Nov 27, 2020
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Harvey Nichols owner Dickson Concepts in profit, despite tough H1

Nov 27, 2020

The six months to the end of September may have been a devastating time for retailers, but Dickson Concepts managed to turn a profit in the first half of its financial year, despite lower sales.

Harvey Nichols

The company owns Harvey Nichols and also operates retail stores in Asia under the Roger Vivier and Tod’s brands, among others. 

The company had already highlighted having to cope with the worst retail conditions in its history so it was no surprise this week to learn that H1 turnover fell 42.7% to HK$981.1 million on the back of the “catastrophic retail climate in Hong Kong”. 

But a “substantial increase in profit contribution from the investment portfolio, a doubling of profit in Taiwan, profit contribution from China and tight control in operating costs at all levels of operation” saved the day. 

Net profit attributable to equity shareholders was actually up to HK$133.4 million from HK$119 million. Its investment portfolio contributed a net profit of HK$62.2 million, which was well above the HK$11.8 million of a year earlier.

The company said that during the six months, it dealt with “one of the worst retail environments that Hong Kong has ever faced as a result of the continued outbreak of Covid-19”. 

The pandemic has resulted in Hong Kong’s unemployment rate soaring to a level not seen in nearly 16 years, while GDP experienced record declines during the year. “Meanwhile, tourism has literally come to a complete halt. This has resulted in Hong Kong’s retail sales declining for 20 months in a row on a year-on-year basis,” Dickson added. 

That meant group turnover in Hong Kong plummeted 47.4% and its retail operations there “incurred substantial negative cash flows”. 

But as mentioned, in other parts of the region, the picture was brighter.  In Taiwan, the group achieved a profits increase of over 100% in the first half as “a direct result of continued improvement in consumer sentiment, together with margin improvement and aggressive cost and inventory control”. 

Meanwhile, in China, it “successfully restructured its organisation and expanded both its retail and digital presence, while growing like-for-like sales of its retail stores significantly”. This means its China operation has gone from loss-making to profitable.

But it’s open to question whether the second half will be as strong. The company said it’s “extremely pessimistic about the retail climate in Hong Kong. With the arrival of the fourth wave of the coronavirus and with the Employment Support Scheme from the Government coming to an end on 30th November this year, the unemployment rate in Hong Kong may further increase and local consumer sentiment may further weaken from the current depressed levels. Despite the possibilities of the re-opening of our borders with China and other Asian countries in the near future, the group does not expect a significant return of tourists in the foreseeable future".

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