CHINA: Zuoan Fashion remains optimistic as Q3 profit rises
- Q3 profit rose 0.7% to CNY92.8m (US$14.9m) from CNY92.2m last year
- Revenue climbed 12.1% to CNY476.3m from CNY424.8m
- Gross profit margin was 46.9% against 44.3% last year
Casual men's wear retailer Zuoan Fashion said it remains optimistic about its long-term growth opportunities after increased sales and margins helped it book a rise in third-quarter net profit.
"Our revenue growth was a result of increased distributor sales volumes as well as increased sales volume from our direct stores," said founder, chairman and CEO James Hong.
"We came in slightly below our third quarter top line revenue forecast largely due to an inventory shipment delay to distributors of approximately CNY58.8m, resulting in a shift in revenue recognition to the fourth quarter instead of our third quarter.
"Gross margin held steady as we benefited from increased wholesale prices implemented over the past year as well as increased contribution from our self-operated direct stores and flagship stores which contributed to higher overall gross margin.
During the quarter, the company transferred 26 self-operated flagship stores over to its distributors to streamline its internal operational infrastructure to lower expenses and improve performance.
The company expects fourth-quarter net income to reach CNY43.7-CNY47.8m and basic and fully diluted EPS to be between CNY0.39 and CNY0.43. It also aims to open 40 new retail stores and two flagship stores during the fourth quarter.
"We remain optimistic about the long-term growth opportunities in our business and are confident our revenue and profit can continue to grow with the expected recovery of the domestic economy along with our efforts to enhance our distribution network, maximise operational efficiencies and increase our brand recognition," Hong added.
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