Bonjour’s 2014 net profit at risk

Hong Kong-listed cosmetics and healthcare products retailer Bonjour Holdings Ltd. said its net profit for last year could decline by a year-on-year 10 per cent to 20 per cent, to which the company attributed the influence of Hong Kong’s pro-democracy Occupy Central movement and restrained spending by mainland Chinese tourists as the major causes.
Bonjour, whose 40-plus retail outlets are mostly located in Hong Kong and Macau, saw its same-store sales growth for both cities record a drop of approximately 1.6 per cent for the year ended December 31, 2014, the company reported in its unaudited operational data to the Hong Kong Stock Exchange after trading hours on Friday, without citing further hard numbers.
The retailer said that ‘the most significant’ decline is found in the fourth quarter, a traditional high season for sales.
‘The board considers the 79-day pro-democracy protest in Hong Kong which began in late September 2014 has affected the group’s retail sales performance in the fourth quarter, especially in the affected districts like Mongkok and Causeway Bay where our group has a number of stores located nearby,’ Bonjour said in the filing.
Accounting for the likely decline in net profit, the retail chain also referenced smaller size transactions made by mainland Chinese visitors as the major cause – an important source of clients shopping in Hong Kong and Macau.
‘This is mainly attributable to a change in PRC tourist mix to tourists from lower-tier cities with less spending power, increasing the number of day trippers,’ Bonjour said, explaining the reasons behind the predicted net profit drop in the filing, ‘And increasing popularity of Korean beauty products which in general are selling at a relatively lower price than higher-priced European or Japanese brands.’
The trend of less sales earned from Chinese visitors as highlighted by Bonjour is similar to what rival Sa Sa International Holdings Ltd. cited in its third quarter sales data update released last week.
For the nine months ended December 31, 2014, Sa Sa saw its average sales per transaction in Hong Kong and Macau drop by a year-on-year 3 per cent to HK$385 (US$50) – although the company said it saw its same-store sales growth in the two cities increase 2.6 per cent in the period, while its retail sales rose 5.2 per cent to HK$5.44 billion, according to Sa Sa’s sales data update.
While Bonjour did not elaborate upon its retail sales figures for last year in the Friday filing, the company said that the increase in some one-time expenses – such as recognition of the share-based payment expenses arising from share options granted in July 2014 as well as store re-openings and reinstatement expenses – had also affected its net profit in the period.