China Lilang Ltd, owner of the mainland's biggest branded menswear and related accessories, said it plans to cut off new stores opening plans as consumer spending is bridled by the country's bleak economic sentiment.

The company will both open and close stores at the same time this year. The pace of opening new stores will slow down while the closure of some non-profitable shops will be at a relative faster pace this year, Wang Dongxing, chairman of China Lilang said in Hong Kong on Wednesday.

Lilang plans to open between200 and 250 flagship brand "Lilanz" stores on the mainland this year, a lower number than the earlier plan announced in March to establish from 250 to 300 stores. Targets of new stores opening for its sub-brand "L2" have also been reduced to 80 shops, down by nearly 50 percent of the previously announced 150 shops.

"Lilang mainly targets consumers in the first- and second-tier cities. We are taking the initiative to slowdown the new store opening pace in a bid to maintain the profitability of the existing ones," Wang told reporters at a media briefing on Wednesday.

Clothing companies currently face weak growth on the mainland as consumers, particularly those in bigger cities, are cautious about spending due to economic factors, according to Wang. The poor weather conditions in the first half has also affected sales data, which also led to increases in inventory.

Lilang, nevertheless, posted positive results in its interim report by announcing that the group's net profit was 278.0 million yuan for the six months ended June 30, 2012, up 21.8 percent year-on-year.The company said in a statement to the Hong Kong stock exchange on Wednesday that its gross profit margin improved 3.3 percentage points to 39.7 percent and same-store sales increased by 12.5 percent during the period, while average selling prices also rose 6.1 percent to 173 yuan from 163 yuan during the first six months in 2011.

Wang expected the company's gross profit margin to further exceed 40 percent, while same-store sales are likely to maintain a low double-digit growth in the second half this year. The company said its after order values of "Lilanz" increased 16 percent and 11.5 percent for the fall and winter collections respectively.

Order values of its sub-brand "L2" also surged 61 percent and 40.5 percent respectively for the fall and upcoming winter collections, according to the company.

Share of Lilang rose HK$0.02 or 0.375 percent to close at HK$5.36 on Wednesday's Hong Kong trading, compared with the 1.18 percent loss of Hang Seng Index.

litao@chinadailyhk.com

(HK Edition 08/16/2012 page2)