Pou Sheng International (Holdings) Limited, the retail subsidiary of Yue Yuen International, said it saw decent recovery momentum with increased foot traffic to its brick-and-mortar channels and improved purchasing intent following the lifting of all control measures in mainland China. It also benefited from a low base effect stemming from the escalation of lockdowns in the same period of last year. Further, sales recovery in the footwear and apparel retail sector showed signs of outperforming the recovery of overall consumer spending in mainland China.

According to the National Bureau of Statistics of China, consumption of garments, footwear, hats, and knitwear rose 12.8 percent year-on-year in the first half of 2023, compared to an 8.2 percent recovery in total retail sales of consumer goods.

Meanwhile, the Group’s omni-channels reportedly remained robust during the Period, with its private domain channels, including its WeChat stores, Douyin live-streaming shopping events and shopping mall membership platforms seeing a strong sales growth of over 50 percent. This resilience demonstrated the effectiveness of the Group’s ongoing digital transformation and how its implementation is incrementing and complementing offline sales.

The Group’s total revenue during the six-month period increased 11.1 percent to RMB10.96 billion as compared with the same period of last year. The increase was mainly attributed to a recovery in offline traffic and purchasing intent following the lifting of all pandemic control and social distancing measures in mainland China, the robust sales growth of omni-channels, in particular its Pan-WeChat Ecosphere.

The Group’s gross profit during the Period amounted to RMB3,670.7 million with a gross profit margin of 33.5 percent. Despite the well-managed discount control, the gross profit margin decreased 1.9 percentage points compared to the same period last year. The decrease was mainly attributed to the negative impact of channel mix.

The Group’s selling and distribution expenses during the Period were RMB2.91 billion (first half of 2022: RMB3.08 billion), accounting for 26.6 percent of the Group’s revenue (first half of 2022: 31.2 percent). Selling and distribution expenses primarily include concessionaire fees, depreciation of right-of-use assets in relation to stores, sales personnel salaries and commissions, other depreciation and amortization charges, and other expenses that mainly include store operation expenses, property management fees, logistic expenses and other expenses.

Administrative expenses during the Period were RMB396.7 million (first half of 2022:RMB375.9 million), accounting for 3.6 percent of the Group’s revenue (first half of 2022: 3.8 percent). Administrative expenses primarily include management and administrative personnel salaries, depreciation and amortization charges and other expenses.

The Group’s selling and distribution expenses and administrative expenses during the Period were RMB3.31 billion, a decrease of 4.1 percent compared to the first half of 2022.

This was equivalent to 30.2 percent of total revenue, a decrease of 4.8 percentage points year-on-year, with the savings benefited from active management on rental and people efficiency that delivered operational excellence, as well as operating leverage.

The Group’s operating profit during the Period was RMB472.8 million, representing an increase of 127.0 percent with an operating margin of 4.3 percent, an increase of 2.2 percentage points year-on-year.

Finance income during the Period was RMB14.2 million, compared to RMB10.6 million in the first half of 2022. Finance costs during the Period recorded a sharp decrease of 45.9 percent to RMB49.5 million, compared to RMB91.5 million in the first half of 2022, primarily as a result of the efforts in debt repayment and a decrease in interest expenses on lease liabilities during the Period.

The Group recorded a net profit of RMB319.0 million during the Period, representing a significant increase of 1,218.8 percent as compared with the corresponding period of 2022. Profit attributable to owners of the company for the first half of 2023 increased by 1,654.2 percent to RMB305.5 million as compared with the
the corresponding period of 2022.

Photo courtesy AP