HONG KONG — Men’s wear firm Trinity Limited reported moderate revenue and net profit growth in 2012, reflecting the weakening retail environment in China.
Trinity, which owns the Kent & Curwen, Cerruti and Gieves & Hawkes brands, said revenues rose 7.4 percent last year to 2.8 billion Hong Kong dollars, or $360 million.
Net profit for the year rose by 5.2 percent to 540 million Hong Kong dollars, or $69.6 million, primarily boosted by a gain of 35 million Hong Kong dollars, or $4.5 million, from the sale of a 30 percent stake in a Ferragamo joint venture. A lower tax rate also helped buoy results.
Dollar figures are converted using average exchange rates for the period in question.
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Trinity gets the vast majority of its sales from greater China with 53 percent from the mainland, 31 percent from Hong Kong and Macau and 7 percent from Taiwan. European sales make up 9 percent of total revenue.
“Sunny” Wong Yat Ming, Trinity’s group managing director, described the market environment as “challenging,” but said the company’s strategy for China remains the same.
Last year’s profits took a hit as seasonal discounts in China were more prevalent than expected, Wong explained during a press conference. Competitors that typically do not offer discounts during peak shopping times — around Labor Day in May and National Day in early October — did offer discounts this year.
If the level of discounting remains the same this year, profit margins should be also be about the same in 2013, Wong said.
Trinity’s same-store sales slowed dramatically in the second half of the year. Same store sales in mainland China were down 1.6 percent for the year.
Wong noted that while sales in the eastern part of China were still quite depressed, high-growth regions such as western and northern China merely showed less growth. Same-store sales in Hong Kong and Macau did better, up 6.6 percent for the year, while Taiwan sales were down 11.9 percent due to poor consumer sentiment.
Looking forward, Wong said he remains optimistic and believes that medium- to long-term growth will continue to fuel the luxury retail sector.
“Domestic consumption is being encouraged and as a growing number of people move into the aspirational middle and upper classes, they have a stronger propensity to purchase luxury goods. The number of wealth Chinese is also increasing substantially,” he said.
Trinity opened 12 net new stores in China in 2012 and plans to continue opening new stores at the same rate, with a focus on larger stores, outlet stores and airport shops.
The company is also pushing to make its men’s wear brands more “global.” It is planning to open new Kent & Curwen flagship shop in the U.S. and a Savile Row shop in London.
Wong also said U.S. department stores have shown great interest in the company’s brands and that Cerutti’s fashion show at Paris Fashion Week helped put the brand back on the map.