Convenience Retail Asia (CRA), which operates the Circle K convenience stores and Saint Honore cake shops in Hong Kong and China, has posted annual sales of HK$3.32bn (US$428.3m) for 2008, up 13.9% from 2007.
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However, sales for the fourth quarter were only 6.1% higher at $829.9m, reflecting a deteriorating economic environment.
Net profit attributable to shareholders rose by 2.3% and 0.3% to $88.9m and $21.6m for the year and the fourth quarter respectively.
“While the group was able to maintain positive growth momentum over the course of 2008 despite the declining economic environment, our gross margin was negatively impacted by steep food cost inflation during the year under review,” said CRA chief executive Richard Yeung.
The company said cost controls in the form of reduced Circle K store openings, allocating human resources in accordance with store sales performance, and reducing energy consumption, had been “timely”.
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By GlobalDataCRA said it would continue to “keep a close eye” on margins, which it expected to improve due to cost-saving initiatives as well as controls over purchases and expenses.
However, slowing GDP growth in China may signal a leaner period ahead, the company warned. CRA has decided to close five Circle K stores in the Dongguan market for the time being due to the deteriorating economic conditions, and will instead focus on the Guangzhou area.
Meanwhile, CRA said that retail conditions in Hong Kong look set to deteriorate further and pose “challenges for operators in the coming year”.
