Profit before tax grew by 36.0% to RMB 482.2 million
Net profit margin increased to 32.7%
Board declared dividend at RMB 1.9 cents per share
HONG KONG, March 29, 2011 /PRNewswire-Asia/ -- PCD Stores (Group) Limited and its subsidiaries (the "Group") (Stock Code: 00331), a department store group in the PRC with an emphasis on high-end and luxury products, announced annual results for the year ended 31 December 2010.
Financial Highlights
| 2010 RMB'million |
2009 RMB'million |
YoY% Increase |
|
| GSP** | 3,638.5 | 3,175.2 | +14.6% |
| Revenue | 1,084.4 | 927.0 | +17.0% |
| Profit before tax | 482.2 | 354.7 | +36.0% |
| Profit attributable to Owners of the Company | 334.7 | 253.4 | +32.1% |
| Net profit margin | 32.7% | 28.6% | N/A |
| Year-end dividend (cents) | 1.9 | - | N/A |
**GSP = gross revenue from concessionaire sales plus direct sales
Business Review
Review
China's retail industry has shown a healthy growth in 2010, driven by the Chinese government's expansionary policy on domestic consumption as well as strong economic growth during the year. The Group continued to execute our strategy of (i) focusing on the high-income consumer market, and (ii) expanding into other regions with high growth potential, both of these strategies had continued to result in tremendous success for the year 2010. As such, the Group is pleased to announce that in 2010, our revenue grew by 17.0%, reaching RMB 1,084.4 million in 2010 and our gross sales increased by 14.6%, reaching RMB 3,638.5 million. Our profit for the year amounted to RMB 354.3 million, representing an increase of 33.5%. After tax net profit to shareholders was RMB 334.7 million, representing a growth of 32.1%.
In September 2010, the Group successfully completed the acquisition of three department stores in Guizhou province from our Controlling Shareholders. The total consideration of the acquisition was approximately RMB 551.0 million, representing a discount of more than 40% to the fair market value. The Group considered this acquisition as another important milestone in our business development and expansion. The addition of these three department stores to our store network, has enabled us to establish a very solid footprint in Guizhou, a province that has demonstrated continuous strong retail growth for the past several years. The three newly acquired department stores have performed well during 2010, and continue to enjoy robust growth in both revenue and profit. With the success of this acquisition, the Group has plans to further bolster our presence in the region. Two additional department stores are planned. Both are located in prime locations in Guiyang, the provincial capital of Guizhou, with one department store scheduled for opening in 2011. Upon the opening of this department store and together with two other existing managed stores in Guizhou, the Group will be firmly entrenched with six department stores in operation during 2011. This will strengthen our dominance in this high-growth region in China.
To capture the opportunities available in the fast-growing Western region of China, the Group devoted significant resources to develop our presence in this area. Xian Project Phase II in Xian, the provincial capital of Shaanxi province, is anticipated to complete by 2011. By that time, the expanded PCD Xian Store will provide over 70,000 square meters of modern retail space, which signifies our intention of expanding our retail network in this highly-regarded area. This department store is part of a landmark complex in Xian which also comprises a 5-star international hotel and five office towers. Major retail tenants, particularly top-tier international fashion and jewelry brands, have shown great interest in establishing a presence in our upcoming property. With this department store as our anchor in the region, the Group will cement its footprint and enjoy strong brand recognition in the area. To leverage this footprint, the Group will continue to evaluate other potential store locations in Xian and nearby areas.
The year 2010 also marked the first full year of operation of our Beijing Scitech Premium Outlet Mall. This 44,000 square meter outlet retail space has become a destination for customers looking for a comfortable shopping environment with offerings from top international brands at attractive discounts. In addition to ample parking space, the outlet mall is also accessible by Subway Line 14 with an exit directly adjacent to our site. Brand mix of Beijing Scitech Premium Outlet Mall has improved continuously, with new premium brand entrants, which, together with the increasing number of food and beverage establishments within the outlet mall, serve to enhance the shopping experience and enjoyment of the customers. The management team is satisfied with the current performance of the outlet mall, and plans to acquire this outlet mall from our Controlling Shareholders during 2011.
Outlook
From a macroeconomic perspective, the Directors believe that a modest inflationary environment along with the Chinese government's focus on expanding domestic consumption should encourage the growth of the retail industry in the year ahead. The increasing pace of urbanization as evidenced in many large cities as well as solid economic growth in tier-3 and tier-4 cities in China also present new opportunities to us. Our management team is excited by the prospects of the retail market in China in 2011 and is actively evaluating potential opportunities to further expand our store network and continue to lay the foundation for our future growth.
To equip ourselves to take on attractive opportunities available in the market, the Group decided to broaden its sources of funding and extend its credit profile to tie in with its investment horizon. On 1 February 2011, the Group issued a 3-year RMB-denominated guaranteed bond. The total amount of the bond issued was RMB 750 million, at an annual coupon rate of 5.25%. The bond was listed on the Singapore Stock Exchange and our Directors were encouraged that the bond was very well received by international investors. The successful offering of the bond signified a strong endorsement by investors to our financial performance as well as our ability to deliver continuous and sustainable growth.
In the year ahead, the Group intends to continue to focus primarily on the high-income market, while evaluating potential acquisition targets and greenfield opportunities to further expand and strengthen our store network. The inclusion of pipeline projects identified to date, could potentially see an increase of more than 40% in the GFA of department stores and outlet malls under our operation and management. This expansion would serve as a solid foundation for us to maintain its growth in the future. At the same time, the management team is upgrading and improving the existing operations at each of our stores, which include hardware renovations, addition of new tenants and enhancement of the experience that each store provides to its customers.
Being encouraged by the solid performance of our Beijing Scitech Outlet Mall, the Group is actively exploring potential new sites in major tier-1 and tier-2 cities to expand our outlet mall network. The Group plans to launch an outlet mall project in the second half of 2011 in Shenyang, the provincial capital of Liaoning province and an area that has shown strong consumption power in the last several years. The Directors are excited about this upcoming project and are confident that this new outlet mall will generate positive returns for us. The Group and our parent company continue to enter into discussions and arrangements with business partners, property owners, developers, and municipal and city governments in relation to potential department store and outlet mall developments in selected cities. The Group will keep our stakeholders timely informed of the progress of all such initiatives at an appropriate time.
The Directors are satisfied and continue to be confident about our development. The Board has decided to declare a year-end dividend of RMB 0.019 per share. With our financial resources supported by a prudent fiscal policy, our management team strives to execute our expansion strategy, build a strong foundation, and deliver satisfactory returns to our stakeholders in this exciting market.
Notes to editors:
About PCD Stores (Group) Limited
PCD Stores is a rapidly growing department store and outlet mall group in the PRC with an emphasis on high-end and luxury products. The Group's department store operations include "PCD" and "Scitech" brands, which aim to lead the luxury department store sector by offering premium branded goods tailored to luxury retail market needs. The Group offers merchandise from more than 1,600 brands, including Gucci, Armani Collezioni, Ermenegildo Zegna, Hugo Boss, Ralph Lauren and Ports 1961, etc. With its esteemed market position and an expanding network, the business of the Group is rapidly growing, riding on the booming Chinese economy.
