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Tag: Wanko

  • Colourmix axes stores to stop losses

    Colourmix axes stores to stop losses

    Colourmix parent and fashion retailer Veeko has seen its sales fall 4.4 per cent in the last year, to HK$1.928 billion.

    But it posted a $5.26 million profit, a turnaround for the previous year’s $25.9 million loss – all due to an increase in the value of investment property.

    Veeko said its cosmetics division’s sales, which accounted for 82 per cent of group revenue, slipped 1.9 per cent, with gross profit margin easing 1.1 per cent to 31.7 per cent.

    Sales in its fashion division slumped 14.2 per cent to $354.45 million, but gross profit margin improved to 70.1 per cent.

    The cosmetics business lost $6 million for the year and the fashion business lost $8.2 million, but an increase in fair value of investment properties of $31.6 million pulled the overall business to a paper profit.

    At the end of March, Veeko operated 84 Colourmix stores, six fewer than a year earlier, and eight Morimor stores, (up one). The Colourmix stores are primarily in Hong Kong, with five in Macau and one in Mainland China. It opened the first Morimor store outside Hong Kong in November, at The Venetian Macao Resort.

    “It is expected that the market presence and popularity of Morimor stores will be further enhanced through its brand new image in quality and trendy cosmetics,” the company said in its results announcement.

    Fashion business

    As at the end of March, Veeko had 101 fashion stores trading under the Veeko and Wanko banners in Hong Kong, Macau and Mainland China, a reduction of 18. This was partly due to the company exiting Singapore, closing its five stores there.

    The group has 25 stores in Mainland China where it closed four underperforming outlets during the year. It also has a presence on Tmall.

    Looking ahead, Veeko says it expects the Hong Kong retail market to continue to improve gradually.

    “Under the challenging environment, the group is cautiously optimistic about its future development, and will continue to seek opportunities for growth and monitor closely the changes in market trends.”

    The company says it will continue to adjust its store portfolio and review rental levels.

    “Given the downward adjustments of rental rates for certain stores in the market, the rental pressure for stores with expiring lease terms will be reduced, and the group will achieve better results in controlling rental costs. Meanwhile, the group will close down underperforming cosmetics stores and identify prime locations with lower rents for new stores in order to improve overall operation efficiency.”

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  • Veeko, Wanko and Colourmix parent finds Singapore tougher than HK

    Veeko, Wanko and Colourmix parent finds Singapore tougher than HK

    Hong Kong-headquartered fashion retailer Veeko – the Wanko and Colourmix parent – has found Singapore more challenging than its home market.

    For the six months to September 30, Veeko International Holdings recorded a turnover of

    HK$1.029 billion, down 3.5 per cent year-on-year.

    Its cosmetics business, the Colourmix and Morimor stores, sales were stable, down by just 0.1 per cent at $828 million, accounting for 80.5 per cent of the company’s business, compared with 77.6 per cent last year.

    That highlights the core of the company’s problem – its fashion stores, trading under the Veeko and Wanko brands – which recorded a 16.1 per cent decline in sales to $200.7 million.

    Sales in Singapore, where it closed one store and now has eight, plunged 23 per cent year-on-year.

    Yet in Hong Kong and Macau, where the overall decline in retail sales during the half year was nudging double digits, sales declined by a more modest 7.6 per cent and the gross profit margin rose marginally from 71.8 per cent to 72 per cent. It added three stores during the period, taking the network to 83.

    In Mainland China, fashion sales declined 14.3 per cent and it closed three stores, leaving a net 38.

    Colourmix holds its own

    Beauty is the powerhouse of the Veeko business. The company has 87 Colourmix stores – five more than at the same time last year – of which 82 are in Hong Kong, four in Macau and one in the mainland.  In August 2015, the group launched another cosmetics store brand Morimor, with seven now trading in Hong Kong. This brand is positioned as offering “high-quality trendy skin care and cosmetics products by integrating global premier skincare and beauty concepts, with diversified products covering skin care, fragrance, make-up, hairdressing, body care and cosmeceuticals and health food”.

    Veeko chairman Johnny Cheng Chung Man says the South Korean series of cosmetics and beauty products are very popular among young customers.

    “In addition, the professional beauty consultants offer customised personal services and consultations on skin care so that customers can enjoy the relaxed and pleasant experience of beauty services.”

    The gross profit margin of the cosmetics business for the period was 32.4 per cent, down 3.3 percentage points year-on-year. The cosmetics business for the period recorded a segment profit of HK$1.319 million, representing a significant decrease of 97.7 per cent.

    “As a result of the rapid growth in the cosmetics business experienced in the past consecutive years, a considerably high base has been accumulated. With the continuously weak retail market and overall consumption environment in Hong Kong as well as a drop in the number of visitors to Hong Kong during the period under review, it was necessary for the group to offer several promotional discounts and organise marketing activities to stimulate sales, which led to a reduction in gross profit margin and a significant decrease in segment profit as compared with the same period last year,” said Man.

    Looking forward

    Man says looking forward, the group expects the challenges faced by the retail business to continue.

    “The retail environment in Hong Kong is anticipated to remain severe while a cautious consumption sentiment prevails. The group will continue to enrich its product portfolio of cosmetics products, increase trendy beauty products with exclusive distributorship, conduct staff training on providing quality professional services, and strengthen its internal consolidation.”

    Man said the fashion retail business will continue to focus primarily on the Hong Kong and Macau market. “To cope with the stagnant retail environment as well as to meet constantly changing needs in the market, the group will continue to optimise product designs and improve customers’ shopping experience. As for the overseas markets, the group will continue its cautious control on its overseas stores portfolio. Underperforming stores will be closed down further to focus its business on profitable stores.”

    In Hong Kong, given the slowdown in the retail market and a decline in rental charges for stores located in prime districts, the enhanced bargaining power of the retailers will therefore help reduce the rental pressure for stores with expiring lease terms, he said.

    “As the group will close down certain stores with low profitability and open new stores in prime locations, additional rental saving will be expected in the near future.”

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  • Veeko International flourishes despite downturn

    Veeko International flourishes despite downturn

    While its peers suffer from Hong Kong’s lacklustre market, one retailer has achieved a stunning sales boost.

    Veeko International operates 82 Colourmix and one Morimor cosmetics stores and 155 fashion stores in Hong Kong, Macau, Taiwan, Singapore and Mainland China under the Veeko and Wanko brands.

    For the six months to September 30, Veeko International recorded a turnover of HK$1.066 billion – an increase of 23.6 per cent on the corresponding period of last year. Its cosmetics business increased sales by 33.7 per cent over the same period last year, accounting for 77.6 per cent of Veeko’s turnover. Sales in the fashion business slipped two per cent.

    Profit attributable to shareholders reached HK$41.488 million – up 14.9 per cent on last year, driven by a 56.2 per cent increase in profit from the cosmetics business. The fashion business, meanwhile, recorded a $2.68 million loss, a 133.6 per cent downturn on the profit of $7.97 million for the same period last year, largely due to exchange rate losses from overseas markets including Taiwan, Singapore and Mainland China. At constant exchange rates the division would have recorded a profit.

    Veeko says it will continue to expand its Colourmix store network, having added six in the first half.

    A large part of the success of its cosmetics operations is an increase in the average sale from $358 per transaction for the same period last year to $377 per transaction for the current period, – a year-on-year increase of 5.3 per cent. The gross profit margin of cosmetics business for the

    period was relatively unchanged at 35.7 per cent.

    Veeko’s fashion store network was down by a net 19 stores due to a revision of its store networks in Singapore, China and Taiwan.

    Veeko says Hong Kong and Macau accounted for 78.8 per cent of the group’s total fashion retail turnover. Sales in the two territories rose 6.2 per cent year on year, but gross profit margin decreased by 1.7 percentage points to 71.8 per cent.

    Taiwan fashion sales fell 24.9 per cent, due to the closure of eight stores, leaving it with 25 in the market. But same store sales grew by 6.4 per cent.

    In Singapore, sales slumped 26.6 per cent, largely due to the closure of four stores, leaving it with just nine there. Same store sales in local currency slipped 2.6 per cent.

    And in China, turnover fell 19.4 per cent, due to a net reduction of 10 stores, leaving it with 41.

    Veeko says it expects the challenges faced by the retail business will continue during the next half year, with cautious consumption sentiments.

    “The group… believes that opportunities exist alongside with challenges. In an environment which is full of challenges, the best policy is to uplift our competitiveness and lay a good foundation for sustainable growth in the future by maintaining healthy growth of the core business in the long run.”

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