Diversified Channels and Improved Product Management Brings Growth Momentum

HONG KONG, CHINA - Media OutReach - 27 October 2020 - 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 its operational results for the three months ended 30 September 2020 (2Q FY2020/21) and the six months ended 30 September 2020 (1H FY2020/21).


For the 2Q FY2020/21, the retail performance of Kappa stores (excluding Kappa kids' apparel business and Japan business) for the overall platform registered a mid-single-digit growth on a year-on-year basis, of which the offline business recorded a flat growth, and the e-commerce business recorded a mid-to-low thirties growth. The retail performance of the overall platform for the 1H FY2020/21 recorded a low-single-digit growth on a year-on-year basis, of which the offline business recorded a mid-single-digit decrease and the e-commerce business recorded a mid-to-low thirties growth.


As for the same-store-sales (SSS) during 2Q FY2020/21, in respect of Kappa stores (excluding Kappa kids' apparel business and Japan business) which have been in operation since the beginning of the same quarter the previous year, the SSS for the overall platform registered a mid-to-low single-digit growth, of which the offline business recorded a mid-to-low single-digit decrease and the e-commerce business recorded a mid-to-low thirties growth. The same-store sales for the overall platform for the 1H FY2020/21 recorded a mid-single-digit growth on a year-on-year basis, of which the offline business recorded a high-single-digit decrease and the e-commerce business recorded a mid-to-low thirties growth.


For the second quarter ended 30 September 2020, the number of Kappa-branded stores of the Group was 1,153 (excluding Kappa kids' apparel business and Japan business), representing a net increase of 24 as compared with that as at 31 March 2020 (the end of FY2019/20). In the next step, the Group will continue to close inefficient stores.


Mr. Zhang Zhiyong, CEO, President and Executive Director of China Dongxiang, said, "Since the implementation of ''direct-franchise'' model, the Group has continued to reform. Interim progress has been achieved in Kappa brand business which has been in line with management's expectation. During the Period, growth momentum of the offline sales was principally derived from structural optimisation of channels as well as continuing steady growth in business performance of outlets and shopping centres. Meanwhile, the Company has made progress in reform and construction of the product management and design team. Through a series of effective measures, apparel product ranges were further diversified in the period, registering a growth in mix-and-match sales. In addition, we are developing a new business platform which helps to build a solid foundation for the development of our e-commerce business. The Company will continue to implement localised management of sales teams, further accelerate the merchandise turnover in omni-channel retailing and strengthen the professional capabilities of product teams. We will closely monitor the changes of the pandemic, strengthening supervision and control over our operations to protect the Group's value and shareholders' interests."


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