China Lilang mulls new stores strategy

China Lilang Ltd, owner of the mainland’s biggest branded menswear and related accessories, said it plans to cut off new stores opening plans as consumer spending is bridled by the country’s bleak economic sentiment.

The company will both open and close stores at the same time this year. The pace of opening new stores will slow down while the closure of some non-profitable shops will be at a relative faster pace this year, Wang Dongxing, chairman of China Lilang said in Hong Kong on Wednesday.

Li l ang plans to open between200 and 250 flagship brand “Lilanz” stores on the mainland this year, a lower number than the earlier plan announced in March to establish from 250 to 300 stores. Targets of new stores opening for its sub-brand “L2” have also been reduced to 80 shops, down by nearly 50 percent of the previously announced 150 shops.

“Lilang mainly targets consumers in the first- and second-tier cities. We are taking the initiative to slowdown the new store opening pace in a bid to maintain the profitability of the existing ones,” Wang told reporters at a media briefing on Wednesday.

Clothing companies currently face weak growth on the mainland as consumers, particularly those in bigger cities, are cautious about spending due to economic factors, according to Wang. The poor weather conditions in the first half has also affected sales data, which also led to increases in inventory.

Lilang, nevertheless, posted positive results in its interim report by announcing that the group’s net profit was 278.0 million yuan for the six months ended June 30, 2012, up 21.8 percent year-on-year.The company said in a statement to the Hong Kong stock exchange on Wednesday that its gross profit margin improved 3.3 percentage points to 39.7 percent and same-store sales increased by 12.5 percent during the period, while average selling prices also rose 6.1 percent to 173 yuan from 163 yuan during the first six months in 2011.

Wang expected the company’s gross profit margin to further exceed 40 percent, while samestore sales are likely to maintain a low double-digit growth in the second half this year. The company said its after order values of “Lilanz” increased 16 percent and 11.5 percent for the fall and winter collections respectively.

Order values of its sub-brand “L2” also surged 61 percent and 40.5 percent respectively for the fall and upcoming winter collections, according to the company.

Share of Lilang rose HK$0.02 or 0.375 percent to close at HK$5.36 on Wednesday’s Hong Kong trading, compared with the 1.18 percent loss of Hang Seng Index.

Standard Chartered Plc has agreed to pay $340 million to New York’s State Department of Financial Services (DFS), the banking regulator, in a hastily arranged deal to avert a hearing to defend its right to operate in New York, but still faces a separate probe over its alleged Iran-related transactions by other US agencies.

The bank confirmed that the two sides had reached an agreement, including the $340 million payment, and said detailed terms would be concluded soon. “It was a pragmatic decision in the best interest of shareholders and customers,” a bank’s spokesman said.

In addition to the civil penalty, the bank agreed to instal an outside monitor who will report directly to DFS to check on risk controls on moneylaundering at its New York branch for at least two years.

The deal with New York Superintendent of Financial Services Benjamin Lawsky on Tuesday caps a week of transatlantic tension.

Standard Chartered Plc could pay as much as $1 billion in fines as it settles with other regulators following its agreement with the DFS, according to Simon Morris, a regulatory lawyer at CMS Cameron McKenna in London.

“The implication for Standard Chartered is they have a truce on one battle but four more to fight” with their other regulators, he said in an interview