SITOY GROUP (HK: 01023) has issued a profit warning, projecting a net loss attributable to shareholders of between approximately HK$110 million and HK$130 million for the fiscal year ending June 30, 2026. This marks a notable improvement from the HK$178 million loss recorded in the corresponding period of 2025.

The anticipated enhancement is chiefly driven by two factors: first, the absence of a significant one-time loss incurred last year from the termination of the Cole Haan business, as detailed in the company's announcement dated November 26, 2024. Second, the expected fair value loss on investment properties for the year ending June 30, 2026, is projected to narrow to a range of approximately HK$50 million to HK$55 million, compared with a HK$109 million fair value loss in the same period of 2025.

Within the manufacturing segment, revenue for the fiscal year ending June 30, 2026, is anticipated to climb from the segment's HK$918 million turnover in the prior corresponding period. Nevertheless, the segment's pre-tax loss for the year is expected to widen from the modest HK$3.768 million loss seen in 2025. This deterioration is primarily attributed to the appreciation of the Renminbi against the US dollar, which has squeezed gross margins, along with anticipated non-cash provision adjustments.

For the retail segment, revenue for the year ending June 30, 2026, is expected to decline compared with the HK$655 million generated in the same period last year, a direct consequence of discontinuing the Cole Haan operation. However, the segment is projected to swing to a pre-tax profit, contrasting with the HK$62.265 million pre-tax loss in 2025. This turnaround stems largely from the termination of the Cole Haan business and the fact that the substantial HK$83.568 million one-time loss from the prior year has not recurred. Still, the segment's pre-tax profit is likely to be tempered by certain non-cash provision adjustments.

In the property investment segment, revenue for the fiscal year ending June 30, 2026, is forecast to dip from the HK$11.193 million recorded in the prior year. The segment's pre-tax loss is also expected to narrow significantly from the HK$102 million loss in 2025, underpinned by a much smaller fair value loss projected for the current year compared with the HK$109 million loss reported previously.