China Dongxiang Announces Operational Results for Q2 and 1H 2019/20

Accumulated Retail Performance Recorded Growth for the First Half Year With Strong E-commerce Momentum

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HONG KONG, CHINA - Media OutReach - 21 October 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 the operational data for the second quarter of
the three months ended 30 September 2019 (”FY2019/20 Q2”) and the six months
ended 30 September 2019 (”FY2019/20 1H”).

 

For the
FY2019/20 Q2, the retail performance of Kappa stores (excluding Kappa kids’
apparel business and Japan business) for the overall platform registered a
mid-teens growth on a year-on-year basis, of which the off-line business
recorded a high single digit growth and the e-commerce business recorded a
mid-to-high-fifties growth. For the FY2019/20 1H, the accumulated retail
performance for the overall platform registered a low-teens growth on a
year-on-year basis, of which the off-line business recorded a mid-to-high
single digit growth and the e-commerce business recorded a low-forties growth.

 

As for the same-store-sales (“SSS”), for the FY2019/20 Q2, 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 last year, the
SSS for the overall platform registered a mid-to-high single digit increase on
a year-on-year basis, of which the off-line business recorded a low single digit
decrease while the e-commerce business registered a mid-to-high-fifties growth.
For the FY2019/20 1H, the SSS for the overall platform registered a mid-to-low
single digit increase on a year-on-year basis, of which the off-line business
recorded a mid-to-low single digit decrease while the e-commerce business
registered a low-forties growth.

 

As of FY2019/20 Q2, the number of retail stores of the Group under Kappa
brand was 1,176 (excluding Kappa kids’ apparel business and Japan business), representing
a net decrease of 33 as compared with that as at 31 March 2019 (”the end of
FY2018/19”). The Group will further reduce the number of stores with
unsatisfactory performance.

Mr. Zhang Zhiyong, CEO, President and Executive Director of China Dongxiang, said, “The Group’s overall business of Kappa brand continued to
recover. Attributed by the Group’s reforms and effective channel strategy,
growth momentum of the e-commerce business, outlet channel and certain major
retail regions has been established. In the future, in terms of channel, we will continue our reform on
direct-franchise, with outlets and shopping malls being the priority.
Meanwhile, localisation of nationwide sales team will be continued. As for
products, we will improve the management of product life cycle in order to
lower the level of inventory. Furthermore, we will introduce more talents for
product research and development to further promote the product reforms.”

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.