Hong Kong-based upholstery manufacturer Man Wah has reported a decline a sales and profit due to weaker demand from its mainland as well as a drop in exports.

According to its fiscal year results ended March 2023, total sales fell by 18.4% to HK$17.79 billion from HK$21.78 billion in 2022. Net profit declined 14.8% to HK$1.91 billion from HK$2.24 billion.

Gross profit fell 15% to HK$6.68 billion, although the gross profit margin increased to 38.5% from 36.7% during the year.

Within its divisions, Chinese market sales were down 15.9% to HK$11.09 billion, representing 64% of total revenues – up from 61.4% in 2022. North American sales fell 26.1% to HK$4.18 billion, while EU and other overseas sales were down 15.5% to HK$1.16 billion, representing 6.7% of group revenues – up from 6.4%.

Man Wah said that the decline was mainly due to a fall in new home sales, impacting demand across China, while price increases across Europe and due to the War between Ukraine and Russia also had an impact.

Looking ahead, Man Wah said it plans to consolidate its European customer network, while “expanding product lines and adding diversified product styles such as European and modern styles to product R&D”, as well as exploring new potential customer bases and markets.

Wong Man Li, Man Wah Holdings Chairman and CEO, added that mainland sales are expected to grow in the year ahead, boosted by a shift to multi-channel sales rather than depending solely on opening more outlets.

Man Wah also confirmed that it plans to open around 1,000 new stores this year, adding to the 500 launched during the past year.