• Q2 net income up 3.3% to CNY35.4m
  • Sales increased 30.4% to CNY176.9m
  • Gross profit up 34.2% to CNY57.3m

Men's apparel retailer China Xiniya Fashion reported an increase in net income for the second-quarter on the back of rising sales.

The men's casual retailer said on Friday (18 August) that for the quarter ended 30 June, net income was up 3.3% to CNY35.4m (US$5.5m) as sales increased 30.4% CNY176.9m.

The company said sales growth was at the "high end" of its prior guidance of 27-30%. However, net profit was hit by rising taxes, up to 23.9% against 11.8% in the same period of the previous year, due to the expiration of preferential PRC tax treatment at the end of 2010.

Gross profit rose 34.2% to CNY57.3m, with gross margin reaching 32.4% against 31.5% in the same period of the previous year.

The company announced plans to open three flagship stores in Zun Yi, Guizhou Province; Harbin, Heilongjiang Province; and Chengdu, Sichuan Province. The company said it continues to focus on tier two cities which have higher GDP growth rates compared to tier one cities.

For the third-quarter the company expects revenue to increase by 20-24% and gross margin to be in the range of 33-34%. It plans to increase the total number of outlets managed or authorised by its distributors by approximately 180-220 in 2011.

Commenting on the results chairman and CEO  Qiming Xu said: "We continue to expand our footprint throughout China and build our brand through targeted marketing and promotional efforts to maximise the impact of our expenditures and customer reach.

"Our network of exclusive distributors is on track to open between 180 and 220 new additional retail outlets this year.

"Furthermore, we are excited about the opening of three new flagship stores, which will further strengthen the Xiniya brand in fast growing Tier 2 cities, which are our top priority for expansion."