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Reform on Sales Channels & Implementation of Para-direct Operation Model Yield Notable Results
ResultsHighlights
| (RMB million) | For the twelve months ended 31 December | ||
| 2018 | 2017 | Change | |
| Revenue
| 1,706 | 1,455 | 17.3% |
| Gross profit (before provision for / reversal of impairment losses of inventories ) | 955 | 862 | 10.8% |
| Gross profit margin (before provision for / reversal of impairment losses of inventories) | 56.0% | 59.2% | -3.2 pts |
| Operating profit
| 418 | 1,027 | -59.3 % |
| Operating profit excluding investment income
| 91 | 113 | -19.5% |
| Profit for the period attributable to equity holders of the Company | 315 | 805 | -60.9% |
| Basic earnings per share (RMB cents)
| 5.44 | 14.51 | -62.5 % |
HONGKONG, CHINA - Media OutReach - 27 February 2019 - The leading international sportswear brand enterprise inthe PRC, China Dongxiang (Group) Co.,Ltd. ("China Dongxiang" or "the Company", together withits subsidiaries, "the Group", HKEx stock code: 3818) announces itsunaudited second interim results for the twelve months ended 31 December 2018("reporting period"). The Group's revenue for the reporting period increased by17.3%, year-on-year ("YoY"), to RMB1,706 million, while profit attributable toequity holders of the Company reached RMB315 million withthe basic earnings per share as RMB5.44 cents. The Group's profit fell mainlydue to negative factors including the trade war. In the second half of 2018,major global stock market indexes has recorded continued drop. The price of theshares that the Group held, including Alibaba, has fallen accordingly. As atthe date of this results announcement, the loss from the drop in price of stockhas however been fully recovered as a result of the improved performance ofstock markets. The Board resolved not to declare any interim dividend for thetwelve months ended 31 December 2018.
Operational Highlights of 2018
- China Segment: Introduction of NewCustomers and Launch of New Model
Kappa
As at 31 December 2018, the revenueof Kappa brand increased by 20.3% YoY to RMB1,370 million. During the reportingperiod, the Group made diligent efforts to optimise its existing store mix andactively establish top stores, shopping-mall stores and outlets, whilerenovating and closing underperforming stores in an ongoing move to consolidatereforms at deeper levels. Benefiting from a highly effective reform on saleschannels, the same store sales and retail performance of the Group maintainedstable growth. In the meantime, the brand continued to adopt a 360-degree brandmarketing through a combination of online and offline activities by closelycooperating with new media and top stars in China and actively participating ininternational fashion events, leading to a greater recognition worldwide ofKappa's brand image of being "rebellious, passionate and outgoing". Inaddition, the Group continued to develop a new para-direct operation model tofurther secure sufficient supply of products, laying a concrete foundation forenhancement of the Group's operational performance. With regards to E-commerce,as an integral part of the business of the Group, its performance for theperiod was in line with expectation. In 2018, the Group continued to penetrateinto major e-commerce platforms, such as Tmall, JD.com and VIP.com, by activelyparticipating in their large-scale promotion activities.
- Kappa Kids
As at 31 December 2018, the Group had a totalof 1,496 Kappa stores (including 316 Kappa Kid's stores), representing a netincrease of 9 as compared to that as at the end of December 2017.
- Japan Segment: Progressive Improvement in FinancialPerformance and Exploration of New Sources for Customers
- InvestmentSegment: High Responsiveness and Sensitivityto Market Change with Progress Made in a Cautious Way
Mr. ChenYihong , Chairman and Executive Director of China Dongxiang, said, "In 2018,domestic and international environment was complicated and complex with toughercompetition in the industry. In order to grasp the potential opportunitiesduring the new development stage of the sports gear industry, we continued todeepen our reform and achieved some progress with initial achievements byleveraging on extensive experience in the industry. As a company that has beenestablished for sixteen years, China Dongxiang will continue to move forwardwith our 'work hard' spirit, and strive for new milestones in the future."
About China Dongxiang (Group) Co., Ltd. (Stock code: 3818)
ChinaDongxiang (Group) Co., Ltd. is a leading international sportswear brandenterprise in China which has been listed on the Main Board of the Hong KongStock Exchange since 10 October 2007. The Group is primarily engaged in thedesign, development, marketing and wholesale of branded sportswear in China.Currently, China Dongxiang owns all rights to the internationally renownedKappa brand in China, Macau and Japan. On 1 May 2008, China Dongxiang completedthe acquisition of PHENIX, a Japanese sportswear enterprise. PHENIX is the mostpopular ski brand in Japan with the largest market share, as well as awell-known brand in the international market.
