On November 14, GLONGHUI | Salsa International (00178.HK) announced that for the six months ending September 30, 2024, the Group's turnover was HK$1.9205 billion, down 10.4% from the same period last year, mainly due to challenges faced by the Group's core markets, Hong Kong and Macau. Operating pressure is mainly due to (i) weak macro markets, (ii) continued travel by local residents in the core markets of Hong Kong and Macau (“Hong Kong and Macau”) to travel north to South China; (iii) a sharp increase in outbound travel. This is partly due to the relative strength of the Hong Kong dollar against a basket of other currencies (including yen), which has reduced local consumption; and (iv) mainland Chinese tourists visiting Hong Kong and Macau have become cautious in spending. The increase in online sales channels in mainland China and the opening of five physical stores in Singapore from April 2024 will help mitigate this impact.
Retail and wholesale turnover in Hong Kong and Macau (“offline sales”) decreased by 19.4% to HK$1.3082 billion. Offline sales in Southeast Asia increased by 18.5% to HK$0.1624 billion; in mainland China, offline sales declined 36.7% to HK$53.7 million due to 12 fewer stores operating compared to the same period last year. As of September 30, 2024, the Group operated a total of 178 retail stores in all regions.
The Group's online sales increased by 32.6% to HK$0.3962 billion, accounting for 20.6% of the Group's total turnover (2023:13.9%). The increase in online sales was mainly due to a sharp increase in online business in the mainland China market from HK$0.1597 billion in the same period last year to HK$0.2575 billion during the period.
During the period, the Group's gross profit decreased by 14.1% to HK$0.7565 billion, and gross margin reached 39.4%. The share of sales and distribution costs and administrative expenses in turnover increased from 30.0% and 5.4% to 32.0% and 5.8%, respectively.
The Group recorded a profit of HK$32.4 million during the period. After paying the final dividend of HK$0.1552 billion for the previous financial year, the Group's cash decreased by HK$0.1199 billion to HK$0.3379 billion. The Group's cash inflow from operating operations during the period was HK$54.9 million (net of lease liabilities and interest payable) or 1.7 times profit during the period, indicating that the Group had sufficient cash flow to meet the needs of business operations.
Basic earnings per share were HK1.0 cents. (2023:3.3 HK cents) The board of directors resolved to pay an interim dividend for the six months ended September 30, 2024, at HK0.75 cents per share, equivalent to approximately 72% profit for the period (2023: none), and will maintain a stable dividend policy.
