HONG KONG: The global economic crunch has taken its toll on mainland retail chain operator Maoye International Holdings.

The company's CEO & chairman Huang Maoru told reporters that the credit crunch severely hit the company's profitability in the second half of last year. The impact lowered the company's same-store sales growth from 12.2 percent in the first half of 2008 to 4.2 percent for the entire year.

For all of 2008, the company's net profit gained 24.9 percent to 520 million yuan. Proceeds from sales increased 5.2 percent to 3.9 billion yuan. The figures translate to a final dividend of HK$2.2 cents per share.

Despite the slowdown in sales, Huang remained positive that the retail sector will get out of the downturn in the near future, spurred by the central government's stimulus package.

"Our businesses in coastal cities such as Zhuhai was hard hit amid the financial crisis," he said. "But I believe the sector (retail) will pick up steadily this year since the central government amassed ample resources to revive domestic consumption."

The company's CFO Wang Guisheng said he is upbeat with the double-digit growth of sales in January, "it is the sign that the business is back on track."

Speaking about its retail network, Huang said that the company opened five new department stores last year, bringing the total number of stores to 19.

He revealed that three new department stores in Shenyang, Changzhou and Shenzhen will join the stream this year. He expected the Shenzhen store will break even within a year and the other two stores' incomes will balance off their costs in two years.

"The company commits its expansions to acquisitions," he noted. He pointed out the company was recently granted 1.3 billion yuan worth of credit lines from lenders. It will set aside 1 billion yuan for the coming year.

The company's director & general manager Zou Minggui said Maoye currently has HK$867.9 million cash-on-hand. Together with cash flow from its operation, the company has strong financial clout to bankroll long-term development.

When asked whether the company will purchase stakes in other companies, Huang said Maoye made purchases of corporate A-shares in other companies last year as stock prices dropped to attractive levels in terms of market value.

But he continued the Maoyehas no intention to absorb new shares for the time being in view of the unstable market conditions. Nor does he consider injecting his personal assets into the listing arm.

Shares of Maoye yesterday closed at HK$0.70, down 7.89 percent.

(HK Edition 02/28/2009 page5)