• Q2 gross profit falls 11% to US$26.7m
  • Gross margin narrows to 33.1%
  • Total sales climb 6.5% to $80.7m

Chinese fashion retailer and supplier Ever-Glory International Group has warned of challenging market conditions heading into the remainder of the year, as it revealed a fall in second-quarter earnings and margin. 

For the three months to the end of June, total gross profit dropped 11% to US$26.7m, compared with $30m in the year ago period. Gross margin narrowed to 33.1% from 39.7%.

Total sales, however, climbed 6.5% to $80.7m from $75.7m in the prior year, primarily driven by a 26.9% increase in the company's wholesale business and partially offset by a 6.7% drop in its retail business.

Sales for the company's branded fashion apparel retail division were down 6.7% to $42.9m for the quarter as a result of a drop in same-store sales. 

Ever-Glory has been undertaking a strategy to improve its cost structure, which it says has resulted in decreased operating expenses as a percentage of total sales in the quarter. 

CEO Yihua Kang said: "We are pleased with our financial results in the second quarter…the strategic initiatives we have implemented in the last few months have contributed to these solid results.

"Looking at the remainder of 2016, we expect the challenging market conditions to remain. We are committed to our strategic initiatives and laying a firm foundation for a sustainable and profitable business in the long term."