SHANGHAI–The owners of The Lane Crawford Joyce Group have offered to privatize its Joyce boutiques business following years of soft performance exacerbated by the political unrest this year in Hong Kong.
The Woo family, which controls a fashion and real estate empire via Wheelock and Company, have made a cash price offer of $0.28 Hong Kong dollars per share to take Joyce Boutique Group private.
The thinly-traded stock has lost nearly 65 percent of its share price since listing and last paid a divided in August 2015. The company also pointed out it had no plans to fundraise and could save costs from forgoing the expense of maintaining its listing on the Hong Kong Stock Exchange.
“The trading environment for retailers has been challenging in recent years,” a company statement said. “The company has recorded significant declines in revenue and losses in four consecutive financial years despite various initiatives of management to enhance the financial performance of the company. This financial year, on top of soft economic performance, the outbreak of social unrest has seriously impacted inbound tourism and customer sentiment in Hong Kong.”
In the first quarter, Joyce recorded an 11 percent drop in revenue year over year which ballooned to 26 percent in the second quarter. The unaudited net loss for the six months ended September 30, more than doubled to $55 million Hong Kong dollars compared to a year earlier. It added that the situation had further worsened in October and November.
Hong Kong, which has been rocked for half a year by some of the fiercest protests the city has ever seen, accounts for 86.7 percent of group revenue.
Joyce, founded by Joyce Ma nearly half a century ago in 1971, was a pioneer in bringing high designer labels to Hong Kong, introducing edgy brands to what was then a newly-booming world financial capital. The company was sold to Wheelock and Company in 2000 and has since expanded its store network to 34 shops, six of which are in Mainland China. Aside from Joyce stores which sell fashion apparel, it operates Joyce Beauty, Joyce Warehouse outlets as well as the Marni joint venture for Hong Kong.
However, the rise of e-commerce, high rent costs in Hong Kong, in addition to other macro challenges of late including the slowing of the Chinese economy and the U.S.-China trade dispute have cast doubt on a recovery in the near term.