I am pleased to report that the Group has returned to bottom line-profitability for the financial year ended 30 June 2019 (FY19) despite a challenging operating environment. Southeast Asia economies, although one of the most robust in the world, were not shielded from the global turbulence as they faced and continue to face macroeconomic headwinds from the escalating US-China trade war, uncertainties over Brexit, and rising interest rates.
Our return to the black came on the back of a groupwide restructuring programme which is now behind us. The actions taken – closing down loss-making stores, discontinuing laggard brands, right-sizing our operations, raising productivity etc. – are delivering results and our financial metrics are firmly heading in the right direction. Our gross and operating margins have been on the uptrend in the last two years and we have stayed disciplined in managing our costs and inventories. Our portfolio of brands is slimmer but stronger.
We will continue to focus on executing our growth strategy by serving our customers with the fashion products they desire and the in-store experience that will enhance their loyalty to our brands.
The two brands we have added this year – French heritage label Fauré Le Page and Swiss luxury watch label Baume & Mercier – are the latest examples of how we continue to push ahead to secure well-recognised brands that will appeal to the upscale segment of our market.
Fauré Le Page, established more than 300 years ago as a master gunsmith specialising in ceremonial weapons for royalty, opened its store in Ngee Ann City in early August. Its collection of fine leather handbags and accessories has proven popular with consumers and we are pleased with the store’s performance. We started distributing Baume & Mercier timepieces in April and its sales have met expectations.
Against the backdrop of moderating growth in our key markets of Singapore, Indonesia and Malaysia, we will scale our distribution network cautiously while investing in an integrated approach to commerce that will allow shoppers to access multiple touchpoints at their convenience. To this end, our omni-channel strategy is taking shape with the encouraging launch of our Superdry online store in Singapore in July, and our planned roll out in Malaysia in the second quarter of the current financial year ending 30 June 2020.
We are investing in digitisation and will continue to harness technology particularly focusing on how we can effectively use data analytics to gain deeper insights that will help us predict customer needs and respond to changing market dynamics.
For FY19, Group turnover fell 21% to $131.5 million, reflecting the closure of loss-making businesses and lower sales to the Group’s Indonesian associate. Group net profit after tax stood at $177,000 against a net loss of $1.2 million the year before while Group operating profit was 33% higher at $4.1 million. Gross profit margin improved from 46% to 49%, underscoring a better yielding brand portfolio, more targeted inventory management and an absence of rampant industry discounting. Group operating expenses fell 19% to $60.7 million, a total savings of $13.9 million.
The Company was placed on the Singapore Exchange watch list in December 2016 for sustaining pre-tax losses for more than three consecutive years and an average daily market capitalisation of less than $40 million for more than six months. And in June 2017, for having a minimum trading price of less than $0.20. On 20 June 2019, the Singapore Exchange approved the extension of the cure period for a period of 12 months, ending 4 December 2020.
We welcomed Yee Kee Shian Leon, Chairman and Managing Director of Duane Morris & Selvam LLP, as an Independent Director to our Board at the start of September 2019. Leon is a highly-regarded lawyer with experience in corporate finance and corporate transactions.
Leon takes over the reins from our Independent Director Daniel Ong, who will be stepping down after the Annual General Meeting. On behalf of the Board, I would like to extend my sincerest appreciation to Daniel for his time and valuable counsel to the Group over the last eight years. I wish him all the best in his future endeavours.
Amid slowing global economic growth, escalating US-China trade war and ongoing protests in Hong Kong, Southeast Asia economies are showing signs of slowing down with Singapore and Indonesia expected to come under greater pressure than Malaysia which has reported stronger growth on the back of rising domestic demand and recovery in commodity-based sectors.
I believe the significant progress we have made in recent years to cut costs, streamline our operations and strengthen brand portfolio, should buttress us against a downturn and position us to seize new opportunities. Management is working hard in this regard to extract greater value from, as well as expand, our existing brand portfolio.
Finally, I would like to thank my fellow directors for their contribution and guidance and our customers, shareholders, business partners and associates, for their support during the year. My deepest gratitude also goes to our management and staff for their diligence and dedication in getting the Group back on a steady keel. I know they will not be complacent but will continue to work with the same determination to succeed in the months ahead.
F J Benjamin Holdings Ltd.