.0 million (2012: HK$27.8 million), representing a decrease of 9.9% as compared to the previous year. Operating loss in Taiwan increased by HK$1.5 million, representing a 94.4% increase as compared to last year. Same store sales dropped by approximately 17.4% and operating deficit to revenue ratio increased by 6.5 percentage points to 12.1% as compared to last year.

Business Outlook - For the year ended March 31, 2013

Looking ahead, we expect the global economy to remain volatile and the operating environment is subject to inflation risks as well as intensified competition among peers. We will exercise extra caution on our operational management and prudently adopt the following strategies to help alleviate these negative impacts to a manageable extent and to preserve our sustainable long-term value.

In light of the inflationary pressure on our business, we will focus on short-term cost control initiatives, including streamlining our operational process and logistics chain for better efficiency, adjusting the number of retail points and retiring underperforming stores for higher profitability. Meanwhile, we remain disciplined in network expansion.

To reduce inventory to a relatively healthy level, we will step up efforts in establishing more clearance channels, including factory outlets. In addition, we will make replenishment orders more frequently to respond to the market in a timely manner and prevent excessive inventory. We will also adopt clearing initiatives as well as incentive programs to boost the efficiency of our sales channels and to improve the turnaround of our off-season items so as to minimize the risks of obsolete inventory and increase cash flow at the same time.

Furthermore, we will offer better value for money products under our own brands, diversify product designs and develop premium quality items to drive sales growth. The addition of dynamic and modern elements is part of our plan to strengthen the brand image.

Exploring sales potential and opportunities is another focus of our strategies. We will do so by leveraging on the potential of fast-growing online sales in the PRC and other regions and allocating more resources to information technology. We are seeking to cultivate the skill set necessary for online sales to mitigate the impact of potential changes in channel format and customer behavior. Moreover, increased efforts will be put in the franchise business.

We are closely monitoring the implementation of the above-mentioned initiatives to boost our revenue, keep the costs under control and hence reduce our operating loss. By adhering to these well-adjusted strategies, we believe we will be able to overcome the difficulties and restore our profitability to create better value for shareholders in the long run.

Source: Walker Group (01386) Annual Results Announcement
Chairman CHAN Mei Sheung Issued Capital (shares) 624M
Par Value HKD 0.1 Market Capitalisation (HKD) 249M
 
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