CHINA: Daphne issues profit warning as sales slide
China footwear retailer Daphne International Holdings has issued a profit warning for its full-year on the back of declining sales and lower margins.
For the year to the end of December, the company said it expects to record a "significant decline" in earnings and a low single-digit net margin.
The decline, it said, is due to a same-store sales decrease of 10.4% for the year, and a fall of 5.4% for the fourth quarter. Impairment losses from the closure of stores and an increase in inventory provision also contributed.
The drop in sales, the company added, was due to a slowdown in consumer spending, unanticipated warm weather conditions in October and November, and keen competition.
Nonetheless, the company offered an optimistic outlook for its new financial year.
"The performance in 2013 was exceptional compared to previous years due to a combination of adverse external and internal factors. However, during the year, the group dedicated efforts to improve staff retention and training, closed down non-performing stores and adopted more prudent inventory management.
"These initiatives will not only enhance sales growth and ease operating deleverage, but will also lay the foundation for improvement in the Group's performance in the coming years."
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