China Dongxiang Announces Operational Results for 2Q2019

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

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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.“

About China Dongxiang (Group) Co., Ltd. (Stock code: 3818)

China Dongxiang (Group)
Co., Ltd. is a leading international sportswear brand enterprise in China which
has been listed on the Main Board of the Hong Kong Stock Exchange since 10
October 2007. The Group is primarily engaged in the design, development,
marketing and wholesale of branded sportswear in China. Currently, China
Dongxiang owns all rights to the internationally renowned Kappa brand in China,
Macau and Japan. On 1 May 2008, China Dongxiang completed the acquisition of
PHENIX, a Japanese sportswear enterprise. PHENIX is the most popular ski brand
in Japan with the largest market share, as well as a well-known brand in the
international market.