VEEKO INT'L (01173) issued a profit warning, expecting a mid-term post-tax loss of approximately HK$45 million to HK$53 million.

VEEKO INT'L (01173) announced that it had incurred a net loss of approximately HK$864,000 for the six months ended September 30, 2023 (the "2023 interim period"), and expects to incur a net loss ranging from approximately HK$45 million to HK$53 million for the 2024 interim period. The expected increase in net loss is mainly attributed to the following factors: (1) Decrease in revenue for both the cosmetics and fashion businesses and a decrease in the gross profit margin of the cosmetics business; (2) An increase in financing costs of approximately HK$4.799 million for the 2024 interim period (mainly due to an increase in borrowings, including loans from directors); (3) A foreign exchange loss of approximately HK$1.744 million for the 2024 interim period, compared to a foreign exchange gain of approximately HK$2.884 million for the 2023 interim period; (4) No expected credit loss reversal for trade receivables for the 2024 interim period, compared to a reversal of approximately HK$3.381 million for the 2023 interim period; (5) A significant decrease in the revaluation of investment properties fair value for the 2024 interim period (approximately HK$289,000) compared to the 2023 interim period (approximately HK$3.378 million); and (6) An impairment loss on the right-of-use assets for the 2024 interim period, due to the recoverable amount of the right-of-use assets of some retail stores being lower than the carrying amount as of September 30, 2024, with no impairment loss for the right-of-use assets in the 2023 interim period. The retail market in Hong Kong and Macau has been affected by an increase in outbound travel and a slowdown in inbound tourist spending, impacting the group's sales performance. Despite the challenging retail environment, management has swiftly implemented various measures to actively restore profitability and remains confident in the long-term outlook. Through the implementation of a series of adjusted sales and marketing strategies, the group's sales performance has improved from October to early November 2024, with double-digit growth in comparable retail sales for the cosmetics business and an improvement in the gross profit margin compared to the same period last year. The group is also actively exploring diversified products and brands and will launch a new customer loyalty program to lay a solid foundation for the group's long-term development. Additionally, the group has implemented cost optimization strategies, rigorously controlling costs and expenditures to accelerate the recovery of profitability.