The Finnish chain of discount department stores that operate under the name Hong Kong has applied for debt restructuring in the face of major financial difficulties. A press release explains that the company is hoping that the debt restructuring will help to quickly restore the chain to good financial standing.
“Group costs outweigh net sales. A few loss-making department stores also strain the company’s profitability,” the release says.
The Finnish financial paper Kauppalehti was the first to report on the Hong Kong application. The paper says that according to the last accounting period that ended in February 2016, the company owed close to 37 million euros in debt.
Turnover for the year ending in February 2016 was 120 million euros, a close to ten percent decrease on the previous year. Overall, the company posted losses of 1.3 million euros in the past year.
Debt restructuring usually involves a reduction of debt and an extension of payment terms and is a less expensive alternative to bankruptcy.
Hong Kong sells general merchandise at discounted prices online and in 27 locations in southern Finland. The northernmost stores are found in Kokkola in the west and Kuopio in the east. The stores in the chain operate as individual subsidiaries, with the head office located in Vantaa.
Import company in trouble too
The debt restructuring application revealed that two applications for bankruptcy for the retail group’s subsidiary company in charge of imports, Hong Kong Import Ltd, were submitted in the last week but both were withdrawn the next day.
According to Iltalehti, as of Tuesday, Hong Kong Import had outstanding debt totalling 1.1 million euros, with penalties paid on payment delays amounting to over 380,000 euros.