• FY net income up 39.7% to CNY255.7m
  • Revenues up 41.1%
  • Q4 net income increased 26.8%

Chinese men's wear retailer Zuoan Fashion has posted a 39.7% increase in full-year net profit, on the back of higher sales volumes at its direct and distributor stores. 

For the year ended 31 December, net income reached CNY255.7m (US$40.6m).

Revenue increased 41.1% to CNY1.2bn. The company said the increase was driven by distributors and direct stores. Distributor sales increased 40.7% to CNY1.17bn during the peirod.

Some 31 of Zuoan's direct stores were transferred to the company's distributors in January 2011 so that it could focus on developing and opening its flagship stores. 

Fourth-quarter net income increased 26.8% to CNY70.2m, while revenue jumped 37.6% to CNY355.3m. 

James Hong, founder, chairman of the board and CEO said: "Our fashion collection continues to expand and customers are increasingly recognising the value and depth of our product collections. We expanded our total number of store locations to 1,270, and our gross number of new store openings exceeded our target for the year. 

"Our fourth quarter gross margin reached a record level of 47.8%, primarily due to greater sales from our higher margin direct flagship stores and from the increase in wholesale prices we successfully implemented at the distributor level last quarter."

Looking forward, Hong said the company remains confident but expects some "turbulence" from a slowdown in domestic consumption as a result of the global recession.

He added that there could potentially be slower growth in sales orders for its 2012 autumn/winter collections due to an "erratic winter".