HONG KONG — Multibrand retailer I.T Holdings said it experienced declining sales and gross profit margin in the third quarter, citing macroeconomic woes and discounting practices.
The retailer said its sales for the three months ended Nov. 30 declined 2 percent in Hong Kong and 2.2 percent in Mainland China. On the upside, I.T said sales grew 37.4 percent in Japan. It did not release sales figures.
I.T noted “cautious consumer spending momentum” over the time period. The company said Hong Kong sales suffered from a stronger Hong Kong dollar to yuan exchange rate, which provided less incentive for cross-border shopping. Sales in Japan, a much smaller market for I.T, grew thanks to a weak yen and strong tourist flows, it said.
In terms of gross profit margin for the quarter, I.T said its margin in Hong Kong fell 2.9 percent to 59.3 percent while that in China increased 0.6 percent to 65.8 percent. The Japan margin fell 10.3 percent to 63.2 percent. On a group level, the margin slid 1.9 percent to 63.2 percent.
“As a result of increased price discounting and the persisting inflationary pressure from rental and staff costs, margins and profitability of our Hong Kong operations were considerably impacted in a negative manner. These cost inflations have rendered a very difficult trading environment in Hong Kong which shall remain unchanged for the rest of this fiscal year,” I.T said.
I.T bought 90 percent of Nowhere Co., the corporate parent of Japanese street label A Bathing Ape, back in 2011.