361 Degrees International Limited said it expects a “notable” decline in earnings before taxes in 2018 due to an expected loss for the second half due in part to the U.S./China trade dispute.

The loss is “due to, among other things, the following reasons: 1. an overall decrease in the Group’s order for 2018 due to (i) a reduction of replenishment order, as relatively conservative consumer sentiment towards non-essential commodities such as the Group’s products among the general public in China, which the Directors believe was caused by the uncertainty arising from the trade war between China and the United States of America; (ii) revised delivery schedule resulted from the Group’s implementation of the Logistics Optimization Program in the year; and (iii) a brand rebuilding program for the Group’s long-term development launched in the second half of 2018 aiming to better satisfy target consumers’ changing needs. 2. the continuous depreciation of Renminbi against the United States Dollars during 2018, which resulted in exchange loss incurred by the company; and 3. a substantial loss recorded in the Group’s e-commence business in 2018 due to the increase in advertising and promotion expenses.”

In the statement, Ding Huihuang, chairman, said the board, “considers that the overall operational and financial position of the Group remains sound and the Board remains positive on the long-term prospect of the Group.”