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Andy Chen

Shares of  fashion retailer I.T surged as much as 23.6 per cent to a record  yesterday after the company said it would buy the 50 per cent stake in its loss-making mainland venture it  does not  own and two other retail stores for HK$263 million.
The retailer is buying the GSIT stake  from Hong Kong-listed apparel firm Glorious Sun as  part of a move to expand  in the mainland more aggressively, the company said  yesterday.
GSIT, which operates 106 stores and has 61 franchised  outlets in the mainland, narrowed its net loss for the first seven months to  HK$3.2 million  from HK$17.5 million  a year  earlier  as sales rose 61.1 per cent to HK$233.4 million.
I.T will pay HK$80 million in cash and HK$183 million by issuing 102.8 million shares at HK$1.78 each to Glorious Sun  for the venture stake and two apparel retail stores in Nanjing and Macau.
The price of the new shares is the same as the closing price of I.T shares on Friday, before they  were suspended from trading on Tuesday pending  the announcement.
Following the transaction, Glorious Sun, which did not previously own part of I.T,  will own  9 per cent.   With most of its stores in Beijing and Shanghai, GSIT sells I.T-branded products and also operates mainland stores selling French Collection, Stella McCartney and Chloe products.
I.T would 'accelerate the group's expansion  in the mainland, including opening stores outside the existing core cities of Beijing and Shanghai, and mergers and acquisitions of local chains and brand operators', the company said.
Glorious Sun said  the merger of GSIT and I.T's Hong Kong operations 'could greatly enhance the operational efficiency and competitive edge of GSIT'.
Glorious Sun aims to use the net proceeds from the disposal for investment purposes but said it had no solid plans at the moment.
I.T shares yesterday rose to a record HK$2.20 before closing up 9.55 per cent  at HK$1.95.
Glorious Sun shares, which resumed trading yesterday following suspension on Tuesday, rose 6.99 per cent yesterday to HK$3.98.
I.T, which operates about  150 retail outlets in Hong Kong, posted a flat net profit of HK$122.4 million for the year ended February, after sales rose 16.5 per cent to HK$1.53 billion. The company   said  its earnings were weighed down by a six million yuan loss at GSIT, which  opened more stores during the period.
Loss-making unit
GSIT narrowed its net loss in the year to July to HK$3.2 million
I.T will buy the 50 per cent stake it does not already own in GSIT for, in HK$: $263m



I.T shares touch record high over plan to buy out mainland venture