Achieves Middle Single-digit Growth in Retail Performance with Strong E-commerce Momentum

HONG KONG, CHINA - Media OutReach - 12 July 2019 - The leading international sportswear brand enterprise in the PRC, China Dongxiang (Group) Co., Ltd. ("China Dongxiang" or "the Company", together with its subsidiaries, "the Group", HKEx stock code: 3818) announces operational results for the second quarter of 2019 (2Q2019).


In 2Q2019, the retail performance of Kappa stores (excluding Kappa Kids business and Japan business) for the overall platform registered a middle single digit growth year-on-year (yoy), of which the off-line business recorded a low single-digit growth with e-commerce business recorded a growth of 30% to 35%. The same-store-sales for the overall platform registered a low single-digit decrease yoy, of which the off-line business recorded a high single-digit decrease while the e-commerce business registered a growth of 30% to 35%. As of 2Q2019, the number of retail stores of the Group's Kappa brand was 1,228 (excluding Kappa Kids business and Japan business), representing a net increase of 48 as compared with that as at the end of 2018.


In 2Q2019, the Group officially launched forward and reverse logistics and distribution solutions upon the completion of the construction of two nationwide logistics and distribution centres, sufficiently securing prompt movement of products through omni-channel distribution. Meanwhile, the Group has been strengthening its management and control over omni-channel distribution of products by actively developing and preparing cloud warehouse system in order to speed up the movement of omni-channel distribution of products. Thanks to the effective marketing strategies, the Group has maintained the growth in its online business. In spite of the underperformed offline sales for short-sleeve products in this quarter, sales performance of Kappa's vulcanised shoes remained strong, offsetting the negative impact from seasonal fluctuation of apparel products.


Mr. Zhang Zhiyong, CEO, President and Executive Director of China Dongxiang, said, "The Group's Kappa brand business is in a period of transformation. The Group has continued its reforms by adopting a series of effective measures focusing on customers, channels, brands and products and made good progress with interim achievements in line with our expectation. In addition, the Group has been eagerly attracting talents and resources of design so as to improve and optimise its product mix. The Group will be more focused on product reform based on the brand's target customers, injecting key driving force for the brand's growth."

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