Kappa China's Annual Sales Decline Exceeds 12%. Can New CEO Take Office To Save Its Performance?

In sharp contrast to Kappa's lack of enthusiasm, over the past year, domestic and foreign brands such as Nike, Adidas and Anta have grown significantly in the Chinese market.

The Kappa brand positioning sports fashion is not ideal in the Chinese market.

The Kappa brand positioning sports fashion is not ideal in the Chinese market.

Recently, China has released the performance report of its sports brand Kappa.

In the 2017 fiscal year, Kappa's overall revenue fell 9.9% to 1 billion 353 million yuan, net profit fell 7.5% to 805 million yuan, and gross profit margin fell 0.5 percentage points to 56.2%.

At the same time, Kappa's revenue in China's market fell 12.02%, to 893 million yuan, of which clothing revenue fell 10.6%.

Li Ning Co has won the exclusive trademark rights of Kappa in mainland China and Macao in 2002, and has invested in the establishment of Beijing Trend Sports Development Co., Ltd., and former Lining CEO Chen Yihong served as chairman.

Three years later, Chen Yihong bought Li Ning Co's 80% stake in the stock market.

In October 2007, China listed in Hongkong, becoming the third Chinese sporting goods company listed on the Hong Kong stock market after Lining and Anta.

As of December 31, 2017, Chen Yihong's Poseidon Sports Limited actually owns 39.64% of China's trend and is the largest shareholder of the company.

At present, China has all the rights and interests of Kappa in the mainland, China, Macao and Japan, and acquired the Japanese outdoor ice and snow brand PHENIX in 2008.

In 2017, Kappa began to cross border cooperation with entertainment, music, art and other fields, and strengthened the collusion products with brand DNA attributes, but the sales effect was not obvious.

According to the financial report, by the end of 2017, the total number of Kappa brand shops was 1487, including 350 children's Kappa stores, compared with 76 in 2016.

The distribution network mainly covers China's major provincial capitals, as well as some large cities and towns.

During the period, the sales volume of Kappa brand's wholesale channel business in the Chinese market was 383 million yuan, down 33% from the same period last year, occupying 42.9% of China's regional sales, and the share also declined.

On the contrary, self retailing sales rose 15% to 510 million yuan over the same period, accounting for 57.1% of China's Kappa sales.

The group said that e-commerce is an important part of the business, and will deepen the domestic electricity supplier market in the future.

2017 is the ninth year for Kappa to participate in Tmall double eleven Shopping Festival. The total sales of children's clothing in the whole network grew by 30% over the same period last year.

Children's clothing business is one of the few bright spots. During the period, sales of children's clothing reached 114 million yuan, an increase of 32.6% yuan over the same period last year, accounting for 11% of Kappa's income in China.

In 2017, Kappa children's wear added 88 stores, with a total number of 350.

Offline water increased by 59%, and online water consumption increased by 43%.

As an operator of Kappa brand in China, the growth of China's main business is somewhat weak.

But China's trend is also engaged in some investment businesses, and the latter's income has become the vast majority of the company's income.

In 2017, China's investment income reached 942 million yuan, an increase of 19.7% over the same period last year.

According to the financial report, stock prices of Alibaba held by the group rose sharply last year, and the indirect holdings of ant gold services and Jingdong finance also increased significantly.

China's trend indicates that investment business has become one of the important growth engines of the group.

In sharp contrast to Kappa's lack of enthusiasm, Anta and Lining, both listed on the Hong Kong stock market, gained significant growth in 2017, with annual revenues of 16 billion 692 million yuan and 8 billion 874 million yuan respectively.

Among them, Anta has become the largest sporting goods industry in China, with a total market value of more than HK $100 billion.

By the end of March 23rd, China's stock price was HK $1.42 and its market value was HK $8 billion 58 million.

In October of last year, China moved to appoint Zhang Zhiyong as executive director and CEO, who worked with Lining for many years in Chen Yihong, and has senior experience in the Chinese sporting goods industry.

Under the background of weak growth of main business, Zhang Zhiyong, who became CEO, became an important step for Kappa to reverse.