Bosideng's annual net profit plummeted 35.6% Do not rule out mergers and acquisitions to develop non-down business

Bosideng International Holdings Limited today disclosed net profit for the financial year ended March 31, 2014 of RMB 695 million, a decrease of 35.6% from RMB 1,079 million in the previous fiscal year.

Bosideng International Holdings Limited today disclosed net profit for the fiscal year ended March 31, 2014 of RMB 695 million (RMB, same below), representing a decrease of 35.6% from RMB 1,079 million in the previous fiscal year.

The annual revenue dropped by 11.7% year-on-year to 8.238 billion yuan, of which the revenue of the Group's branded down apparel business decreased by 14.6% to 6.057 billion yuan, which was mainly affected by the decline in domestic demand and the high temperature in autumn and winter; the OEM processing business was slow due to economic recovery in Europe and the United States and processing factories In Southeast Asia, revenues decreased by 7.8% to RMB 880 million; sales of non-down apparel business increased slightly by 1.9% to RMB 1.3 billion, accounting for 15.8% of the Group’s total revenue, which was higher than the 13.7% recorded in the previous year. In mid-May, Liang Xuhui, who was newly appointed as CEO of Bosideng (3998.HK), stated at the performance conference that he would focus on the development of non-down apparel business in the future, and did not rule out the adoption of mergers and acquisitions that had a well-known brand and raised the proportion of revenue from the business to 30%.

Gross profit for the year decreased by 12.8% from the same period of last year to 4.116 billion yuan, gross profit margin decreased by 60 basis points to 50%; inventory increased from 1.97 billion yuan to 2.043 billion yuan. Liang Xuhui hopes that the gross profit margin for the current fiscal year will be at least the same as last year, while inventory will hopefully be reduced by 10%.

Liang Xuhui disclosed that the annual income from e-commerce business was only 4-5 billion yuan, accounting for 6% of total revenue. He hopes to increase the ratio to 10% through online and offline integration within three years.

Bosideng closed at HK$1.26 on Friday, down 4.55%.

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