Convenience
Retail Asia reports
satisfactory growth in sales
and profit for 2002 first quarter
China expansion
progresses as planned
Hong Kong,
24 April 2002 - Convenience Retail Asia Limited ("CRA"
or "the Group") [SEHK code: 8052], operator of the Circle
K convenience store in Hong Kong and China, announced satisfactory
growth in both turnover and profit for the first quarter ended 31
March 2002.
The Group's turnover
for the period under review was HK$322.6 million, increasing by 7%
from HK$301.9 million in 2001 first quarter. This turnover increase
was entirely contributed by the sales of new stores. A 5% decrease
in sales of comparable stores (stores in existence throughout the
first quarter of 2001 and 2002) was recorded reflecting the very difficult
retail environment in Hong Kong. As at 31 March 2002, there were a
total of 148 CRA-owned-and-managed Circle K stores in Hong Kong, up
from 126 as at the end of the first quarter of 2001.
Quarterly net
profit rose by 7% to HK$12.0 million from HK$11.3 million in 2001.
Increased sales turnover, lower operating and administrative expenses
and higher gross margins combined to contribute to the increase. Basic
earnings per share remained unchanged at 1.8 HK cents when compared
to the same period last year.
Dr. Victor K.
Fung, Chairman of CRA, said, "We are encouraged by the satisfactory
growth in turnover and profitability for the Group despite an economic
downturn and adverse retail environment in Hong Kong. As the economy
rebounds, we believe that we shall be able to capitalize on the recovery
and maintain our track record of growth."
Mr. Richard Yeung,
Chief Executive Officer of CRA, commented, "Closer collaboration
with suppliers in product promotion, category management and smart
pricing resulted in improvements in our gross margins and other income.
We will continue with this strategy while maintaining a tight control
of our store expenses."
China Update
The Group's plan
to expand into Guangdong has been progressing on schedule. In preparation
for new store openings, the Group has committed to acquire two new
stores sites located at prime retail areas with high pedestrian traffic.
Two other potential store sites are currently under negotiation.
The new outlets
will operate in a modified store model, which will emphasize on food
services featuring an innovative range of quality food and drink products.
Mr. Yeung said, "The new model aims at offering customers an
exciting and novel experience while shopping at Circle K. We hope
it will ultimately help position Circle K as the premium convenience
store chain in Guangzhou."
Business Outlook
In Hong Kong,
survey findings indicated that overall consumer sentiment improved
slightly but consumers are still cautious on spending. Steady investment
in advertising and promotion proved to be effective in increasing
overall sales turnover in an unfavorable economic environment in the
first quarter of 2002. This provided CRA with a competitive edge to
generate repeat purchases and increase value per transaction.
According to Mr.
Yeung, the Group will continue to implement an aggressive marketing
program to encourage customer spending by providing novelty offers,
innovative services and unparalleled value. The Group will also focus
on improving net margins through overall cost reductions.
Conclusion
Looking ahead,
Mr. Yeung commented, "Short-term uncertainties in the Hong Kong
market and start-up costs in the Mainland of China might affect the
Group's profit growth. However, as the warm weather sets in in the
SAR, we begin to see some healthy growth in the seasonal product categories
such as packaged drinks and ice creams. If the trend continues, together
with an economic rebound in the US, we believe that retail conditions
and businesses should improve in the second half of 2002."
About CRA
Convenience Retail Asia is engaged in the operation of one of the
leading convenience store chains in Hong Kong under the brand name
of Circle K. The Circle K store chain comprises 148 company-owned-and-managed
stores in Hong Kong as of 31 March 2002. Major initiatives are planned
for expansion into the southern part of the Mainland of China.
About Li
& Fung Retailing
Li & Fung (Retailing) Limited, the holding company of Convenience
Retail Asia, was formed in 1985 as a company wholly-owned by Li &
Fung (1937) Limited. There are two chains within the retailing group:
Circle K and Toys "R" Us. The retailing group's business
extends from Hong Kong to Taiwan, Singapore, and Malaysia, with plans
for expansion into the Mainland of China and other South East Asian
countries.
For more information, please contact:
Convenience
Retail Asia Limited
|
Telephone:
|
2991 6000
|
Mrs. Louisa
Kwan
|
Direct line:
|
2991 6229
|
CRA corporate
Web site: www.cr-asia.com
Convenience
Retail Asia Limited
First
Quarterly Results
For the Three Months Ended 31 March 2002
|
%
Increase |
2002 |
2001 |
|
Group turnover |
7% |
HK$322,585,000 |
HK$301,905,000 |
|
Group profit |
7% |
HK$12,024,000 |
HK$11,256,000 |
|
Basic earnings per share |
- |
1.8
HK cents |
1.8 HK cents |
|
-
Satisfactory
growth in turnover and profitability despite adverse retail environment
in Hong Kong.
-
Number of
stores in Hong Kong increased by two to 148 during the quarter
with an additional four store openings planned.
-
Some volatility
in rate of profit growth is expected due to uncertainty in the
Hong Kong retail environment.
-
Entry into
the Southern China market progressing according to plan.
-
It is anticipated
that the Company will continue to incur start-up costs from new
operations in the Mainland of China.
-
Strong cash
position with HK$351.6 million cash on hand and no bank borrowings
as at 31 March 2002.
Convenience
Retail Asia Limited
Unaudited
Consolidated Profit & Loss Account
Three months ended 31 March |
|
2002
HK$'000 |
2001
HK$'000 |
Turnover |
322,585 |
301,905 |
Cost of sales |
(243,614) |
(228,189) |
|
|
|
Gross profit |
78,971 |
73,716 |
Other revenues |
22,583 |
21,600 |
Store expenses |
(73,392) |
(69,018) |
Distribution costs |
(4,396) |
(4,251) |
Administrative expenses |
(10,739) |
(10,931) |
Start-up costs for China operations |
(1,076) |
- |
|
|
|
Operating profit |
11,951 |
11,116 |
Minority interest |
73 |
140 |
|
|
|
Profit attributable to shareholders |
12,024 |
11,256 |
|
|
|
Basic earnings per share |
1.8 cents |
1.8 cents |
|
|
|
|