• Q2 net loss of CNY6.8m (US$1.1m)
  • Gross margin narrows to 20.8%
  • Revenue drops 47.2% to CNY106.4m?

Men's wear business China Xiniya Fashion has moved to a loss in its second-quarter and booked lower revenues on the back of increased expenses and higher discounting.

In the three months to the end of June, losses amounted to CNY6.8m (US$1.1m), as compared to net profit of CNY13.3m in the second quarter of 2014.

Gross margin narrowed to 20.8% in the quarter, from 27% in the prior year, primarily due to an increase in research and development expenses, and a drop in retail prices to improve its competitiveness.

Revenue dropped 47.2% to CNY106.4m, compared to CNY201.7m in the year ago quarter.

Chairman and CEO Qiming Xu, said: “We are beginning to see a definite positive impact on our business from the buyback initiatives and expect this progress to continue for the rest of the year. Confidence from our distributors and existing and prospective authorised retailers has improved, evidenced by the increase in orders from our sales fair and the net increase in number of authorised retail outlets.

“While we expect the economic environment to remain challenging, we are confident that our strategy to adjust our business will ensure the long-term sustainability of our business and brand.”