CHINA: Double-digit Q1 profit decline for Xiniya Fashion
- Q1 profit declines 19.9% to CNY26.6m
- Revenue falls 7.5% to CNY204.6m
- Gross margin slips to 29.6% from 30.7%
Men's wear business China Xiniya Fashion has reported a double-digit decline in first-quarter net profit, weighed down by lower revenues and margins.
Net profit amounted to CNY26.6m (US$4.3m) for the three months to 31 March, compared to CNY33.2m in the same period last year.
Revenue fell 7.5% to CNY204.6m from CNY221.2m in the prior year, with the group delivering around 1.05m units to its distributors, down from 1.18m units a year ago.
Gross margin slipped to 29.6% from 30.7% last year, primarily due to increased expenses associated with the research and development of the group's latest collection to try to improve its competitiveness and fashion appeal.
Nonetheless, chairman and CEO Qiming Xu said he was "pleased" revenue came in at the higher-end of guidance with gross margins "remaining stable".
"While we are disappointed with our sales fair results, we have always encouraged our partners to remain cautious when placing orders in order to ensure their profitability and low inventory levels. This cautious approach has impacted our financial and operational results in the short-term but we believe that it is a good investment that will yield longer term value.
"By implementing our focused strategy now, we are providing support to our distributors and authorised retailers when they are most in need, giving them the support needed to navigate a market that is facing increasing downwards pressure."
For the second-quarter, Xiniya said it expects to report between a loss per ADS of $0.04 and earnings per ADS of $0.01. Revenue is forecast to decline 10-15%.
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