Sogo department stores parent Lifestyle International has reported a 50 per cent drop in net profit for last year, despite increased sales.
While turnover rose 16 per cent to HK$4.36 billion (US$555 million), net profit fell to $1.69 billion ($215 million).
However, the company explained the fall was largely due to comparison with 2017 when the company received a one-off gain from the sale of a majority stake in its subsidiary, netting $420.8 million. On a trading basis, the department stores it operates posted solid results.
Sales at its Sogo Causeway Bay flagship store rose by 10.5 per cent last year, and mainland tourists underpinned a 30.3 per cent increase in sales at the Sogo Tsim Sha Tsui store.
CFO Terry Poon Fuk-chuen said the improved turnover was due to the company enhancing the shopping experience at its stores.
Lifestyle International executive director Kam Shim Lau predicts this year will be challenging for retail as declining wage growth and weakening asset values may dent consumer sentiment.
“Looking ahead, the group predicts a single digit growth in the first half of 2019 and adopts a cautious approach for 2019,” he said.