Sales and profits were down for the first half of the year for Chinese headwear manufacturer, Mainland Headwear. The company pointed to the loss of the MLB license and the NHL lockout as culprits for much of the downturn, while looking to the back half as a source of rejuvenation.
During the six months ended June 30, Mainland posted a 12.4% decrease in sales to HK$233.7 million ($30.0 mm) from HK$266.9 million ($34.3 mm) in the year-ago period. Profit attributable to shareholders was HK$36.0 million ($4.6 mm), a decline of 17.4% from H1 2004. Diluted EPS was 12.6 HK cents ($0.02).
Profit contribution from the Manufacturing business increased from HK$48.5 million ($6.2 mm) to HK$49.6 million ($6.4mm) in the first half of 2005, despite sales in the category falling 8.6% to HK$172.4 million ($22.1 mm) from HK$188.6 million ($24.2 mm) in H1 last year.
The Trading business, which was hurt by the loss of the MLB license and the NHL strike, fell to a HK$4.4 million ($0.6 mm) loss in H1 on a 25.0% sales decline to HK$99.7 million ($12.8 mm) for the period.
The Retail business, which is new this year, posted sales of HK$8.8 million ($1.1 mm), representing 3.7% of total Group sales for the six month period. The Retail business recorded a loss of HK$4.7 million ($0.6 mm) for the half.
At the end of the first half, the Group had opened a total of 22 LIDS stores, of which seven were in Hong Kong and the remainder in the PRC. The LIDS operations incurred a loss during the period, with some of the outlets making shop level contributions. In response to the high shop rental cost in Hong Kong, the Group will control the growth of LIDS outlets to a total of 10 stores by the end of 2005. The company also plans to open a total of 28 LIDS stores in the PRC by year end.
