Dapai International, the China-based manufacturer of backpacks, expects to record a net loss for the fourth quarter (4Q11) and for the financial year ended 31 December 2011 (FY11) due to poor sales and increased expenses.
Since the last warning in Nov 22, Dapai says there has been no improvement in the sales of its products despite slashing prices at its 500 outlets and selling them to distributors at lower prices.
As a result, the company has decided to close down many of the outlets and drop some of its distributors.
There was also a significant increase in selling and distribution expenses as well as administrative expenses due to the write-offs and impairments of a substantial number of non-performing outlets.
Dapai says the negative trend is likely continue for the next few quarters resulting in more losses for the group.
Management is in the process of formulating a new business strategy based on increasing OEM production as well as exports as well as cash conservation.
Further details of the group’s financial performance will be disclosed when the company announces its unaudited financial results for 4Q 11 and FY 11 on or before Feb 28.
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