Earnings rose 22.6 per cent to 1.2 billion yuan (US$169.7 million) for the year ended March 31, the Shanghai-based group said in an exchange filing. Sales increased 17.4 per cent to 12.2 billion yuan, an all-time high since it went public in 2007.
While the Covid-19 disease has traumatised small and medium-sized enterprises, “the phenomenon of ‘the stronger the winner’ will be increasingly apparent in the growth momentum of industry leaders,” Bosideng said in its exchange filing on Wednesday. Brand awareness will help unlock values, it added.Many industries were upended by the pandemic with China’s economy shrinking last quarter for the first time since 1992. Fashion retailers in Hong Kong have also suffered as consumers held back spending, forcing top names like Prada and Louis Vuitton to downsize. Even the weather was unhelpful, Bosideng said, as the last winter turned out warmer than usual.“In case the second wave of pandemic comes, I am confident that we will have steady growth for the second half of 2020” by digitising its operations and sales, said Gao Dekang, chairman and chief executive officer of Bosideng.
Mi Hanjie, an analyst at GF Securities said the group’s decision to upgrade its designs and scaling the upmarket sector have helped reduce sales fluctuations over the past five years. Its higher pricing has not compromised sales, he added.
Bosideng stock rose 6.2 per cent to HK$2.57 at mid-day in Hong Kong. This year, it has dropped 7.1 per cent versus an 11.2 per cent loss in the Hang Seng Index. GF Securities has a “buy” rating with a target price of HK$3.40.
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Bosideng has recently come up against Canada Goose as the foreign manufacturer stepped up its presence in the mainland. It will continue to take its products upmarket and positioning itself as an “expert in down apparels” by increasing brand awareness through physical stores and online channels.
“We need to shift into the mid-to-high-end market and follow the China consumption upgrading trend,” Chief Financial Officer Zhu Gaofeng said in a press briefing. “This strategy will remain unchanged in the medium to long term, although the short-term epidemic will affect consumer behaviour and sensitivity to price increases.”
Bosideng has made some progress in becoming a premium brand. The percentage of revenue from mid-to-high-end products that sold at more than 1,800 yuan has increased in the past three years. They made up 20 per cent of sales this time, up from 14 per cent a year earlier.
To prepare for lingering economic uncertainty, Zhu said Bosideng will focus on selling products priced between 1,000 and 1,500 yuan to capture more sales from the millennials.
Last year, more than 100 stores synchronised online and offline live streaming sales, helping to more than double its TMall.com flagship store members to above 5 million “fans”.
Bosideng also has licensing cooperation with Walt Disney Co and Marvel to upgrade its designs and increase its global market presence.
This article appeared in the South China Morning Post print edition as: Bosideng hits record with 22.6pc annual profit gain
