Le Saunda, a Hong Kong-based footwear retailer with outlets all over the mainland, said its first-half net profits jumped 94.6 percent, boosted by the robust retail growth on the mainland market.

The company's net earnings rose to HK$40.2 million for the six months ended Aug 31, a significant growth from HK$20.7 million in the same period last year.

The company's consolidated turnover soared 15.4 percent to HK$408.1 million on the back of strong sales growth from retail operations, particularly in the second quarter, while its gross profit margin also climbed 3.4 percentage points to 52.3 percent.

Kenneth Wong, executive director and chief financial officer, said the company's innovative measures and restructuring plan implemented last year had been effective for its rapid growth in first-half net profits.

"Less frequent and aggressive stock clearance resulted in promising surges in same-store sales and average selling price," Wong said at a press conference yesterday. Le Saunda's total turnover in Hong Kong and Macao rose 6.4 percent to HK$87.8 million year-on-year, while the same-store sales also increased 4.8 percent.

In the first half, the company closed down two underperforming retail stores in Hong Kong, leaving 21 others open in Hong Kong and Macao.

On the mainland, meanwhile, the total turnover soared 19.3 percent in the first half to HK$208.3 million, with its same-store sales leaping 10 percent. The footwear retailer currently operates 336 self-owned and franchised outlets on the mainland.

The company's average selling price in Hong Kong and Macao increased 26.9 percent, while it also recorded a 34.2 percent jump on the mainland. Executive director Alice Lau said selling prices have been significantly reduced last year due to the clearance of off-season products.

She also noted that the 4-trillion yuan stimulus package has brought a positive impact to the company's retail operation. "Sales on the mainland from September to October have recorded a double-digit growth, while the same-store sales also showed a single-digit increase in November," Lau said.

She expects the market in Hong Kong to experience more fluctuations, while Le Saunda will try to keep its same-store sales in break-even mode.

The company expects the growth rate to slow down in the second half due to the impact of the global recession, yet it remains cautiously optimistic and will focus its business operation more on the mainland.

"We have planned to open 800 self-owned and franchised outlets on the mainland by the end of 2010," Wong said, adding that the company's capital expenditure for the second half will amount to HK$40 million to HK$50 million, mainly for the construction of a new production base in Gaoming, Foshan, which is expected to be completed by the end of 2009.

(HK Edition 11/18/2008 page2)