Lifestyle International, the Hong Kong-based department stores operator, posted a 42-percent growth in first-half net profits, driven by strong same-store sales and a strong non-cash gain on investment properties.

Lifestyle's net profits increased 41.9 percent to HK$606.3 million, including the fair value gain of HK$130 million of its investment properties on the mainland. Both total sales proceeds and turnover jumped 19.5 percent to HK$3.7 billion and HK$1.7 billion, respectively.

Net profit margin excluding the revaluation gain dropped to 28 percent from 30.1 percent due to deterred income tax charge for the first time at Shanghai Jiuguang store from last year and its employees' share options.

The company's Hong Kong operation turnover, which includes flagship Sogo store in Causeway Bay (Sogo CWB) and Tsim Sha Tsui (Sogo TST), increased 15.2 percent and accounted for 83.8 percent of the total turnover.

Same-store sales of Sogo CWB jumped 13.6 percent, compared with 15.2 percent last year, while the growth in Sogo TST jumped to 27.6 percent from 14.6 percent in its third year of operation. Average sales per ticket increased 13.8 percent to HK$520 and 12.2 percent to HK$330 respectively.

"We are cautious about the retail sales in the second half amid economic slowdown," said managing director Thomas Lau. "But we are still confident that the Causeway Bay store will be in line with Hong Kong's overall sales growth while the Tsim Sha Tsui store will outperform the market."

Lau said Sogo CWB recorded single digit growth in July while Sogo TST posted double digit growth in sales. He estimated sales of Sogo CWB will reach HK$5 billion by the end of the year.

Meanwhile, Shanghai Jiuguang department store, the company's flagship store on the mainland, turned loss into profits last year after opening in 2004, booking 80 million yuan before tax in 2007.

Chief financial officer Terry Poon said the store has booked 70 million yuan in the first half. He estimates that same-store sales can still grow over 20 percent in the second half of the year.

Same store sales growth in the first half of 2008 slowed down to 30 percent from 40.6 percent in 2007. Average sales per ticket increased 8 percent to 271 yuan.

The company also owns 23 percent in Beiren Group, which owns five department store and 13 supermarkets in Hebei province. Lau said that the company will explore more cooperation opportunities with Beiren to expand in the province.

(HK Edition 08/12/2008 page2)