Hong Kong-headquartered shoe retailer Le Saunda shut down 52 stores during the year to February as it worked to mitigate falling sales in the wake of the Covid-19 pandemic.
The embattled shoe retailer recorded a profit for the full year of US$16.6 million, although this was entirely due to material gains on the return of its former manufacturing plant at Shunde in Guangdong for which Le Saunda booked a material gain of $25.4 million. Local government grants to mitigate the impact of the pandemic added around $1.4 million to income.
Total revenue for the year fell by 19.3 percent to US$97.2 million due to store closures and trading restrictions related to government measures to slow the spread of Covid.
Efforts to reduce overheads across the business resulted in selling and distribution expenses falling 28.5 percent to $37.4 million. The company also managed to cut inventory by 44.1 percent year on year, some of that relating to fewer raw materials after the Shunde plant was closed.
In a stock exchange filing, chairman James Ngai said the pandemic led to a “severe winter” for greater China’s retail industry.
Le Saunda responded by outsourcing manufacturing, closing unviable stores, tapping into social commerce, and expanding online sales channels through the “livestream shopping” model. It launched the Le Saunda Y collection online, aimed at catering to the preferences and buying behavior of younger female consumers, and upgraded its loyalty scheme to a WeChat Mini Program.
“During the pandemic, the group was determined to innovate, grasp the pulse of the market and introduce new elements to its brands, so as to maintain the competitive edge of its brands and its leading position in the female footwear market,” he said.
As at the end of February Le Saunda had 297 stores (down 34) under its core branding, and 40 Linea Rosa stores (down 12).