Daphne Closes More Than 1000 Stores And Changes Logo To Younger

In March 28th,

International Holdings Limited (hereinafter referred to as "Daphne", stock code: 210) announced its year-end results announcement as of December 31, 2016.

During the period, the turnover decreased by 22.4% to HK $6 billion 502 million (equivalent to 5 billion 766 million yuan), mainly due to a sharp decrease in the number of sales outlets and a negative growth in the same store sales, resulting in a decline in the turnover of core brand businesses.

Gross profit was HK $3 billion 312 million (equivalent to RMB 2 billion 937 million yuan), a decrease of 29.9% compared with the same period last year. The sales of commodities increased significantly after the sharp discount, resulting in gross margin falling to 50.9%, down 5.5 percentage points from 2015.

Operating loss of HK $820 million (equivalent to 727 million yuan), compared with last year's increase of HK $322 million (equivalent to 286 million yuan).

The share loss of shareholders was HK $819 million (equivalent to RMB 726 million yuan), which was HK $379 million in 2015 (equivalent to 336 million yuan).

Consolidated income statement

Daphne is mainly engaged in manufacturing, distributing and retailing footwear products and accessories business.

The core brand business is mainly in mainland China to sell its own brand "Daphne" and "shoe cabinet" footwear products and accessories retail business.

Core business continues to fall, clear inventory is the main reason.

During the period, the core brand business accounted for 88% of the total revenue of the group.

However, due to the high inventory situation prevailing in the industry, both online and offline sales channels are full of sales promotion.

Through a substantial discount to clean up over the season goods, coupled with the increase in the proportion of over season products in the sales mix, eventually led to the core brand business gross margin reduced by 6.4 percentage points to 47.3%.

The average selling price of the core brand business decreased by 4.8% to 159 yuan, and the turnover decreased by 23.1% to HK $5 billion 936 million (equivalent to RMB 5 billion 264 million yuan).

Of course, the effect of clearing inventory is also remarkable.

The book value decreased from HK $2 billion 92 million in 2015 (RMB 1 billion 855 million yuan) to HK $1 billion 415 million (RMB 1 billion 255 million yuan) in the period, and the inventory level decreased by 32.4%.

Meanwhile, the average inventory turnover period was 201 days, representing a decrease of 17 days compared with last year.

It is reported that the external client revenue of its core brand business and other brand businesses mainly come from mainland China, Taiwan and Hongkong, while the external customer revenue of manufacturing business mainly comes from mainland China.

In the two years ended 2016 and December 31, 2015, no customers accounted for 10% or more of Daphne's total turnover in each year.

Although the core business is affected by such factors as inventory clearance and store closing, Daphne's agents such as "love", "STEP HIGHER", "Alex" and "ALDO" contribute to Daphne's overall turnover to 12%, up 2 percentage points from last year.

Its contribution to operating profit also increased to HK $78 million (equivalent to 69 million 173 thousand and 500 yuan).

Closing over 1000 stores will make labels younger.

Since the second quarter of 2016, Daphne has been accelerating the closure of poorly performing shops, closing 1030 sales outlets by the end of the year, including 999 core business outlets, including 810 Direct stores and 189 franchised stores, a decrease of 17.8% over the same period last year.

At present, the total number of Daphne's sales outlets is 4900, including core brand business -- 4598 sales outlets in China's "Daphne" and "shoe cabinet", and 302 sales outlets in other brands.

Daphne said that the integration of the store network has been largely completed. In the future, the sales channel portfolio will continue to be optimized through reducing the proportion of street shops in the overall retail network.

At the same time, it will also maintain the rapid growth of the electricity business.

It is worth noting that Daphne mentioned in its earnings report that it will introduce new brand identity and new products.

To display young, innovative, fashionable and dynamic brand image.

In addition to expanding and combing the design team, an outstanding designer who has rich experience in international and Asian shoe footwear brands has recently joined Daphne in leading the design team and inject new vitality into the creative process.

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