Hong Kong-headquartered I.T Ltd. issued a profit warning on Wednesday, sharing that it is expecting to swing into a net loss for the half-year period ended Aug. 31.

The forecast was based off of a preliminary assessment of accounts and up-to-date operational data, said the company, which operates a network of multibrand retail stores and is the China partner for brands such as Dover Street Market, Undefeated, Fred Perry and more.

“In view of the various geopolitical and macroeconomic challenges such as the Sino-U.S. trade tensions and the recent social instability in Hong Kong, the group offers extra discounts to increase sales and reduce inventory,” the company said. “This leads to decline in gross margin and earnings in several of our operating regions such as Hong Kong and mainland China.”

While the persistent political controversy in Hong Kong surely has not helped, the group’s business in the quarter to May, before the protests began, had already showed signs of weakness. In Hong Kong, same store sales growth fell 1.2 percent year-over-year off of heavy discounting. It was more positive in mainland China where the company’s same store sales growth grew by 6.2 percent, while Japan and the U.S. rose 3.2 percent.

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