Inflated rental and staff costs precipitated a loss at Pou Sheng, one of the two leading sports retailers in China, for the first six months of its financial year, until the end of March. The company's turnover increased by 9.7 percent to $846.1 million, including acquisitions that lifted the number of stores directly and indirectly operated by Pou Sheng to more than 7,700 units – most of them mono-brands stores for Nike, Adidas, Reebok, Li Ning, Anta and several others. Without these acquisitions, sales would have risen by only about 4.5 percent. It's a pretty poor score for the fast-growing Chinese market which, as we have already reported, is going through a major reorganization.
The company was hit by a jump of 23.6 percent in its selling, distribution and administration costs, which it will strive to improve in the second half of its financial year. Pou Sheng ended the six months with a net loss of $17.6 million, compared with a profit of $34.5 million for the same period last year.
Meanwhile, Pou Sheng's parent company, Yue Yuen, which remains the world's largest shoe manufacturer, reports an increase in net income to $278.8 million for the six months ended March 31, up from $230.1 million in the same period a year ago. Sales rose by 9.5 percent to $3,614 million, with increases of 8.9 percent for athletic footwear, 11.5 percent for casual and outdoor shoes, and 7.0 percent for sandals.
On a geographical basis, excluding the company's retail operations in Asia, sales were up by 3.0 percent in the U.S., by 4.4 percent in Europe, by 15 percent in Asia and by 33 percent in South America.
Yue Yuen is changing the end of its financial year from Sept. 30 to Dec. 31, so the current fiscal year will be stretched to last for 15 months.