Focusing on Point-of-sale Reform ; Omni-channel Distribution of Products Starts

Results Highlights

(RMB million)

For the fifteen months ended 31 March








Gross profit (before reversal of / provision for impairment losses of inventories)



+13.1 %

Gross profit margin (before reversal of / provision for impairment losses of inventories)



-1.2 pts

Operating profit




Profit attributable to equity holders of the Company



- 27.2%

Basic and diluted earnings per share

(RMB cents)




Final dividend and special final dividend per share (RMB cents)




HONG KONG, CHINA - Media OutReach - 19 June 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 its results for the fifteen months ended 31 March 2019 ("Reporting Period"). The Group's revenue for the Reporting Period was RMB2,144 million, while profit attributable to equity holders of the Company was RMB866 million. Basic and diluted earnings per share was RMB14.91 cents. As a reward to shareholders for their unfailing support, the Board of Directors has proposed to distribute 30% and 20% of the net profit attributable to equity holders for the fifteen months ended 31 March 2019 as final dividend and special final dividend, respectively, representing a dividend payout ratio of 50%.

Operational Highlights of 2018/2019

  • China Segment: Launching A New Model and Securing Product Supply


The Group has reinforced cross-sector collaboration with celebrities and key opinion leaders in various sectors in the Reporting Period to fully envision the fashion trends and strengthen its brand penetration. The Group has also endeavoured to develop a digitalised member recruitment programme for Kappa to increase members' repeated purchase by omni-channel management of members and big data utilisation for precise marketing. Meanwhile, the Group has stayed focused on point-of-sale reform by optimising existing structure of its stores, actively managing the proportion of top stores, shopping mall stores and outlet stores. In addition, the first step of reform on relationship-building channels for customer adjustment has been completed, the direct-sale system and direct-franchised customers accounted for over 90% of the Group's entire business. The construction of two nationwide logistics and distribution centres will be completed in the next quarter, aiming to provide secured and prompt product turnover. The Group has sought closer cooperation with reputable e-commerce platforms, including Tmall, and, its e-commerce business for the Reporting Period recorded a significant growth.

During the Reporting Period, the Group achieved outstanding results on the marketing programme of kid's wear business. The Group has launched a sequence of effective marketing events for kid's wear in order to further uplift its brand awareness in kid's wear market, for example, Kappa has announced via social media platforms that it will continue to be the sole official sponsor of the "Chinese Football Boy" (中國足球小將 ) campaign 2019 for the provision of sports gear. The Weibo hashtag of #Chinese Football Boy# secured more than 3 billion click views. During the Reporting Period, revenue from the kid's wear business reached RMB151 million, accounting for 8.6% of the revenue from China segment.

As at 31 March 2019, the Group had a total of 1,502 Kappa stores (including 295 Kappa Kid's stores), representing a net increase of 15 stores as compared to the end of 2017 (a net increase of 70 Kappa stores and a net decrease of 55 Kappa Kid's stores).

  • Japan Segment: Improvement in Financial Performance and Steady Progress Made on Reform

The Japan business continued to undergo reforms. During the Reporting Period, revenue from Japan segment grew significantly with an improved financial condition. The Group has organised a number of marketing activities tailored to the characteristics of local consumer spending in Japan, facilitating steady development of its business in Japan. Meanwhile, the Group has placed great emphasis on the business development of PHENIX brand in China as well as overseas sales of PHENIX brand in Europe and other markets. PHENIX China will prepare well in advance for the coming of Beijing 2022 Winter Olympics by focusing on omni-channel expansion, club member services and brand marketing.

  • Investment Segment: Progress Made in a Cautious and Pragmatic Manner

In 2019, the Group's investment business achieved a healthy growth amid fluctuations in global capital markets. As at 31 March 2019, the Group reported net asset value of investments of RMB8,668 million, a 50% surplus over the market capitalisation of the Group for the corresponding period. During the Reporting Period, the Group had investment net gains of RMB1,054 million. The price of shares in secondary market held by the Group, such as Alibaba, was volatile due to market fluctuations, but the share price during the Reporting Period was generally stable. Certain investment funds indirectly invested by the Group also achieved a significant growth in value.

Mr. Chen Yihong , Chairman and Executive Director of China Dongxiang, said, "Though the domestic and international economic environment has become complicated and complex, China Dongxiang continued our reforms by adopting a series of effective measures which has made good progress with interim achievements in line with our expectation. As a company that has been established for over 17 years, China Dongxiang will continue to move forward and tackle challenges with confidence, bringing stable and considerable returns to shareholders."

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